Household photovoltaic + High electricity price, household energy storage has become a new track

Household photovoltaics plus high electricity prices, household energy storage have become a new track

Under the "dual-carbon" target, new energy sources represented by photovoltaics have seen rapid growth under favorable policies. As energy storage technologies mature and costs decrease, the household sector has gradually become an important field for the application of new energy.

Especially in overseas markets, the economic benefits of household energy storage have gradually become prominent as residential electricity prices continue to rise, coupled with government fiscal subsidies, further promoting its rapid popularity.

From the demand side, the continuous rise in electricity prices has led to a surge in demand for household energy storage. Since the Russia-Ukraine conflict, European countries have been deeply mired in inflation and energy crises, and energy prices have continued to rise. According to data from the Intercontinental Exchange (ICE) in London, natural gas futures reached $2,861.6 per thousand cubic meters on August 22, setting a historical high for many natural gas hubs in Europe and reaching the highest level since its operation in 1996. The continuous shortage of natural gas supply has led to a continuous increase in electricity prices. This has greatly stimulated the application of photovoltaic power generation in household scenarios and triggered the explosion of household energy storage.

On the other hand, poor power supply stability has stimulated resident demand. In some overseas regions, communities are dispersed, and the construction cost of the power grid is high, with weak coordination capabilities, especially under extreme weather conditions, various large-scale power outages occur frequently, and the stability of power supply to residents is poor. Household energy storage can provide emergency power supply when there is a public power grid failure or unstable power supply, improving the stability of electricity use.

From the supply side, photovoltaics have formed a relatively mature system in technology and application, and have a relatively high penetration rate in some overseas developed regions. With the development model of photovoltaics shifting from subsidy-based and full-grid connection to self-economy-driven and self-use, the demand for supporting energy storage is gradually becoming prominent.

US household installation capacity can reach 4.9GW/14.3GWh from 2021-2026

Affected by factors such as the pandemic and supply chain shortages, the global new household energy storage market still maintained a high-speed growth trend in 2021, with an installed capacity of newly operational power storage projects of 18.3GW, an increase of 185% year-on-year. Among them, European and American household energy storage has shown an explosive growth trend at a doubling rate every year since 2021. The installed capacity of energy storage in the United States reached 3.51GW/10.50GWh in 2021, doubling year-on-year. Relevant data shows that the total new installed capacity from 2021-2026 will reach 63.4GW/202.5GWh, of which household capacity can reach 4.9GW/14.3GWh.

Intense competition among companies in the household energy storage sector

The demand and supply sides have created market enthusiasm, and global companies are accelerating their layout in the household energy storage sector. Relevant data shows that in 2021, the top three household energy storage suppliers were Tesla, Pylontech, and BYD, accounting for 18%, 14%, and 11% respectively.

In order to further highlight the economic benefits of household energy storage in the market, in July of this year, Tesla partnered with the California utility company PG&E to create a new virtual power plant, providing a reward of $2 per kWh to eligible Powerwall users. It is reported that 50,000 Powerwall users will be eligible for the subsidy. If we estimate the market power demand and the number of Powerwall users, users will earn income of $10-60 per power dispatch.

Meanwhile, to meet the rapidly growing market demand, domestic enterprises are also accelerating production expansion. For example, in June of this year, PylonTech accelerated the expansion of the battery core end, intending to issue shares to specific objects to raise funds totaling no more than 5 billion yuan for investment in the construction of a 10 GWh battery core and system assembly production line and related supporting facilities, headquarters and industrial base projects, and supplementary working capital.

Another example is GoodWe, a pioneer in household energy storage inverters, which has launched the LynxHome F series high-voltage energy storage battery with a stacked design that can flexibly expand the battery capacity from 6.6 to 16 kWh, providing strong power for household electricity supply. Battery company Penghui Energy became the second-largest national energy storage battery shipment enterprise in 2021. The company previously stated that its household energy storage products had been certified in Europe and Australia last year and had received large orders.

Is the household energy storage track a "long and arduous journey"?

It is generally believed in the industry that this year is the first year of the energy storage market. The growth of household energy storage currently verifies this statement. So, in the long run, how long will the "slope" of the household energy storage market be?

From the perspective of residential usage costs, household energy storage is more economical when paired with household photovoltaics. In the past two years, the penetration rate of household photovoltaics has greatly increased. According to Infolink's statistics, it is estimated that the penetration rate of household photovoltaics in the United States and Germany will increase from 3.3% and 11.1% to 6.6% and 21.5% by 2025. At the same time, the penetration rate of photovoltaic storage integration in the United States and Germany is also increasing, and it will increase from 0.25% and 2.39% in 2020 to 1.24% and 10.02% in 2025, respectively, with an increase of 4.96 times and 4.19 times, respectively.

The increase in the penetration rate of photovoltaic storage will bring some development space for household energy storage. As electric vehicles and other power-consuming devices increase, the per capita electricity consumption of residents will also increase, thereby driving the increase in the power of individual photovoltaic storage systems and bringing greater industry growth space.

Currently, the incremental market for household energy storage in the world is mainly concentrated in Europe and the United States, represented by Germany and the United States, and its growth is driven by multiple factors such as policy support, the penetration rate of household photovoltaics and energy storage. HIS Markit data shows that in 2020, the global household energy storage was mainly concentrated in Europe, including Germany, Italy, and the United Kingdom, as well as Japan, Australia, and the United States. Germany, the United States, Japan, and Australia's household energy storage accounted for a total of 74.8%.

According to 2021 data, Tesla has a market share of 15% in the global household energy storage market, thanks to its outstanding product strength and brand effect, by Chinese company PylonTech with a share of 13%. In addition, domestic manufacturers such as Penghui Energy, Haichen Energy Storage, Sungrow Power Supply, Deeyeo Stock, Jinlang Technology, GoodWe, Xindara, Hehe New Energy, and Shouhang New Energy are also accelerating their layout in overseas markets.

Generally speaking, a complete household energy storage system includes photovoltaic panels, energy storage inverters, energy storage batteries, and other components, among which the most critical are the energy storage batteries and energy storage inverters. In 2021, the average hardware cost of household energy storage is about 2.8 yuan/Wh. According to the calculation of a 5% annual cost reduction for energy storage systems, the market size of household energy storage is expected to be around 111.7 billion yuan by 2025.

Since the beginning of this year, the demand for energy storage equipment in Europe has increased significantly. To ensure market supply, China's energy storage industry chain has also quickly responded. Customs statistics show that in the first half of this year, China's exports of lithium-ion batteries increased by 36.8% year-on-year, while the export volume of inverters surged by 576.7% year-on-year. At present, small-capacity battery cells for household energy storage are in continuous short supply. Photovoltaic inverter manufacturers are smoothly shipping energy storage inverter products through existing channels, and their prices and profits are maintaining high levels. Household energy storage products have become an important growth point for their future performance.

About Household Energy Storage

Household energy storage, also known as home energy storage systems, is similar to a miniature energy storage power station, and its operation is not affected by the pressure of urban power supply. During periods of low electricity consumption, the battery pack in the household energy storage system can charge itself, providing backup power during peak electricity consumption or power outages.

Household energy storage adopts an integrated microgrid design concept, which can operate in both off-grid and grid-connected modes, and can achieve seamless switching between operating modes, greatly improving power supply reliability. In addition, household energy storage is equipped with a flexible and efficient management system, which can adjust operating strategies based on the grid, load, energy storage, and electricity prices to optimize system operation and maximize user benefits.

Overall, household energy storage is elegant and beautiful, easy to install, equipped with long-life lithium-ion batteries, and can be combined with photovoltaics to provide electricity for residences, public facilities, small factories, and other places with power demands. Depending on the coupling method and whether it is integrated into the grid, household energy storage can be divided into four types: hybrid household photovoltaic + energy storage systems, coupled household photovoltaic + energy storage systems, off-grid household photovoltaic + energy storage systems, and photovoltaic energy storage energy management systems.

It is worth noting that household energy storage can achieve integrated design with household appliances, providing power needs for smart homes. Industry insiders believe that household energy storage is expected to become an important strategic household appliance product globally, and Chinese energy storage battery and inverter companies have outstanding product, cost reduction, and channel capabilities to respond to this industry trend. It is expected that the industry will maintain high-speed growth by 2025, with high electricity prices and low penetration rates as the core driving forces.