What happened?

Residential energy storage systems, i.e. home batteries, appear to be taking off across the globe. In the United States, annual installations grew from 2.25 MWh in 2014 to 185 MWh in 2018 and growth continued in 2019 as well. For Europe, analysts believe a doubling of installations, to 1.2 GWh per year, will have taken place by 2024.In Germany, with the highest electricity prices in Europe, already half of all households that invest in solar panels order a home battery as well. It is thus no wonder that battery producers (e.g. Tesla, CATL), traditional energy companies (Shell) and suppliers of conventional generators (e.g. Generac) are jumping on this market.

What does this mean?

Most households use their home battery to store solar energy during the day so they can use their “own” power after sunset as well and minimize their utility bill. This is especially relevant in areas where consumers receive a low price for the excess energy they supply to the grid or where “time-of-use” tariffs make it expensive to use grid power during peak hours. These factors, in combination with purchasing subsidies for the (ever cheaper)batteries, make that solar-plus-storage can already compete with grid-power. Aside from lower costs, households may also seek to become as grid-independent as possible. For some, this is a rather romantic ideal, for others, it is increasingly a necessity, as events of extreme weather are leading to more frequent power outages (sometimes power is shut off on purpose, to prevent wildfires).

What’s next?

The transition to renewable energy power generation will require ever greater capacity to store excess power for later use. These home batteries already play a valuable role on the level of individual households, but there are also attempts to leverage them to balance supply and demand in the wider energy system. Storage capacity aggregators (e.g. utilities or dedicated companies) are developing “bring your own battery” programs that pay consumers a premium to have their batteries provide energy to the grid during peak hours. These initiatives fit with ideas of a decentralized energy system, but it remains to be seen whether they can actually compete with the kind of large scale battery projects that have also enjoyed rapid growth in recent years.