Under the European energy crisis, electricity prices have soared, and the high economic efficiency of European household solar storage has been recognized by the market, and the demand for solar storage has started to explode. The home energy storage market is the core driving source of energy storage growth in Europe. Europe has a complete electricity market spot trading system.
Residential electricity consumption is a rigid demand for Europe, and its gross profit margin is relatively high, attracting Chinese top 10 energy storage lithium battery companies to go overseas. From the perspective of large storage, large storage installations in some other countries and regions are expected to start on a large scale in 2023.
Under the dual-carbon policies of various countries, overseas developed regions have entered the stage of new energy installed capacity replacing stock thermal power installed capacity. The growth of installed capacity has made the power system's demand for energy storage more urgent.
1. Home energy storage analysis: German home storage is still booming
According to the data released by ISEA&RWTH, the installed capacity of home energy storage in Germany will be 1839MWh in 2022, +49.9% year-on-year. In 2023Q1, the installed capacity of household storage was 976MWh, +156.2% year-on-year. Among them, the installed capacity of household storage in March was 343MWh, +118.5% year-on-year and +18.7% month-on-month.
The installed capacity in April was 218MWh, +62.7% year-on-year and -36.4% month-on-month. It should be pointed out that the website data will dynamically update the historical data, and the April data may still be revised up.
European electricity prices are on a downward trend, but electricity prices are not expected to change the economics of household savings in Germany. According to HEPI data, electricity prices for newly signed residents in many European countries are still on a downward trend in April, among which Denmark has dropped by more than 30% month-on-month, and Germany and Spain have dropped by more than 5% month-on-month.
In terms of absolute value, the UK and Ireland are still higher than 0.45 EUR/kWh, and Germany, the Czech Republic, and Italy are still higher than 0.4 EUR/kWh. Although benefiting from sufficient natural gas reserves and warm winter weather, electricity prices for European residents in April 2023 have passed a period high, but electricity prices are still significantly higher than the same period in April 2021 before the Russia-Ukraine conflict.
Although the marginal impact of electricity price on home energy storage demand is weakening, Germany's "higher electricity price level + incentive policy" is still relatively economical for residential energy storage. At the same time, the subsequent drop in the price of energy storage cells and loose supply will also benefit the demand for household energy storage.
The current boom in household energy storage in Germany also proves that economics still constitute a direct driving force for household energy storage demand. Professionals believe that the current release of German household energy storage demand may be caused by the alleviation of supply shortages such as labor shortages and energy storage system shortages in the early stage, and will continue to maintain a relatively high level of prosperity due to "higher electricity price levels + incentive policies".
2. The installed volume of home storage in Italy ranks the first in Europe
Since Europe's energy transition has not been broken first, and natural gas supply has changed from pipeline natural gas to LNG, industry insiders believe that European electricity costs will be higher than before August 2021. European electricity prices are relatively high in winter each year, and natural gas futures prices in October have strong guidance.
Dutch TTF natural gas October 2023 futures prices have fallen sharply from their peak of nearly 300 EUR/MWh at the end of August 2022. At present, it is basically around 45 EUR/MWh, returning to the level before the Russia-Ukraine conflict, but the price is still rising.
The high prosperity of household storage in Europe and the associated high electricity prices are not only the result of the conflict between Russia and Ukraine, but also the result of the European energy transition not achieving "establishment first and then destruction". Therefore, from the second half of 2021 to before the conflict between Russia and Ukraine, the high prosperity of European household reserves has begun to appear.
Even if the conflict between Russia and Ukraine is eased, professionals believe that the cost of electricity supply in Europe will still be higher than the level before August 2021 because the European natural gas supply channel has changed from cheap Russian pipeline natural gas to more expensive LNG.
Driven by favorable policies, the installed capacity of household storage in Italy will reach 2.0GWh in 2022, but the development of household storage in 2023 due to policy retreat remains to be seen. According to ANIE Federazione's data, Italy's household storage installations in 2022 will be 2.0GWh, +384.7% year-on-year, with new additions surpassing Germany's and expected to rank first in Europe.
According to ANIE Federazione's analysis, the prosperity of the Italian household energy storage market in 2022 is due to the combination of tax relief and credit sales. However, a new decree was issued in February 2023. It was previously expected that the 110% super subsidy for individual households will be postponed from March this year to the end of September, which weakens credit support and may lead to a slowdown in this segment. The impact of the new decree remains to be seen in the latest figures for the first quarter of 2023.
In summary, the integration of household energy storage will become an important power supply trend for European residents. However, due to the restrictions of household photovoltaic net metering policies in many European countries, it is difficult to predict the short-term demand for household energy storage in Europe. The high prosperity of European household savings still needs more national policy support.
3. Large-scale energy storage analysis: project implementation remains to be seen
According to the data released by British officials in January 2023, so far there are 42 energy storage projects of 10MW and above in operation in the UK, with a scale of 1.2GW; 38 under construction, with a scale of 1.9GW; and 419 planned projects, with a scale of 25.4GW.
According to ISEA&RWTH data, in 2023Q1, Germany put into operation 58.0 MWh of large-scale storage, industrial and commercial storage of 31.5 MWh; the current planning of large-scale storage is 350MWh. The large-scale energy storage commissioning shows a large monthly difference. In 2022, the large-scale energy storage commissioning volume will be 464MWh, of which 251MWh will be put into operation in December, accounting for 54%.
Europe took the lead in proposing the goal of carbon neutrality in 2050. Energy transformation is imperative, and energy storage is also an indispensable and important link to protect new energy.
In the past few years, the European household storage market has mainly relied on the development of a few countries. For example, Germany is the country with the highest accumulated household storage system capacity in Europe so far. With the vigorous development of some home energy storage markets such as Italy, the United Kingdom and Austria, the household storage capacity in Europe has grown rapidly.
The economy and convenience of household storage are also becoming more and more attractive in Europe. In the highly competitive energy market, energy storage has gained attention in Europe and will usher in steady growth.