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Germany will continue to dominate European home battery market – no matter who is in government

Industry association SolarPower Europe expects little change in the line-up of Europe’s biggest residential battery markets in four years’ time, with a rush of retrofits as turn-of-the-century solar feed-in tariffs begin to expire, set to keep Germany way ahead of the pack.

While PV trade body SolarPower Europe is bullish about the prospects for home energy storage, the second edition of its European Market Outlook For Residential Battery Storage holds out little expectation the market will diversify much beyond the current big five nations, dominated by Germany.

With Germany accounting for 70% of the home batteries installed in Europe last year and the biggest five markets – also including Italy, the U.K., Austria, and Switzerland – cornering 93%, SolarPower Europe expects France to supplant the latter in an otherwise identical line-up in 2025.

Net metering programs which encourage home solar owners to export excess power to the grid, rather than storing it in a residential battery, will continue to hamper growth in the Netherlands and Belgium, even if both EU member states are slowly moving away from such systems. The picture is even bleaker in Eastern Europe, according to the report – published yesterday – with cheap, often fossil fuel-fired electricity coupled with a lack of policy support.

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The important role policymakers can play in driving sales was spelled out by a bald statement in the report which referred to the negotiations under way in Germany to form a new coalition government. With the study positing low, medium and high scenarios out to 2025, the authors wrote: “A new German coalition government without Conservatives is likely to push developments towards [our] high scenario.” The same would also be true if the Green party is part of the new cabinet, the report later added.

Describing Germany as “the European power house in both residential solar PV and residential battery storage systems,” the document stated the nation added 749 MWh of home batteries last year, to account for the lion’s share of the 1,072 MWh installed as Europe’s home battery market breached the gigawatt mark for annual installs for the first time.

That is perhaps not surprising given the highest-quality home solar-plus-storage systems in Germany can offer a levelized cost of energy of as little as €0.122/kWh, around a third of the typical retail electricity price in what is an expensive power market. Those economics ensure around 60% of the new residential solar systems installed in Germany at the moment are accompanied by batteries.

Retrofits

SolarPower Europe is predicting a surge of retrofitted batteries to bolster the market from this year, as the first of the solar arrays to benefit from 20-year feed-in tariffs introduced by renewable energy law the Erneuerbare-Energien-Gesetz (EEG) in 2000 begin to expire.

The report’s medium expectation (neither Greens nor Conservatives in government, perhaps?) estimates Germany will add 1,181 MWh of home batteries next year, followed by annual returns of 1,402 MWh, 1,577 MWh, and 1,793 MWh for 5.95 GWh of battery capacity installed between this year and 2025.

The 90,000 or so battery systems added in Italy last year ensured Europe’s number two home storage market added 94 MWh of capacity, some way behind Germany but bolstered by the extension, to 2023, of the Covid-recovery ‘super bonus‘ incentive which offers a tax rebate of 110% of the value of residential solar and storage systems provided they are keyed to more substantial building energy-efficiency renovations. Italy is expected to add 625 MWh of new battery capacity between this year and 2025, according to the study’s authors.

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If SolarPower Europe is ready to offer pointers to the politicians horse-trading for Bundestag influence at the moment, it was also ready to contribute thoughts on the U.K. – Europe’s third biggest home storage market – with the trade body lamenting “political uncertainty remains high in the U.K. these days,” thanks to Brexit.

Around 11,000 residential batteries were installed in the U.K. last year, according to the report, despite the lack of solar feed-in tariffs, but the ability of energy users to maximize returns from batteries is crippled by the poor roll-out of smart meters. The devastation being wreaked among new-entrant energy companies in the country, thanks to rocketing gas prices at the moment, could present another obstacle and the section of the SolarPower Europe report praising the “high stage of liberalization” in the U.K. energy market already looks out of date as fears rise only the ‘Big Six’ energy companies will survive, following the demise of Bulb – the nation’s seventh largest energy company – this week.

Still, the document forecast the U.K. will install 500 MWh of batteries from 2021-25.

Austria

Austria, which could introduce a new solar and storage grant by the end of the year, added around 6,000 residential batteries last year, for around 41 MWh total storage capacity, and is expected to add 304 MWh for the 2021-25 period.

The only change in the top five European markets expected by SolarPower Europe in 2025 concerns France overhauling Switzerland, with homeowners warming to the technology despite the low electricity prices in the former country that are largely down to its extensive nuclear fleet. Supportive policy will see France add 178 MWh of home storage capacity in the 2021-25 period but, SolarPower Europe added, Switzerland will still be a promising market and there is potential too in Spain, Ireland and Czechia.

Regulation

With the trade body predicting the EU will need 1.6 TWh of small-scale ‘distributed’ energy storage by mid century to reach a net zero economy, SolarPower Europe has called upon the legislators working on a pending EU battery regulation to take into account device carbon footprints and recycled content, as well as “due diligence,” which could relate to supply-chain workers’ rights.

In an interesting aside for the solar industry in the report – which will be updated annually – the trade body said it expects the current rising prices for solar panels and batteries to be a temporary blip on a longer term, downward pricing trend “as supply chains adapt” to post-Covid shocks. The situation will ease from the second half of next year, according to SolarPower Europe.

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Source: pv magazine