Energy storage is likely to be worth “tens of billion dollars in the next five to 10 years” across a number of global regions, according to executives at solar microinverter firm Enphase.
Paul Nahi, president and chief executive of Enphase said in his company’s quarterly earnings call earlier this week that Enphase believed “very strongly that the growth of renewables have to be associated with a storage solution”. While acknowledging that storage is an industry in its early infancy at present, Nahi also said he believed storage will become an “essential part” of the energy mix in future.
Responding to questions from Pierre Macagno of investment bank Dougherty & Company and Vishal Shah of Deutsche Bank on expectations for the energy storage market and Enphase’s plans to take it on, Nahi was enthusiastic about the prospect but prefaced his response with an important caveat.
“The storage market is a tough one, because it doesn’t really exists yet, and you can make the case that in the US residential market today, there isn’t an economic case because we have net metering and I think that’s certainly true,” Nahi said.
“At the same time we know that ... there is not just [a] simple economic case [for storage], but it’s also about grid stabilisation, it’s about grid resiliency.”
Nahi referred to the growth of solar-led storage markets in the US, Australia and the UK as examples of regions where storage is being adopted to accommodate more solar energy. He said however that worldwide, policy changes are needed, as well as innovative financing options, for deployment to spread. Other than certain specific regions such as California and Hawaii, even in the US, net metering takes away much of the economic impetus for homeowners to pair their residential solar systems with batteries, for example. According to Nahi, demand is however already coming from regions as diverse as Asia-Pacific and EMEA (Europe, Middle East and Africa).
Nahi said he was “extremely confident” Enphase could lead the storage market and gave a prediction for the overall market, something considered uncharacteristically candid for an earnings conference call.
“…we do believe very strongly that the growth of renewables have to be associated with a storage solution… I'm extremely confident that with that we will lead the storage market,” Nahi said.
“In terms of how big it is, hard to say…but I would be surprised if it wasn’t in the tens of billions of dollars in the next five to 10 years.”
While Nahi’s comments were forthright if vague on numbers, they do appear to be broadly in line with the expectations of several analysts and industry-watchers. Navigant Research recently put a figure of US$16.5 billion a year on distributed energy storage by 2024, while the bank Citigroup predicted an overall battery storage industry to develop that could be worth as much as US$400 billion by 2030. GTM Research, meanwhile has put out a prediction to 2018 with its latest forecasts and said the industry will break the US$1 billion barrier by that year.
Nahi later echoed recent thoughts voiced by many industry figures including analyst Sam Wilkinson at IHS that the value of energy storage technology lies not just in the battery, but also in the energy management software and other non-hardware components.
In responding to a question on pricing and cost of Enphase’s soon to-be-rolled-out energy storage products, Nahi said he could not be specific about prices, but explained his company’s thinking around the subject.
“I'm not guiding any specific prices, but I will say this, that you have to look at the entire system…You have to look at the storage, the chemistry. You have to look at the inverter technology. You have to look at the integration into the rest of the system. You have to look at mounting,” he said.
“You have to look at it holistically. No one element will drive this.”
Finally, in terms of market segmentation, Nahi said that storage is split in a ratio that greatly favours residential, approximately 85% in the residential space and the remainder in small commercial. Nahi said however that Enphase is launching new products targeting the larger commercial space.
Enphase launched its first energy storage product, Energy Management System, at Solar Power International in Las Vegas last October. The AC battery-powered “modular, plug-and-play device” can provide a scalable 1.2kWh of energy storage and power output at 275W/550W. The system, which Nahi described as an “absolutely revolutionary product”, is scheduled to go on the market in mid-2015.
Enphase quarterly earnings conference call transcribed and hosted by Seeking Alpha.
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