The Energy Storage Report 2024

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Strategies for increasing residential energy storage deployment

Display of Panasonic home energy management system (HEMS) at PV Expo Tokyo. Image: Andy Colthorpe.
As residential storage solutions fast become a staple of energy companies’ product portfolios, many in the market are addressing the growing conundrum of how to sell storage solutions to the residential customer.

The price of storage, in the short term, will continue to remain the primary obstacle for those selling in the residential market. While prices of battery storage have fallen by 14% on average every year between 2007 and 2014, and more dramatic cost reductions are expected, particularly as a number of companies scale up lithium-ion battery production, economically, residential storage remains a challenging sell at today’s prices.

There are some exceptions to the rule, most noticeably in Australia and Germany, where homeowners who have an existing solar system or are planning to install one, are investing in storage to either maximise their clean energy generation or take advantage of cleverly conceived subsidy schemes which also incentivise other home efficiency improvements. However in the majority of countries, companies are facing up to the dominant scenario of low volumes and high prices.

Ecotricity EV charging station in England with Mistubishi PHEV. The UK green energy supplier is among those looking seriously at residential storage from a utility perspective. Image: Andy Colthorpe.
Connecting with networks and engaging with customers

To overcome this hurdle, companies are looking at a variety of alternative strategies to increase deployment of their storage products.

A tactic that a growing number of manufacturers are pursuing is working directly with national power utilities to reach the residential end user. With power utilities having wide-reaching, well-established consumer influence and networks, this tactic represents an effective, financially low-risk strategy of generating potential sales in residential storage. Over the last 12 months, many companies have entered into trail partnerships with utilities to test the effectiveness of the model including the likes of Enphase, VARTA, Ecotricity and Panasonic. Undoubtedly the biggest sales potential lies in this channel. Success is however not expected short term given the need for additional sources of revenue or saving beyond mere self-consumed electricity by the user. Examples include demand-response or other ancillary services that result in a win-win for customer and the utility or network operator. Such concepts challenge our current legal framework and electricity retail concepts meaning the adaptation will need some time to mature and be accepted by the utility establishment.

In a differing strategy, companies are increasingly trying to create interest in residential storage through building excitement around company and product brand. Leveraging such elements as technology innovation and sleek design, and positioning energy storage as an aspirational home feature, storage has seen its ‘cool’ factor significantly rise over the last year. The standout example is Tesla, whose combination of significant PR engagement and leveraging Elon Musk’s persona have undoutbedly contributed to orders of over 100,000 units for their Powerwall worth roughly US$1 billion, effectively selling the product out through 2016.

The tactic is firmly focussed upon an emotive sell rather than conventional financial or economic reasons, developing intrigue and excitement amongst potential buyers. Similar methods have been used by UK start-ups REDT and Powervault, the latter of whichgenerated over US$1.1 million worth of investment and pre-orders through its smart, aspirational design and the viral nature of its crowdfunding on CrowdCube.

Panasonic's home energy management system (HEMS) complete with lithium-ion battery storage, seen on display at the 2015 PV Expo, Tokyo. Image: Andy Colthorpe.
Adding storage to solar can open the door to a complete household solution

Outside of the previously mentioned storage hotspots of Australia and Germany, storage is being intrinsically paired with solar to significantly improve interest from homeowners in installing solar. Companies are showing increasing enthusiasm for packaging solar with storage to first time buyers to bring real innovation, introducing a more tangible feeling of energy saving.

When looking at countries such as Spain, Italy and the UK, the latter of which only just recently announced significant cuts to solar subsidies, companies will begin using storage to maintain or restart their solar sales against a backdrop of low or inexistent homeowners incentives. The positive side-effect is not to be underestimated. With a significant decrease of the residential market caused by the worsening business case of installing just solar, storage is the item en-vogue to open the consumer’s door for a more comprehensive energy-consumption analysis by installers and advisors, ultimately enabling the paradigm shift, from “how much money can be earned” to “how much energy can be saved”. The consequences are twofold - increased turnover per sale in difficult market conditions and a motivation to buy not focused upon payback, but on levels of autarky and levelised cost of energy (LCOE).

Furthermore, having identified the gatekeeper, the utilities, customer aggregators, and the key motivation factor, price, there is another element worth paying attention to - the targeted audience.

Companies selling solar and storage have been systematically targeted a primary audience of homeowners. Whilst, this may represent the lowest hanging fruit, companies are now beginning to address the larger audience of property renters.

There have been some great examples of this in Europe, particularly with Germany’s ‘Mieterstrom’ and Holland’s, ‘Salderen’ concepts. In both cases the idea is as simple as it is genius. The utility manager or owner of a multiple-dwelling building invests in solar that can then be “enjoyed” by the tenants living in the apartments, distributing the cost of the investment, but also the savings that it generates. The resulting business model is as efficient as residential solar  can be, with almost guaranteed 100% real-time own-consumption and improved economy of scales. Further it makes solar and  become as essential an aspect of the building as heating is. The addition of storage to these concepts seems the natural next step to further improve the availability of solar electricity to tenants off-hours.

These concepts are yet to be turned into mainstream but they show an alternative path to bypass the bottlenecks of the expansion of domestic storage, cost and a limited customer base.

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