BNEF: Australia ties with Germany as fastest growing residential storage market

As stated in a recent report by the Climate Council, the Australian residential storage market is about to take off. Behind the increasing adoption of residential storage is a range of factors including price declines of lithium-ion batteries. The Climate Council found that li-ion is tracking the declines achieved by solar PV, with prices dropping by 80% since 2010, and are tipped to halve again by 2025.

In Australia alone, 6,750 new household batteries were installed in 2016, while the market is predicted to have tripled in size in 2017, with over 20,000 new installations, finds the Fully Charged: Renewables and Storage Powering Australia report.

The Climate Council figures exceed the officially reported data, as published by the Clean Energy Regulator last month. However, there is no requirement for installers to report battery storage installations likely depressing the official data.

Logan Goldie-Scot, who leads Bloomberg New Energy Finance’s (BNEF) battery storage analysis, reports that Australia and Germany are neck-and-neck in terms of being the fastest growing residential storage markets. 

“We estimate between 1 GW – 1.4 GW [of residential storage will be installed] in 2018 globally,” says Goldie Scot. “Leading markets are similar to those in 2017, although the U.S. emerges in 2018.”

Battery payback times are heavily dependent aggregation payments – additional revenue battery owners can receive for the provision of grid services on a pooled basis.

“PV plus storage paybacks are often between 10-15 years,” Goldie-Scot told pv magazine Australia, “whereas PV only payments are typically single digit years. Aggregation payments naturally favor energy storage and help partially bridge this gap. International examples suggest that utilities place a high value on access to their customer’s batteries – for example, Ovo Energy offers £350 (AU$625) per year to access 4.6 kW batteries and Eneco pays €400-500 (AU$710-890) per year depending on the battery’s size.”

While the Climate Council anticipates rapid price declines for li-ion storage in the mid-term, BNEF believes that these are not yet flowing through to residential storage prices.

“We still see a lot of room for further price reductions, although there was a lot of competition for battery supply in 2017 and smaller vendors missed out on their supply, or had to pay a premium,” said Goldie-Scot. “Also, some announced prices are not yet aligned with availability of the product on the market and so we expect this to sync up before further meaningful reductions.”

On a global level, BNEF sees residential storage uptake being driven by a number of factors, with policy support remaining key.

“A combination of policy support, desire for increased autonomy, more flexible financial offerings, [such as the] PetersenDean & LG Chem monthly lease option in the U.S., increasing retail rates and more complex ones at that,” Goldie Scot said. 

BNEF reports that Germany was the largest residential storage market in 2017, with some 107 MW of battery capacity added to homes.

Edited and additional reporting by Jonathan Gifford