With the global transition in energy structure and the rapid development of renewable energy, the residential energy storage market has encountered unprecedented growth opportunities. This growth is driven by a combination of factors such as policy support, technological advancements, and market demand, leading to residential energy storage systems becoming increasingly mature in technology and gradually demonstrating economic advantages.
Current State of the Residential Energy Storage Market
According to relevant data, the global residential energy storage market experienced explosive growth in 2022. This growth was especially notable in Europe, where the Russia-Ukraine conflict exacerbated energy supply uncertainties, significantly boosting the demand for photovoltaic (PV) plus storage systems.
Additionally, the global push for energy transition strategies, coupled with issues such as aging power grids, local conflicts, and extreme weather, has driven the growth in demand for residential energy storage. It is expected that the residential energy storage industry will experience high growth rates, with global installed capacity anticipated to reach 47.6 GWh by 2025, and the industry scale potentially reaching 195.5 billion RMB, with a global penetration rate of residential storage expected to reach 28%.
According to the “2023 China Residential Energy Storage Industry Development White Paper,” electrochemical energy storage accounted for 17.2% of the cumulative global energy storage installed capacity in 2022, with lithium-ion batteries constituting 94.8% of this share. In terms of new installations, electrochemical energy storage accounted for 51.7%, highlighting the dominance of electrochemical energy storage, particularly lithium-ion batteries, in the energy storage sector.
Residential energy storage, as a crucial application scenario for electrochemical energy storage, is primarily concentrated in countries or regions with high electricity prices, such as Germany, the United States, Japan, Italy, and Australia. Data indicates that in 2021, the U.S. accounted for 22% of the global new residential storage installations, while Europe accounted for 47%, with Germany contributing the most significant demand.
In the U.S., a leading advocate for clean energy, the residential energy storage market holds substantial growth potential. California, as a pioneer in clean energy in the U.S., accounts for about half of the nation’s residential storage installations. Tesla’s Powerwall series products play a significant role in the U.S. market, with integrated solar inverters, providing an all-in-one system to meet users’ demands for efficient energy management.
Europe is the largest residential energy storage market globally, with Germany being the largest market within Europe. Germany’s residential energy storage systems primarily use lithium iron phosphate batteries due to their superior safety performance, long cycle life, and lower costs.
Australia’s residential energy storage market is also developing rapidly, with a high growth rate in storage coupled with PV installations. This growth is driven by rising energy prices and federal solar and storage incentive programs.
Australia’s residential storage market has achieved a certain level of economic viability, with significant economic benefits observed under high electricity prices and supportive policies.
Interestingly, China’s residential energy storage products, including lithium batteries and storage systems, are extensively exported overseas. Leading companies like BYD and Pylontech focus predominantly on overseas markets, with many of their residential energy storage products sold in Europe, the U.S., and other regions.
Chinese companies occupy a significant position in the residential energy storage inverter market, with several Chinese companies ranking among the top in global market share and maintaining high growth rates. For example, GoodWe has achieved the highest global shipment volume in the residential energy storage inverter segment, making China an indispensable part of the current residential energy storage market.
High Electricity Prices Driving Rapid Development of Residential Energy Storage
In recent years, high electricity prices have been the primary driving force behind the promotion of residential energy storage. For instance, electricity prices in Europe have risen significantly, especially during the 2022 energy crisis, reaching historical highs, with prices in some regions exceeding 1000 euros per megawatt-hour. High electricity prices have directly stimulated the explosive growth of the residential energy storage market.
Household users can reduce their electricity bills and dependence on the grid by installing storage systems combined with solar PV panels, storing solar energy during the day and using the stored power at night or during peak electricity price periods.
In high electricity price regions like Europe and the U.S., installing residential energy storage systems can significantly save on household electricity expenses.
For example, in Germany, where electricity prices are high, the proportion of residential PV installations with battery storage systems is the highest, accounting for 70% of Europe’s new storage capacity.
From the latest electricity price information in Europe and the U.S., German and French electricity prices have recently declined, but UK prices remain at 495 pounds/MWh (approximately 4452 RMB for 1000 kWh, about 4.5 RMB per kWh).
In the U.S., electricity prices vary by region, with residential electricity prices around 10 cents/kWh in cities and 9 cents/kWh in rural areas, differing by region.
For instance, electricity prices in California, the Midwest, and New York vary at different times.
Meanwhile, China’s residential energy storage market is also rapidly advancing, primarily driven by favorable policies and growing market demand.
Data shows that China’s cumulative energy storage installed capacity reached 66.5 GW in 2022, with electrochemical energy storage accounting for approximately 10.8 GW, and user-side storage accounting for about 1.8 GW.
In 2023, China’s user-side storage installed capacity reached 1.89 GW/4.77 GWh, showing significant year-on-year growth.
Regionally, the installed capacity in Shanghai is expected to reach 1.2 GWh by 2025, reflecting the expansion trend of the user-side storage market in the coming years.
From a technical perspective, lithium iron phosphate and sodium-ion batteries are the two main technological routes for residential energy storage.
Lithium iron phosphate batteries have become a major choice for storage batteries due to their safety performance advantages and lower costs. Sodium-ion batteries, with their high cost-performance ratio, safety, and better high and low-temperature performance, have potential for widespread adoption.
In inverter technology, the demand for hybrid inverters is increasing because residential storage systems are primarily an incremental market. Hybrid inverters combine the functions of PV grid-tied inverters and energy storage converters, enhancing system integration.
Additionally, high-voltage battery systems are becoming an industry trend due to their reduced heat generation, improved system efficiency, simplified circuit structure, and easier installation.
In the future, technological innovation will be a key factor driving the development of the residential energy storage market.
With the development of new materials and improvements in manufacturing processes, the energy density of storage systems will increase, and costs will further decrease. Advances in solid-state batteries, high-nickel ternary materials, and silicon-based anodes will make residential energy storage systems more efficient, safe, and economical.