Europe Household Energy Storage Market Development Outlook

In recent years, the European market has been affected by rising energy prices, leading to a surge in residential electricity prices, which has highlighted the economic viability of energy storage. Driven by anxiety over energy crises, various regions in Europe have introduced policies to develop clean energy, accelerating the pace of energy transition to ensure energy supply security, resulting in a continuous growth in household energy storage demand.

For a long time, overseas household energy storage has been considered the most lucrative segment in the field of energy storage. However, with factors such as declining electricity prices, rising interest rates, and policy changes, the golden age of household energy storage seems to have slowed down.

On one hand, domestic players are expanding production capacity frantically, while overseas distributors are reducing inventory. Although household energy storage still has some room for penetration rate improvement, its growth rate has slowed significantly.

1. Global Household Energy Storage Development Outlook for 2024

Looking ahead to 2024, in terms of the growth rate of global household energy storage, TrendForce's energy storage research center predicts that the breakdown of newly added energy storage installations globally in 2024 will be as follows: Commercial and Industrial Storage (93%/112%) > Utility-scale Storage (39%/43%) > Household Storage (4%/11%).

Under the background of falling electricity prices and natural gas prices, the urgency for residents to install household energy storage has weakened. The growth rate of household storage has significantly slowed down compared to 2023, with a year-on-year growth of only 11%.

In terms of incremental capacity, the global newly added energy storage installations in 2024 will be dominated by Utility-scale Storage (53GW/130GWh) > Household Storage (10GW/20GWh) > Commercial and Industrial Storage (7GW/18GWh). Due to the early start of household storage, as well as its mature profit model, it still has certain growth potential. Therefore, household storage will have a slightly higher increment in 2024 than commercial and industrial storage.

2. Europe Household Energy Storage: Slowing Growth, Led by Germany

Due to the high degree of connectivity of the European grid, the demand for utility-scale storage is not as strong as in other regions. As a result, the proportion of front-of-the-meter and behind-the-meter storage in the European market is close to 1:1, making it the world's leading household energy storage market.

Europe is actively promoting energy transition, and the scale of household energy storage installations has experienced rapid growth. According to IHS Markit data, Germany and Italy have higher growth rates of household energy storage installations than the European average, ranking first and second respectively. Germany accounts for over 70% of the market share and is the largest country in the world in terms of household energy storage market size.

The concentration of the European household energy storage market is relatively high, with the top five countries accounting for around 90% of the market share. However, as household energy storage gradually becomes popular in other European countries, differences in growth among early adopter countries have emerged. France and Spain have surpassed Austria and Denmark to enter the top five in terms of European household energy storage market share. Europe relies heavily on external energy sources, and residential electricity prices are much higher than the global average, as well as higher than in other developed countries. Italy is one of the countries with the highest electricity prices globally. European electricity spot prices are closely related to natural gas, and driven by the energy crisis, electricity prices reached historical highs in 2022, with residential electricity prices exceeding 0.7 euros/kWh at the peak, about 10 times that of China's residential electricity prices. Although natural gas prices fell significantly in 2023, the electricity prices of major European countries are still far higher than those in 2020.

In addition, various taxes, fees, and surcharges in Europe also result in high costs, such as grid transmission and distribution fees, renewable energy surcharges, value-added tax, electricity tax, etc. The tax and fee components in countries like the UK, Germany, and Italy account for 30% to 60% of electricity prices. Under the influence of natural gas prices, inflexible grid and taxes and fees, household electricity prices in Europe are higher than the cost of household photovoltaic electricity storage.

In terms of policies, due to different stages of development in the European countries, policy focuses also vary. Taking Germany as an example, as a leading country in energy storage construction in Europe, Germany has taken the initiative to support household energy storage with a combination of financing, tax incentives, and subsidies.

3. Europe Household Energy Storage Market Development Outlook

According to the European Energy Storage Association (EESA) statistics, the demand for household energy storage in Europe increased by approximately 5.1 GWh in the first half of 2023. By Q2, the inventory at the end of 2022 (5.2 GWh) had been largely consumed, with remaining inventory of approximately 6.4 GWh, equivalent to about eight months of household energy storage market installations in Europe.

It is predicted that the European household energy storage market size will reach 9.57 GWh in 2023, with the remaining inventory consumption reaching approximately 4.47 GWh in the second half of the year. Inventory clearance will continue until the end of 2023, and by the end of the year, the European inventory level will return to a reasonable scale (approximately 4.5 GWh). With inventory gradually decreasing, another round of competition in the European household energy storage market is about to begin.

Currently, the return on investment in European household energy storage is still high. Compared with the previous two years, current energy storage products are more diverse, and the costs of batteries and other raw materials are gradually decreasing, while demand is growing. It is expected that European household energy storage will continue to have high growth momentum in the future. The European energy storage market is mainly driven by energy autonomy and high economic efficiency. It is expected that shipments in 2024 will return to rapid growth, and there is still room for improvement in the penetration rate of European household energy storage.