Germany's Next Logical Investment-Energy Storage

Germany’s energy storage market for the residential sector is about to experience a boom.
Published: Wed 07 May 2014

Industry experts predict that a 20-fold growth in residential energy storage installation is to be expected over the next four years.

EuPD Research predicts a nationwide market of 100,000 units by 2018. Last year the figure stood at 6,000 units. The reason for this commercial growth is mainly due to the dramatic drop in photovoltaic prices.

Germany’s solar success

Germany is proving that solar can be a major, reliable source of power—even in countries that aren’t blessed with plentiful sunshine hours.

The country is home to 1.4 million solar installations, with more than 1 million of those on private buildings.

Recently, German solar power plants produced a world record 22 GW of electricity – equal to 20 nuclear power stations at full capacity. This volume of solar power was able to meet almost half of the country’s midday electricity needs.

The drivers of this success include the German government’s aim to replace its nuclear power with clean energy sources, as well as the country’s highly successful feed-in-tariff system which requires utilities to buy solar power from producers, large and small, at a fixed rate. Despite these tariffs causing electricity prices to increase, Germans don’t seem to mind since most are of the opinion that clean, non-nuclear energy should be prioritized.

As a result of this government support, Germany has been a big contributor to the 80% fall in the price of solar modules.

Energy storage-the next piece of the puzzle

After being successful in supporting photovoltaic solar energy, the German government is now focusing its attention on how to harness the full potential of solar. Energy storage is now the missing piece of the clean energy puzzle.

There is a great need for energy storage in the country and the potential is huge, according to a report from Germany Trade and Invest: “Smart Grids: Business Opportunities in Germany.” The expected investment value until 2030 in storage capacity stands at 25-30 billion Euros. The country’s storage needs will escalate from 3.5-8TWh (during the period 2025 to 2030) to 40TWh during 2040 to 2050.

In the first half of 2013, the German government started a program to stimulate homeowners and small businesses to install battery storage units, offering customers a direct subsidy (covering a percentage of the storage system costs). By November, around €32 million in loans had been allocated and €5 million in grants.

Over two-thirds of German PV installers already offer energy storage solutions to their customers and the number is growing.

Radical transformation on the cards

Lowering the costs of energy storage could assist with “finding the final piece of the puzzle” of the renewable energy transition. This could radically change the way we generate and consume energy.

Homeowners and businesses could produce electricity with their solar (PV) system, and store it (with their energy storage solution) at lower costs, becoming independent from utilities.

A battery is the next logical investment for people who are owners of solar power installations and whose systems are coming to the end of their 20 year contract lifetime," says Tobias Rothacher, Senior Manager Renewable Energies at Germany Trade & Invest(GTAI). "Most of these systems will still produce electricity even after their 20 year feed-in tariff period. The system owner can then decide if he wants to waste this electricity or if he wants to use his low-price electricity rather for himself by installing a battery system. We believe most people will decide for the latter:"

Just as it led the way with feed in tariffs, it appears the nation is likely to lead on home energy storage too.

There is no doubt that the increase in energy storage will see more homes and businesses going off-grid altogether. Small-scale solar power generation is already putting the pinch on fossil fuel based generators in Germany - a sign of what some say will become a widespread 'death spiral' for utilities around the world.

However, utilities can save themselves by embracing solar generation and energy storage opportunities.