The global market for grid-connected residential photovoltaic (PV) solar installations coupled with energy storage is predicted to grow tenfold to reach more than 900 megawatts (MW) in 2018, up from just 90 MW in 2014, according to new analysis from IHS Technology.
This expanding opportunity for PV companies and battery manufacturers largely will be driven by the increasing attractiveness of PV for self-consumption, as well as by subsidies and increasing interest from home owners in becoming more independent of the electricity grid.
These findings can be found in the report entitled, "Energy Storage in PV Report - 2014," from the Power & Energy service of IHS.
A huge amount of anticipation has surrounded the adoption of energy storage in small PV systems in recent years. However, deployment mostly has failed to live up to the hype. A number of barriers have prevented the market from taking off in line with expectations.
One of the major factors restricting growth has been the performance of the overall PV market.
"The outlook for PV in many major residential solar markets where energy storage is likely to be adopted has weakened considerably during the last year, largely because of reduced government incentives," said Sam Wilkinson, research manager for energy storage at IHS. "In particular, the IHS forecast from 2014 to 2017 for total residential installations in Italy, Germany and the United Kingdom-three large PV markets-has been reduced by nearly 50 percent since April 2013."
The high price of both batteries and the power-conversion devices needed to integrate them into PV systems has also remained a major inhibiting factor for the market. Although the average price of lithium-ion (Li-ion) batteries, which account for the majority of residential PV energy storage installations, is estimated to have fallen by 20 percent in 2014, price continues to be a major concern for the industry. The result is that profitable business models for PV energy storage are complex and only exist in a small number of niches, where subsidies and strong interest from end users have enabled the market to grow.
"In situations where a financial justification for adding energy storage to a residential PV system does exist, the business case is highly dependent on several variables, such as the levels of self-consumption that can actually be achieved, and the development of retail electricity rates over the next 20 years," Wilkinson added. "The fact that these variables are impossible to ensure and so difficult to predict makes the investment relatively insecure and has further hampered end-user appetite for residential PV energy storage."
The overall picture, however, will improve next year, as huge progress in overcoming many of these barriers is expected in 2015. IHS predicts that average Li-ion prices will fall by a further 15 percent, and the residential PV market will return to growth for the first time in three years. These factors will be critical to spurring a 90 percent expansion in residential PV energy storage in 2015.