China Energy Storage Network: According to a survey by research institutions, by the end of 2020, nearly 70 percent of residential solar power facilities in Germany are supporting the deployment of battery storage systems. As of today, the German residential energy storage market has a cumulative deployment capacity of about 2.3 GWh.
According to a report published recently by Energie Consulting, a consulting firm commissioned by the German Energy Storage Association (BVES), more than 300,000 residential battery storage systems have been installed by German households, with an average capacity of about 8.5kWh per residential storage system deployed.
The survey by Energie Consulting found that the German residential energy storage market will have a turnover of about €660 million in 2019, and grow by 60% to €1.1 billion by 2020. This significant growth is partly due to increased interest in energy resilience, self-sufficiency and security, and independence of electricity supply.
Jorg Blaurock, author of the survey and an analyst at Energie Consulting, said the German government has further boosted the solar+storage market by removing restrictions on the cap on solar power capacity. Germany's residential battery storage market revenue is estimated to reach 1.3 billion euros in 2021.
The continued expansion of the solar power market and the growing demand for electric vehicles are expected to create a "strong growth path" for the residential battery storage sector in 2021, with the cumulative number of residential battery storage systems deployed in Germany expected to reach more than 385,000 by 2021. Germany will again benefit the residential energy storage industry by waiving the EEG surcharge at the end of this year on large residential solar+storage installations with an installed capacity of 30 W or more to facilitate the energy transition.
Residential thermal energy storage systems currently account for a larger share of the German energy storage market, with market revenues more than double those of the residential battery storage market in 2019 (€1.7 billion), 2020 (€2.4 billion) and 2021 (€2.6 billion), respectively. Germany installed about 120,000 heat pumps in 2020 and is expected to install 168,000 in 2021. One of the main drivers is the availability of subsidies for the adoption of heat pumps as an alternative to oil heating, and the introduction of a carbon tax this year is an additional driver.
Commercial and industrial sector deployments are impacted by the epidemic in 2020, while grid-scale deployments still face regulatory hurdles
According to survey data from Energie Consulting, residential energy storage systems account for about half of the total German energy storage market revenues in 2020. Of the total energy storage market revenue of approximately €7.1 billion, residential energy storage systems (including thermal and battery storage systems) generate revenues of approximately €3.5 billion, while grid-scale energy storage systems generate revenues of €2.1 billion, commercial and industrial (C&I) energy storage systems generate revenues of approximately €1.3 billion, and related R&D projects generate revenues of €225 million.
Commercial and industrial (C&I) energy storage deployments suffered more severely due to the impact of the coronavirus outbreak that occurred, with a large number of orders and projects being postponed or cancelled, resulting in a decline in sales of approximately 20% in 2020. Although sales are not expected to rebound to pre-epidemic levels in 2021, they rebounded from late 2020 due to the implementation of a carbon tax and the growth of electric vehicles.
Commercial and industrial (C&I) energy storage systems can be used in a "variety of ways," including for peaking and as uninterruptible power sources for industry sectors such as manufacturing and data centers, as well as emergency backup power. There is also interest in energy storage technologies to optimize industrial processes and, of course, in electric vehicle charging infrastructure.
A survey by Energie Consulting suggests that while revenues in the German commercial and industrial (C&I) energy storage sector fall from €1.5 billion in 2019 to €1.2 billion in 2020, they could rebound to about €1.35 billion this year.
Meanwhile, turnover from grid-scale battery energy storage systems fell sharply from €200 million in 2019 to about €65 million in 2020, and revenues are expected to likely be about €30 million in 2021. However, revenues from pumped storage facilities continue to grow strongly, remaining at a level of approximately €2 billion per year.
The deployment of grid-scale battery storage systems has been somewhat plagued by declining revenue levels from the provision of backup battery services to the grid: over the past few years, the deployment of an increasing number of battery storage systems has provided backup power for grid balancing. The grid has maintained stable operations, but depressed service prices, and this is expected to continue.
Last year, Germany launched its first so-called "innovation tender" to promote the deployment of renewable energy systems, which can boost the energy market. Renewable energy systems can be intelligently integrated with the grid, and some of these tenders include energy storage systems that have not yet been deployed and will begin construction this year. Germany is also expected to significantly increase the deployment of large "Gridbooster" projects, which will add large energy storage systems to the grid as virtual power lines, but the impact on energy storage system sales will not be seen until 2022.
A survey of industry participants found that regulatory barriers remain the biggest market barrier to energy storage deployment in Germany. More than half (51%) of respondents indicated that the regulatory framework is the main barrier, far outweighing any other factors, including stability, market conditions and investment security (28%), raw material prices and production costs (14%), and demand development (only 8%).
This means that despite user demand, energy storage deployment continues to face challenges due to a lack of clear regulatory definitions for energy storage systems, lengthy approval processes, grid connection conditions lacking adequate metering and billing concepts, and a lack of regulatory transparency.
Looking ahead, while the introduction of a carbon tax has been welcomed, many believe it is priced too low and that energy storage deployment remains constrained from generating multiple revenues from the multiple applications offered. Respondents indicated that regulators still have some way to go in understanding the technical possibilities.
Nonetheless, the German energy storage industry as a whole continues to grow in 2020, although there are significant differences between segments. Energie Consulting expects sales in all segments to grow in 2021 due to economic demand and growth in the energy sector's sustainability and decarbonization goals as the cost of energy storage technologies declines.
Last year, Valeska Gottke, senior specialist for communications and markets at the German Energy Storage Association, said that German energy regulations are built around three guiding "pillars" of the energy system: production, consumption and transportation. should have its own category. The lack of a clear definition means that battery storage systems are at a disadvantage in terms of economic operation because they must pay twice for the electricity they receive from the grid and the electricity they export to it.
Regulatory issues in the energy storage market are not limited to Germany. For example, analyst Wood Mackenzie highlighted in a survey last year that while Europe is a global leader in the deployment of renewable energy, the important role of energy storage systems has not been recognized, which does not match the continent's ambition to transition to clean energy. systems help keep grid operations stable, especially as intermittent generation of renewable energy (such as wind and solar) continues to increase. Although Europe has an even higher percentage of renewable generation than the United States or China, its global share of the energy storage market has declined over the past few years, a trend that is continuing.
A survey by Energie Consulting found that, overall, the German energy storage industry will grow despite the new coronavirus crisis, with market revenues of €5-5.6 billion in 2018, €5.5-6.3 billion in 2019, . This is expected to grow to €7.6 billion in 2021. As shown in the figure.
Hydrogen enters the market segment, but is still in the early stages of development
The report notes that the use of hydrogen in Germany has grown in all market segments, but the business case for hydrogen is still small. While this number is expected to increase significantly in the coming years, large hydrogen storage projects still require significant subsidies.
The entry of hydrogen into the utility sector is imminent, as existing natural gas-fired power generation facilities will be converted to hydrogen-capable facilities and hydrogen will increase the flexibility of the energy system. The demand for hydrogen will also rise sharply from 2022 onwards as Germany's hydrogen strategy aims to achieve the production of 5GW of hydrogen energy by 2030 and will use large amounts of hydrogen in industry.
The German hydrogen market in the commercial and industrial sector (C&I) is expected to reach revenues of €130 million in 2021, a slight increase compared to €120 million in 2019 and €110 million in 2020. And it is expected to grow even more in the coming years.
The report notes that German decarbonization advocates have long talked about the need for "sectoral coupling," i.e., combining electricity use in the energy sector with heating and transportation applications, and that the use of hydrogen shows that this concept is entering the end-user market. Nevertheless, for the most part, the use of hydrogen has remained mainly in the R&D area or in demonstration projects.
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