Solar Home Storage Systems Part 2: Europe, North America, and Oceania

Editor’s Note: This is the second of three articles we will be publishing on solar home storage systems. The articles will explore the challenges and opportunities that they present in different parts of the world. The first article can be found here

 

In Europe, North America, and Oceania, the average resident consumes electricity at a rate far greater than the world average. The average resident in Europe consumes more than double the amount of electricity than the average resident in the two most populated countries in the world: China and India. Although levels of power consumption are high, residents of Europe, North America and Oceania could use a high-class lithium-ion battery to run several household appliances at the same time. It is also plausible that some of these residents could operate independently of a national or regional grid.

Perhaps the most obvious drawback of an idyllic lithium-ion battery based Solar Home Storage System (SHSS) for high consumption users is how much it costs to set-up. The overall cost is the combined cost of the battery itself, the solar panels, the associated equipment and its installation. Generally, the cost of setting-up a new high-end battery based SHSS ranges from approximately US $15,000 to US $30,000.  Factors that may affect the cost include system capacity, subsidies offered by national governments, non-profit organisation involvement, discounts offered by private companies, and labour costs, which vary by case and by country.

Usually, high-end battery-based SHSS owners worldwide can expect to save at least 60% on their monthly bills if switching from buying solely from the grid. This is a significant increase in savings potential in comparison to using a SHS without a battery. Metering technology can further increase savings by improving energy efficiency in the house. For example, it can make sure that heating and cooling in homes happens at optimum times, when the building is using low amounts of power. This arrangement reduces the home’s reliance on the grid in peak times, meaning that homeowners can avoid paying for power at premium rates. Moreover, although the cost of ownership is high for these SHSS, they are proven to be economically viable in the long-term; savings are usually estimated to payback initial outlay costs between 10 to 15 years from installation.

In order for SHSS to flourish, experts believe that growth will depend upon regulatory structures evolving with the technology and market design. For instance, the Federal Energy Commission (FERC) in the U.S. recently told regional grid operators to create rules valuing the services of energy storage, effectively leveling the playing field. This usually means that the most economically viable solution wins. The regulatory change is great news for the SHSS industry in the U.S., as solar storage technology is likely to be developed further and has the potential to be implemented at a larger scale , as long as it remains economically viable for consumers to do so.

In Europe, The European Market Monitor on Energy Storage predicts that Italy will overtake Germany as Europe’s top SHSS market by 2021. Growth in Italy is subsidy-driven, and such initiatives can reduce the costs of a SHSS system by half. Similarly, SHSS in Germany are driven by subsidies, although in Germany energy storage systems are subject to double standard levies and taxes in the energy industry, which works against the favour of SHSS.

In the UK, the take-up of SHSS is driven by cost savings. In recent years, high-end battery-based SHSS owners have expected to save up to 85% on their bills. Regulatory structures are lamented as the biggest barrier to the development of the SHSS market there. Importantly, subsidies for installing all solar home systems were cut in 2015, and the money paid to solar owners for selling their electricity back to the grid (also known as a feed-in tariff) was cut by 65% in 2016.

Elsewhere in Europe, Nordic countries may see a large increase in commercial demand for energy storage. This development is largely driven by the trend of building data-centres in the same region. In addition, governments in countries such as Armenia are looking to buddy up with commercial battery storage giants to increase take-up of SHSS.

There are also great examples of government support for solar storage initiatives in Oceania, mostly driven by the Australian Renewable Energy Agency (ARENA). One example is an AUD $2.6 million project providing 33 on-grid systems across Australia. Similarly, Tasmania’s Flinders Island project has set a goal of displacing more than 60% of their diesel usage with a combination of solar storage and wind.

Market forces are very much at work in the SHSS market, as thousands of companies look to capture its huge potential. Private-sector organisations have been able to invest in, develop, and improve battery technologies, as well as driving the sales of SHSS across regions. Some even go as far as donating SHSS to many households and businesses. For instance, Tesla has launched a private sector initiative in Australia. This $23 million project is giving away Tesla Powerwall 2 batteries to power SHSS to 1,200 Adelaide households, and also to 10 businesses. The goal is to have this initiative up and running by the end of 2019.

Additionally, non-profit organisations (NPOs) and non-governmental organisations (NGOs) have a fundamental role to play in increasing the uptake of SHSS. For example, pressure groups can help to raise awareness of SHSS, research groups can investigate new behind-the-meter market opportunities, while other charities and initiatives can help to fund critical SHSS projects.

In summary, high-end batteries are fit for consumers in high-consumption regions across North America, Europe, and Oceania. Consumers can utilise SHSS to power their homes with a little help from the national grid from time to time. However, the existing literature suggests the costs of these high quality SHSS are still the main barrier to widespread adoption in homes across these regions. National governments in many countries, with Italy being the best current example, can help and have already helped to reduce this critical price-point to improve the adoption of SHSS. They may do so through subsidies and by implementing legislation supportive to both consumers and vendors in the SHSS industry. Examples such as these provide a blueprint for other nations in developed regions looking to improve the uptake of SHSS technologies.

Supply and demand issues for energy and power aren’t just themes prevalent in these broadly more developed countries and continents, either. In Africa, Latin-America, and Asia, recent research shows that electricity demand far outstrips supply. However, the expansion of an electric grid  to accommodate for this demand would take decades or might not even be possible in some areas. As such, off-grid electrification is both common and necessary. The next part of this series will cover the SHSS market in Africa, Asia, and Latin America.

 

Image courtesy of Flickr. Originally published by S&S on August 21, 2018.

Authors

Related posts

Top