Home owners dominate energy storage market in Germany: Study

The battery storage market in Germany is dominated by the residential or ‘household’ segment and its far greater than the commercial-industrial or large scale segments. This is the finding of a recent report named ‘The development of battery storage systems in Germany – A market review (status 2022).’

The report is led by the Institute for Power Electronics and Electrical Drives (ISEA) and other organizations related with RWTH Aachen University, Germany. The researchers find that 1,357 MWh of new storage capacity was installed in 2021 and the Home Storage Systems (HSS) make 93% of it. The rest 7% constitute industrial and large scale storage segments.  The results are certainly an anomaly, when one considers the way the storage market is evolving now, with large batteries increasingly being seen as a solution to balance a high share of renewables in the grid.

The report has defined the Home Storage Systems as those that come under 30kWh.  As per this definition, Germany has about 430,000 installations by the end 2021. Of this, about 145,000 were installed last year only. This data also matches with the research done by Energie Consulting. The report does not specify if a proportion of these installations are off grid or not.

The industrial and large scale storage installations were no match to HSS. As per the study, only 27MW/57MWh of 30kWh-1MWh industrial storage systems (ISS) installed in 2021. The performance of 1MWh-plus large-scale storage (LSS) is found to be grimmer. New LSS installations were 36MW/32MWh.

The report says that HSS installations in Germany have been growing since 2013. But its growth rate is lesser than that of industrial storage.

The most drastic decline is witnessed in large scale storage. It had reached its peak in 2018 with 288MWh installations but dropped off sharply in 2021, the new large scale storage installations were about a tenth only. The size of installations also fell drastically from 11.5 MWh to just 2.9 MWh.

The researchers found some notable reasons behind the decline in large scale storage installations in Germany. They say that a saturation of the frequency containment reserve market (FCR) is key impediment; large scale storage systems were mostly built in the period of 2016 – 2019. Then double charging for storage assets – both drawing and dispatching power with the grid system – also hampered the segment’s growth. BVES too found in its survey that regulatory issues burdened storage asset operators in Germany.

The study says that overwhelming numbers of new residential and industrial installations in 2021 in Germany were of lithium-ion. All large scale installations in 2021 were of lithium ion.

The report says that the net result of all the discussed barriers is that at the end of 2021, 4,406MWh energy storage systems were installed in Germany. Home storage systems account for 79%, large scale storage is 17% and industrial storage systems is remaining 4%.

The report also holds that new opportunities for grid scale systems are opening up in the storage market, coupled with renewables.