Over the past two to three years, overseas customers have increasingly prioritized the economics and stability of electricity consumption, thanks to favorable policies in the energy storage industry and higher energy prices. Consequently, the household energy storage markets have experienced rapid growth, and overseas markets have emerged as a primary driving force in the industry. The year 2022 marked significant growth in the industry, and as of 2023, there is still ample room for the development of household energy storage. The question arises: what lies ahead for this sector in 2024?
According to TrendForce statistics, the projected global installed capacity increment in 2024 is as follows: large-sized energy storage takes the lead with 53GW/130GWh, followed by household energy storage at 10GW/20GWh. The commercial and industrial energy storage sector contributes less to the increment with 7GW/18GWh.
Europe: A trend of destocking is underway in the household energy storage sector.
The robust economics associated with it ensure the continual growth of the market.
The promotion of household energy storage is entering its second phase, driven by its compelling economic advantages that promise long-term development. The easing supply of gas in Europe has led to a significant drop in prices for both local gas and electricity compared to the previous year. As of December 2023, the local electricity price in Germany has plummeted to less than EUR 0.1 per kilowatt-hour.
As the energy crisis in Europe eases, there's a surplus of household energy storage products. Customs statistics reveal a general decline in the volume of inverters exported from China to the Netherlands from January to October 2023. However, breaking the trend, November witnesses a positive month-on-month growth rate for the first time since August. The 2022 Russia-Ukraine geopolitical conflict, which triggered the energy crisis in Europe, prompted a heightened awareness of green energy products like household PV and energy storage systems. Furthermore, with the decreasing costs of energy storage and solar systems coupled with lower interest rates, there's substantial potential for the economic viability of household energy storage and solar products to further improve. Calculations indicate an impressive Internal Rate of Return (IRR) of 12.7%, even with an electricity price of 0.11 euros per kilowatt-hour and energy storage and solar investment costs reaching 0.35 euros/Wh, with a payback period of about 6 years. Should the electricity price remain at normal levels, the ongoing decline in investment costs for energy storage and solar systems is expected to continuously stimulate local demand for green energy products, particularly household energy storage solutions.
South Africa: The country is on the brink of a significant boost in installed capacity, fueled by the escalating electricity shortage crisis that is set to drive household energy storage development.
As the demand for electricity continues to outstrip supply, the expansion of renewable energy installations is anticipated to persist. The 2021 annual report from Eskom, South Africa's main power operator, reveals a power landscape where 73.8% relies on coal-fired structures, and a staggering 90% of the installed capacity is under Eskom's monopoly. Challenges faced by the company, including aging coal power equipment, insufficient maintenance, overuse, and high debt, have normalized large-scale power limitations in South Africa. According to Deye Technology's announcement, 2022 witnessed power outages of varying degrees for 205 days throughout the year.
In response to this energy crisis, the South African government has initiated an ambitious renewable energy development plan. The goal is to achieve installed capacities of 17.7GW for wind power, 8.3GW for photovoltaic, and 5GW for energy storage. By 2030, these sources are expected to contribute 22.8%, 10.7%, and 6.4%, respectively, to the overall installed capacity, marking a significant shift towards a more sustainable and diversified energy landscape.
South Africa has been rolling out a series of progressive policies supporting renewable energy, resulting in a substantial year-on-year surge in domestic inverter exports. The government's commitment to fostering distributed power generation facilities was evident in the introduction of policies in July 2022 and March 2023. Additionally, numerous tax subsidies for photovoltaic energy storage were issued.
The export numbers tell a compelling story, with China sending 1.781 million inverters to South Africa between January and November 2023, showcasing an impressive year-on-year growth of 72.8%. Notably, the export volume witnessed a remarkable boost since March when the South African government expanded its renewable energy tax incentive policy. Anticipating continued growth, South Africa's installations are poised for a significant uptick. The country grapples with an ongoing power supply crisis, prompting the government to not only address immediate challenges but also implement favorable policies to stimulate long-term growth in new energy installations.
South Africa: Frequent power shortages are forcing the manufacturing industry to shut down.
The pressing need for energy storage systems arises from these recurrent outages, and consequently, the demand for such systems in the South African energy storage market is anticipated to rise.
In June 2023, the export numbers of inverters to Vietnam, Thailand, and Malaysia experienced significant YoY growth—533,000, 101,000, and 233,000 units respectively, marking increases of 945.3%, 46.3%, and 75.2%. This surge indicates a substantial growth in the energy storage market demand in Southeast Asia since the beginning of summer. The primary reason behind this surge is the increased vulnerability and instability of the local power grids during extreme weather events and the rise in renewable energy capacity. For instance, in Vietnam, the El Niño phenomenon has led to a sharp decline in hydropower generation, which constitutes 43% of the installed power in northern Vietnam.
Simultaneously, high power generation loads have resulted in frequent accidents in coal power generation, severely impacting local factory production, manufacturing, and the daily lives of residents. The urgency to safeguard power supply has escalated the need for energy storage system construction.
In southern Vietnam, Thailand, Malaysia, and other neighboring countries, the proportion of new energy installed capacity continues to rise, with energy storage systems playing a crucial role in utilizing renewable energy. Consequently, there is an expected increase in the installation of energy storage systems. Since the latter half of 2023, the household storage market has witnessed inventory build-up, leading to a slowdown in demand and sparking diverse market expectations for 2024. As the energy transition gains momentum, the evolution of the household storage market in 2024 raises questions about new opportunities in specific country markets and potential changes in market share. The unfolding developments in 2024 will be eagerly awaited.