Residential solar-plus-storage systems are reaching grid parity in Europe, meaning it will soon be cheaper for households to generate their own electricity than to buy their power from the grid, according to a new report from analyst Wood Mackenzie.
“The economics of storage have been challenging in the past, however we are in the midst of an economic tipping point,” says senior research analyst Rory McCarthy. “The major European markets of Germany, Italy and Spain are moving towards grid parity for solar-plus-storage in the residential space — when the costs per kWh of power from the grid meet the cost per kWh of the solar-plus-storage system.”
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WoodMac expects a fivefold growth in residential solar plus storage systems across Europe by 2024, with annual installations of 500MW/1.2GWh by that date.
Germany is currently leading the world in residential storage, with other European countries catching up fast, “particularly where market structures, prevailing power prices and disappearing feed-in tariffs create a favourable early-stage deployment landscape”, says McCarthy.
“We expect this trend to diffuse through Europe — moving the proposition from an emotive purchase to a sound investment decision.”
The rapidly decreasing cost of storage systems, and increasingly expensive electricity bills, are the primary drivers for this economic tipping point, the report says.
Nevertheless, financial innovations are still needed due to the high upfront costs of residential solar-plus-storage systems.
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“There is a hefty premium for adding storage to a solar installation — 93% in our Germany 2019 base case. This makes the customer proposition more challenging. More innovative business models are needed to absorb the upfront cost, allowing residential storage to become a common European residential technology for consumers who want to be a part of the energy transition,” says McCarthy.
“Electricity price increases, along with consumers’ desire to live in a more environmentally sustainable household, may be enough to drive the residential business case across the line,” says McCarthy.
The report adds that the UK and France will not see such grid parity for solar-plus-storage before 2024, although WoodMac does expect deployments in those two countries to increase regardless. Spain, it says, is a market to watch, with “new government thinking… [prompting] a resurgence of residential solar, paving the way for solar-plus-storage in one of the sunniest regions in Europe.”