German Jamison: Study: Italy Could Become Europe’s Top Storage Market

Italy is poised to take over from Germany as Europe’s top energy storage market after the turn of the decade, a new report finds.

The European Market Monitor on Energy Storage (EMMES), compiled by Delta Energy & Environment (Delta-ee) on behalf of the European Association for Storage of Energy (EASE), forecasts Italian behind-the-meter installations could soar after 2021.

The market will be driven by local rather than national subsidies, coupled with a strong solar market, said report author Valts Grintals, product manager for the energy storage research service at Delta-ee.

Unlike previous reports, which have tended of focus on single European energy storage markets, the EMMES has a pan-European scope, covering Germany, the United Kingdom, Italy, France, Iberia, the Nordics, Central and Eastern Europe, and the rest of the continent.

It shows, for example, that the Nordic countries could see strong demand for commercial and industrial energy storage systems, coupled to the growth of data centers in the region. The research also allows for comparisons between subsidy- and non-subsidy-driven markets.

Germany and Italy are good examples of the former, whereas the U.K. has managed to scale purely on the back of decreasing costs for energy storage, which happened as solar feed-in tariffs are being phased out.

In the U.K., behind-the-meter storage still does not really make much economic sense. But the market has started to take off regardless, in part thanks to the availability of off-the-shelf solar-plus-storage offerings, such as that launched by Ikea in August.

Ikea estimates the systems will save homeowners up to £560 ($741) per year, or about 67 percent more than the savings from solar panels alone, allowing for a 12-year payback for a typical customer, or a 6 percent annual return on investment.

The growth in behind-the-meter storage in Britain reflects a predicted decline in the importance of front-of-meter installations across Europe.

The finding reaffirms a trend revealed in previous studies, such as 2016 research by Bloomberg New Energy finance, which forecasted worldwide behind-the-meter storage would overtake utility-scale installations between 2020 and 2021.

A more surprising trend highlighted in the EMMES is the emergence of energy storage markets that have not experienced substantial subsidy-based solar buildouts.

Germany, Italy and the U.K. were Europe’s top three solar markets (and fourth, fifth and sixth worldwide) by installed capacity at the end of 2016, according to SolarPower Europe’s 2017-2021 Global Market Outlook.

Tying batteries to rooftop solar is a big driving force for energy storage adoption in these countries. But in future Europe will see the emergence of important amounts of energy storage capacity in countries such as Ireland and Norway. Here, somewhat paradoxically, Delta-ee believes energy storage adoption will be helped by the spread of electric vehicles.

Even though electric vehicles can potentially work as battery storage units on their own, until concerns over vehicle-to-grid technology have been worked out Delta-ee predicts homeowners may want to buy additional batteries to have more flexibility in vehicle charging.

Behind-the-meter storage and electric vehicle charging are already being considered together, said Grintals. "Storage players in the market are offering chargers in addition to the battery, so it’s part of the package," he said. "They would both work within the same household.”

Overall, the story that emerges is one of a transition from solar-and-subsidy-linked energy storage growth, to markets that are less dependent on government support and where factors such as electric vehicle ownership are driving battery adoption.

This second wave of European energy storage markets should begin to emerge from 2021 onwards, said Grintals. Before then, “there’s a few regulatory issues that need to be sorted out,” he said.

EASE is aiming to track developments by publishing the EMMES twice a year.

“We believe that EMMES will become an important tool for businesses and investors interested in the energy storage sector, helping them to understand the market from a European perspective,” said Patrick Clerens, EASE secretary general, in a press note.

“The EMMES provides a robust evidence base to inform the energy storage debate on a European and member state level, and to help educate important stakeholders about storage and its important role in the transformation of the energy system," he said.