Suddenly, from an emerging market, you might be fooled into thinking that domestic battery storage had gone ‘mainstream’ given the number of companies now selling it.
Googling ‘battery storage uk’ returns 25 million results. The top sponsored ad promises you a system from £2,995 installed – which is bundled for free if you buy solar from them. To be fair, while this installer isn’t making any marketing claims that such a system will save you money, there is also no reality check about how much useful power you’ll get from it. Although it’s unclear from the web site, you’ll probably get a 2kWh battery with 80% depth of discharge. Clearly, if you’re expecting to run your washing machine when you get home in the evening by using the solar power you generated while you were at work, you’re going to be disappointed.
There is no doubt that using batteries within our homes and businesses has the potential to transform our current energy model. Effective energy storage will smooth the peaks and troughs of supply and demand, increase the value of power delivered by intermittent renewables and reduce the need for expensive peak generation.
So much for the benefits for our energy infrastructure. What about the benefits for you and me?
There are 900,000 solar homes in the UK. Recall the dramatic PV installation peaks that accompanied every feed-in tariff degression deadline and it’s easy to reach the conclusion that the uptake of PV was (and is) financially motivated.
Currently, the price of domestic battery storage makes it difficult to make a sound financial case for its purchase. My back-of-an-envelope calculation suggests I might get my money back in 18 years. With most battery warranties limited to 10 years at the most, and with multiple alternative options to store my own excess solar power (including a heat pump connected to a ‘sling’ thermal store hot water tank, some slabs of concrete with underfloor heating, and an electric vehicle), I, like many, would have to find some other reason to tempt me into a purchase. The other issue in my mind is that solar output on those short, overcast winter days is often pitiful. On days when you most need it, your batteries will struggle to get a full charge. Apart from the capital outlay, the other question for many people will be: “exactly where will this huge box fit in my house?”
On a less pragmatic note, technology’s early adopters (sometimes referred to as the ‘rocket fuel’ for products) want the latest gadget before the mass market takes off. They are less motivated by financial returns, but are deeply knowledgeable about the technology they consume and can become powerful brand advocates.
Some of those early adopters of battery storage may well be the people who were first to adopt PV, and have some money to spend thanks to the 43.3 pence per unit FIT they’ve been banking since 2011. These people may also be owners of out-of-warranty inverters that they need to replace, which could trigger a purchase of a battery storage system. Some storage systems offer backup power in case of a power cut; a possible benefit for those with unreliable grid connections.
So, are the odds really stacked against ‘quick wins’ for domestic battery storage vendors?
There’s no doubt that the market will take off, but it’s still early days. The market isn’t big enough to support all the vendors currently jostling for position – expect a shakeout. The manufacturers left standing, with viable businesses, will be those able to tick the majority of these boxes, and:
- Clearly differentiate their solution to avoid commoditisation
- Listen to their early adopters
- Offer a home energy management solution – not just a battery
- Support funded models for ownership, such as rental
- Enable owners to store electricity from sources other than their solar PV – for example, by partnering with utilities that offer time-of-use pricing, or energy sharing within a community. Challenger utilities with their own battery proposition may have an unfair advantage here.
- Facilitate participation in consumer demand response programmes and other schemes that generate income for the owner
- Invest in educating their key audiences – installers, distributors and end users (the technical side of battery storage is more complicated than many think)
- Win trust and share of mind by making it easy for installers to sell their battery storage products to PV customers
- Set realistic expectations with customers
- Are confident about their value proposition, and able to translate it into clear messaging that will resonate with consumers
- Invest in growing the market as well as winning their own slice of market share
- Build their brands through consistent, creative and honest marketing
On that last point, research we conducted last year with some of our trade media contacts revealed a limited awareness of the leading brands targeting the domestic battery storage market.
There is clearly an opportunity to demonstrate technology and brand leadership within this sector. Only then will the humble battery cross the technology chasm and reach the mainstream market.