• Residential Energy Storage
  • DER
  • solar PV
  • Policy and Regulation

Regional Differences Drive RESS Demand

Young Hoon Kim
Dec 09, 2021

Guidehouse Insight solar panel

Technological advancements in batteries and inverters have contributed to the growth of the residential energy storage system (RESS) market. Diverse factors have also affected regional RESS demand. More efficient solar-generated power use, the need for emergency power due to natural disasters, power market restructuring, and various business models have shaped the RESS market in different ways.

Regional Policies and Needs Drive RESS Market Growth

Germany has led the European RESS market, which has grown over the past decade as a result of various subsidies. To drive efficiency across these installations, Germany has encouraged investments in RESS plus solar deployments. German state-owned bank KfW pioneered and incentivized RESSs with solar PV solutions, scaling the RESS market significantly. However, the program ended in 2018. As the following chart shows, the German market’s dependency on subsidies has diminished over time, and the market can now grow without them. 

Cumulative Installed RESS plus Solar Deployments in Germany: 2013-2018

Cumulative Installed RESS plus Solar Systems in Germany

(Source: RWTH Aachen University)

Since 1995, Japan’s power generation segment has begun deregulating the electric power sector. The 2011 earthquake and resulting Fukushima Daiichi nuclear disaster drove RESS demand to improve household power supply resiliency. This disastrous event accelerated deregulation activities to solve the monopoly structure in the retail power market. Amendments to the Electricity Business Act in 2016 have also deregulated the Japanese retail power market. Electricity consumers including households and small businesses can select power service plans offered by any registered electric retail provider. This industry transformation can also lead to RESS adoption as a distributed energy resources (DER) asset. 

Many industry players have started to use RESSs to improve the power industry’s efficiency in line with this market transformation. For instance, ENERES, a Japan-based energy service company, announced plans to develop a virtual power plant in 2019 partnering with Autogrid, a California-based DER and AI solutions company. ENERES will provide households with RESSs at no upfront cost that will act as emergency power in the event of a power outage.

The US market leads the solar leasing business. Customers who have installed solar systems can pay monthly lease payments instead of a lump sum, reducing the upfront cost burden. In addition, many US solar leasing companies have included solar plus residential storage in their businesses. Sunrun's Brightbox is a prime example among many solar plus RESS leasing services.

Understanding Regional Differences Is the First Step in Preparing Market Entry

Regional differences across incentives and business models have driven RESS demand and innovation. Markets that have grown via subsidies can now grow without them. The solar leasing business model includes RESSs as part of its business. Manufacturers, utilities, and policymakers should consider the following recommendations: 

  • Monitor new regional policies and regulations: There are always new and emerging policies and regulations, such as the new incentive program from Hawaiian Electric with a 5-year fixed contract for Oahu, Maui, and Hawaii. About 6,000 households are expected to benefit from this program.
  • Observe new regional trends: New trends driving RESS demand (such as backup power needs) can develop rapidly. In 2019, Australian bushfires caused a sudden blackout when the local grid operator cut off power to reduce fire risks. RESSs can provide resiliency during blackouts. sonnen, a German RESS manufacturer, introduced a new blackout-ready RESS, which gained attention from the Australian market after its disastrous bushfire experiences. Stakeholders should stay ahead of new market opportunities by watching for regional market trends.