Author InfoLink
Updated May 02, 2021

The application of wind-plus-storage systems and solar-plus-storage systems in the grid can be divided into three parts: the generation side, the grid side, and the end-user side, all of which are indispensable for achieving energy transitions. The developments on the generation side and the grid side depend on enterprises, regional policies, and governmental impetuses in each country. The end user side, on the other hand, are not only propelled by policies, but also where economic benefits are directly reflected. 

Despite having broad space for advancements and being a focus in many countries’ objectives, the development on the end-user side sees manifold difficulties, especially in countries with lower electricity prices, slower progresses in renewable energies, and weak governmental policies, such as Taiwan. 

To promote renewable energies on the end-user side, it is the first priority to keep end users informed of how to utilize ESS and the pros and cons coming along with it. Presently, there are two types of applications of wind-plus-storage systems and solar-plus-storage systems. The first is self-generation and sell excess power to the grid and the second is saving chartered capacity through peak shaving. Theses two types of applications can bring end users economic benefits in countries with high electricity prices, such as Germany and Japan. ESS InfoLink takes Germany as an example, analyzing how much economic benefits residential ESS can brought. 

High electricity prices 

The average electricity price in European countries has exceeded EUR 20 ct/kWh at present, with that in Germany reaching as high as EUR 31 ct/kWh. Over the past decade, German household electricity prices have surged by more than 50%, from around EUR 20 ct/kWh to EUR 31 ct/kWh. The electricity and ratio comprises actual costs of power generation (22.4%), costs of transmission (25.1%), and levy, tax, and revenue (52.5%). The reasons behind electricity price hikes are EEG-surcharge (renewables surcharge), grid charges derived from grid expansions and upgrades as renewable energies prosper, and power value increment tax. As electricity prices rise along with the growing share of renewables, the trend lays the groundwork for the development of solar-plus-storage systems in Germany.

Residential solar-plus-storage systems in Germany

Costs of small-scale solar-plus-storage systems are high, with unit cost doubled that in the generation side. The following German residential solar-plus-storage prices trends and forecast chart indicates that the current unit price of PV and storage systems is EUR 1250/kW and EUR 700/kWh, respectively. Based on the prices, ESS InfoLink hypothesizes different scenarios to analyze economic benefits solar-plus-storage systems can offer German households. 

German residential solar-plus-storage prices

Taking a regular household with average 4,000 kWh/year power consumption and 1,200 hr/year of solar power generation for instance. In scenario 1, no solar-plus-storage system is installed, in scenario 2, only 5 kWp PV systems are installed, while in scenario 3, 5 kWp PV paired with 10 kWh storage systems are installed. According to policies in Germany, households that install over 3 kWh storage systems can receive EUR 500 subsidy (EUR 100 for every additional 1 kWh, with EUR 3,200 maximum), and EUR 10 ct/kWh FIT rate. The following table showcases a comparison of electricity costs for the coming decade under the three scenarios. 

German solar-plus-storage

The cumulative electricity costs in the three scenarios fall at EUR 13,500, EUR 9,700, and EUR 11,500, respectively. Installing PV systems can save 28% on costs, while installing solar-plus-storage systems saves 14.5%, which seems to bring little benefit. This can be ascribed to two factors – high ESS equipment costs and the ratio of solar-plus-storage capacity and electricity consumption to be optimized. With the two issues resolved, solar-plus-storage systems are expected to save 50% on electricity costs for German households from 2025 onwards. 

Energy transition

The broad nature of energy transition will, to a certain extent, affects personal power consumption habits and costs. During the transition, supportive policies and subsidies are necessary, and yet temporary. Japan, for instance, has markedly cut FIT rate to around JPY 20/kWh, while some countries are reducing, or even abolishing FIT payments. This is a benign process for energy transition, allowing power consumers to realize the essentiality of developing, utilizing renewable energies and paying for electricity from renewables. Countries that lead the world in renewable energies, including Germany, Japan, and the U.S., can serve as fine role models for other nations or regions; in turn, countries lagging behind can take their policies for references. In the era of energy transition, nobody is an outsider.