The residential battery market is estimated to be valued at USD 12.11 Bn in 2024, growing at a CAGR of 18.3% over the forecast period (2024-2031). Furthermore, the growing adoption of smart home technologies is also boosting the market growth.
Market Dynamics:
Rising demand for energy storage across residential applications and growing integration of renewable energy resources are the primary drivers propelling the residential battery market growth. Residential batteries help store excess energy generated from solar panels during the day and use it later for applications like lighting and running appliances. This reduces households' dependence on grid for electricity supply. Besides, favorable government policies in various countries that offer subsidies for battery storage systems are encouraging more homeowners to adopt residential battery solutions. For instance, rebates provided by state governments in the U.S. on battery storage systems paired with rooftop solar installations are driving their increased adoption. Additionally, growing consumer awareness about the benefits of reducing carbon footprint is also contributing to the market expansion.
Market Drivers
Increasing Adoption of Renewable Energy Sources at Residential Level
With growing concerns over climate change and environmental pollution, more homeowners are adopting renewable energy sources like solar panels for their power needs. However, the intermittent nature of these renewable sources creates the need for battery storage to store excess solar energy that can be utilized when the sun is not shining. Residential battery storage helps homeowners effectively utilize the solar energy produced and reduce their dependency on grid electricity. The increased solar panel installations at residential properties is a major driver for the growth of the residential battery market.
Cost Reduction of Battery Storage Technology
The cost of lithium-ion battery technology, which is commonly used in residential battery systems, has reduced significantly over the past years due to advancements in manufacturing processes and economies of scale. For example, the average lithium-ion battery pack price declined by 87% between 2010 and 2019 according to Bloomberg New Energy Finance. The declining battery prices have made residential storage more affordable and economical for homeowners looking to store solar power or reduce utility bills. This cost reduction is attracting more customers to the residential battery market and expected to further propel the market growth.
Market Restraints
High Upfront Investment Costs
While battery prices are declining, residential battery systems still require a significant upfront capital cost that is a barrier for many homeowners. A typical residential battery system costs between $10,000 and $15,000 based on the storage capacity which is still considered expensive by some homeowners. The payback period through utility bill savings can take 5-10 years which deters some potential customers. This high initial cost is a major challenge restraining faster growth of the residential battery market.
Lack of Standardization
The residential battery market currently lacks standardized products, technologies, and connectivity options. Different battery vendors offer various incompatible products with varying support for renewable energy integration and home energy management. This lack of interoperability confuses consumers and installers. It also limits Second-Life applications where used batteries can be reused in other non-residential applications. The absence of industry standards poses restraints on the seamless adoption of residential batteries.
Market Opportunities
Integration with Electric Vehicles
As electric vehicles see higher adoption, there is a growing opportunity to leverage the large battery packs in EVs to also power homes. With smart bidirectional charging and integration, EVs can act as mobile batteries to homes. This will allow homeowners to store electricity from the grid or solar panels in their EV batteries and use that stored power back home when needed. Major automakers are already exploring this opportunity presenting a huge growth avenue for the residential battery market.
Combination with Solar+Storage Offerings
Bundling energy storage solutions with solar panel installations provides an attractive value proposition to homeowners. It allows the seamless integration of solar power generation with storage allowing maximum self-consumption of solar energy. Leading solar installers like Tesla, Sunrun, etc. offer such integrated solar+storage offerings, making financing and installation hassle-free. This bundling removes barriers and simplifies the deployment of residential batteries, thereby opening a substantial market opportunity.
*Link: https://www.coherentmarketinsights.com/market-insight/residential-battery-market-5168
Key Developments:
- In October 2022, as part of the President's Bipartisan Infrastructure Law, the U.S. Department of Energy (DOE) announced funding for projects aimed at expanding domestic manufacturing of batteries, materials, and components, with a total allocation of USD 2.8 billion across 12 states
- In October 2022, the Central Electrochemical Research Institute (CECRI) commenced the construction of a lithium-ion battery manufacturing plant in Chennai, India, with a capacity of 1,000 batteries per day, slated for completion by 2024
- In September 2022, BYD Company joined forces with Victron Energy to assess the compatibility of BYD Premium LVL / LVS with Victron inverters/chargers, achieving successful results
- In August 2022, Huawei Digital Power and Pinggao Group Co., Ltd inked a Memorandum of Understanding (MoU) to bolster their collaboration in supplying innovative and reliable Huawei string inverters for PV plants in Balkan countries such as Greece, Bulgaria, and North Macedonia
- In May 2022, the Solar Energy Development Centre (SEDC) announced tax incentives in Washington DC and Connecticut for installing residential and commercial battery energy storage systems, including maintenance for 20 years
Key Market Players
Key companies covered as a part of this study include Amara Raja Batteries Ltd, BYD Co. Ltd, Delta Electronics Ltd, Duracell Inc., Energizer Holding Inc., FIMER SpA, LG Energy Solution Ltd, Luminous Power Technologies Pvt. Ltd, NEC Corporation, Panasonic Corporation, Samsung SDI Co. Ltd, Siemens AG, and Tesla Inc.
