The Development of Solar Energy

The energy shortage in Europe brings the clean energy industry development.

Following the severe impacts of the COVID-19 health emergency on Europe in 2020, with significant lockdown measures enforced in many counties, the following year, 2021, the continent faced a new set of crises.

With the global economy regaining traction after the COVID-19 induced a slowdown, also the demand for energy grew and leading to a significant rise in prices, including electricity. This increase was reflected in households as well.

In the European Economic Area, average residential electricity prices surpassed for the first time 0.19 EUR/kWh in 2021 and continued growth throughout the year. The Russian invasion of Ukraine in February 2022 has led to a continent-wide energy crisis and, as the war continues, accelerated the electricity price trend to new heights in 2022.

Residential solar and storage markets in Europe

2020 saw residential battery energy storage systems (R-BESS) truly emerge on the energy map in Europe, with two major milestones achieved: it was the first year when the annual market reached the GWh scale; and also, for the first time, more than 100,000 battery units were installed in one single year. In 2021, the home battery market entered a new phase. With more than 2 GWh installed over the course of the year, the market basically doubled compared to the previous year – to be precise, it grew 107%. Such a steep level of growth hadn't been registered since 2014; but back then, the market was significantly smaller and had increased to just 64 MWh compared to 30 MWh the year before. To put this into perspective, the size of the R-BESS market in 2021 was 35 times larger than in 2014. That year, only about 9,000 batteries were installed, while in 2021 about 260,000 units have been added.

Remarkably, the growth in the market could have been even larger, if it were not for a severe shortage of batteries limiting the possibility to meet customer demand and causing, months-long, lengthy delays to install R-BESS products. This issue was particularly felt in less developed markets, where the sudden spike in demand caught distributors by surprise as they struggled to find products for their clients. Even mature R-BESS markets have been suffering from a lack of batteries, which continue to be the missing product link for solar system technology after modules shortages have been solved and inverter shortages are being addressed.  Over the last years, the continent relied on a handful of R-BESS pioneers, primarily Europe’s largest solar market Germany, which is also the country with the largest R-BESS installed residential battery storage volume by far. In Germany, home storage started first gaining traction after it switched from a full Feed-in Tariff (FIT) scheme to a model supporting self consumption, in combination with a premium for excess power, and backed by an attractive R-BESS subsidy programme of its development bank KfW that was slowly phased out. Later, home battery markets started to emerge as well in a few other countries – Italy, the United Kingdom, and Austria – while hardly any capacity was installed in the rest of Europe. Today, R-BESS technology applications can be seen in a quickly growing number of European countries, and, as volatile energy prices reaching unknown heights are severely affecting households across the whole continent, the home storage business case is becoming appealing in many different European regions. For the second year in a row, the home storage growth path in Europe turned out to be significantly higher than what we had previously forecasted. In last year’s edition of this report, we assumed the market would grow 28% to 1.4 GWh. The positive evolution of the market conditions exceeded even our most optimistic expectations: our High Scenario anticipated 1.8 GWh of annually installed capacity; actual installations were 27% higher. The exceptional increase in the annual market is well reflected in the growth of the total operating home storage capacity. The residential BESS fleet jumped from just over 3.1 GWh in 2020 to 5.4 GWh in 2021, with a 74% year-on-year increase. Unlike last year, the annual market growth rate is higher than the growth rate in cumulative capacity, a sign that the total operating fleet has reached substantial volumes and the technology is entering a new deployment phase. Total R-BESS capacity has grown 13 times its size, compared to just five years ago.

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