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1、 Scaling the Residential Energy Storage Market November,2023 Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works
2、without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.Contents Section 1.Executive summary 1 Section 2.Why build residential batteries?3 Section 3.History and background 6 3.1.Mark
3、et overview 6 3.2.Drivers 7 3.3.Battery chemistry 10 Section 4.Residential energy storage products 12 4.1.Overview of products 12 4.2.Consumer preferences 13 Section 5.Competitive landscape 18 5.1.Company overview 18 5.2.Key trends 18 Section 6.Case studies 21 6.1.Veneto,Italy homeowner seeking bill
4、 savings 21 6.2.Landford,UK solar self-supply enthusiast 22 6.3.Challenges and takeaways 24 Section 7.Rewarding power system flexibility services 25 7.1.How residential batteries can provide flexibility 25 7.2.The value of providing flexibility for homeowners 30 About us 36 Scaling the Residential E
5、nergy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on ter
6、ms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.1 Section 1.Executive summary The residential battery storage market is rapidly growing,and many governments subsidize consumer adoption of batteries to accelerate the smooth integration of large amounts of solar
7、 into power grids.However,there are several questions remaining about choice of products,the structure of the industry which will deliver the storage capacity,and the policies and business models which will allow residential battery owners to capture part of the value of the grid flexibility they pr
8、ovide.This report examines the state of the industry at the end of 2023.Battery storage is an important enabler of the energy transition,and residential batteries are a major part of that(Figure 1).Already in Germany and Italy,over 70%of new home solar systems have batteries attached,to shift the us
9、e of daytime solar power generated to the evening(Figure 2).Encouraging customer uptake will also help smoothen major fluctuations in electricity demand between day and night,as well as support local grids that are becoming congested.Customers have different,but often overlapping,concerns about prod
10、uct selection,depending on whether they are primarily driven by resilience concerns,a desire to increase solar self-consumption,or to reduce their bills.Across the board,they are mostly concerned with ensuring that the battery capacity is appropriate and having the ability to accurately track how th
11、e system operates.Installers typically have different concerns.For installers,reputation and continued recommendations are crucial,making factors like safety a critical priority.The average consumer does not know how to assess other important features such as battery safety and quality,and relies he
12、avily on the installer for guidance.Products on the market are now lithium iron phosphate(LFP)batteries,which are safer as well as less expensive than the previously dominant nickel manganese cobalt(NMC)batteries.It is becoming more important for installers and residential storage providers to offer
13、 targeted products in each market.Figure 1:BNEF cumulative residential energy storage forecast Figure 2:Residential battery to solar attachment rates in 2023,selected markets Source:BloombergNEF.Note:Based on BNEFs 2H 2023 Energy Storage Market Outlook(web|terminal).Source:BloombergNEF,SolarPower Eu
14、rope,LBL,Otovo,Sunwiz.Note:Europe=EU average including Italy,Germany.0204060802024202620282030GWOthersJapanAustraliaItalyUnited StatesGermany0%20%40%60%80%100%USAustraliaEuropeanaverageItalyGermany%attachment rate93GW/196GWh Cumulative residential energy storage capacity in 2030 78%New ho
15、me solar systems that have batteries attached in Germany 6.2x Cumulative residential energy storage market size in 2030 Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,p
16、ublicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.2 The value chain is evolving,as residential energy storage provide
17、rs that integrate hardware components and software into a final product for the customer face fierce competition.These are increasingly focusing on their competitive advantages in downstream areas of the value chain like aggregation and energy trading,while partnering with established component manu
18、facturers that can make components at scale and at reasonable cost,but cannot offer downstream services as efficiently in new markets.Challenges to further uptake of batteries include poor economics without subsidies and an inexperienced installation industry in many markets where batteries are new.
19、Consumers can be put off by lengthy wait times,lack of good data on actual performance of the system,and other negative experiences.Some of these problems will be resolved with time and industry maturity.Opportunities to drive uptake of batteries,and their usefulness to the overall grid system,can b
20、e accelerated by improving business models that reward battery owners for their services.These include more sophisticated time-of-use electricity tariffs and virtual power plant business models that participate aggregated residential batteries in flexibility markets.Emerging local flexibility market
21、s look to be an apt opportunity,because they are designed to reward small,distributed energy resources in specific locations.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distribu
22、ted,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.3 Section 2.Why build residential batteries?Electricity storag
23、e is a key component of almost any reasonable pathway to net-zero greenhouse gas emissions.BloombergNEF models a pathway to take the world to net-zero emissions by 2050,using solar,wind and battery backup(Figure 3).This requires 722GW of batteries to be installed worldwide by 2030,up from 36GW at th
24、e end of 2022,and 2.8TW of batteries by 2050.(See BloombergNEF New Energy Outlook 2022(web|terminal).Figure 3:Cumulative installed power capacity in BloombergNEFs Net-Zero Scenario Source:BloombergNEF.Note:CCS is carbon capture and storage.CCGT is combined cycle gas turbine.Residential batteries are
25、 expected to be a major contributor to the storage capacity needed to shift electricity demand to timeslots of high renewable electricity generation.At the household level,the battery charges in the daytime when solar power is generated in excess,and discharges later when there is typically higher d
26、emand.These charge and discharge patterns benefit customers that want to increase their solar self-consumption.They can also lower consumer bills,assuming that consumers are on time-of-use tariffs.The benefits of these charge and discharge patterns translate to power markets by flattening out the ov
27、erall load or the duck curve which emerges at high solar penetrations(Figure 4).Examples of this duck curve already exist in many markets like Hawaii and California in the US,South Australia,and even on a sunny day in the Netherlands or Spain.05,00010,00015,00020,00025,00030,00035,00040,00045,000200
28、0200402050GWBattery storagePumped hydroOtherOffshore windOnshore windSmall-scale PVUtility-scale PVGeothermalHydroBioenergySmall modular nuclearNuclearHydrogenOilGas peaker with CCSGas peakerCCGT with CCSCCGTCoal with CCSWhen customers use residential batteries to increase their solar sel
29、f-consumption,they also help to reduce overall power price volatility Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivati
30、ve works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.4 Figure 4:The duck curve that emerges in power markets at high solar penetrations Source:BloombergNEF Residential ba
31、tteries also have some important benefits for local grids,helping to resolve challenges presented by rapid growth of distributed energy resources such as residential solar and electric vehicles(EVs).Thousands or even millions of residential solar systems and EV chargers will connect to grids that we
32、re not built to support high instantaneous loads like EV charging or electricity flowing in the opposite direction when residential solar systems send power back to the grid.In Hawaii for example,reverse power flow occurs in more than half the substations(Figure 5).As these local grids become conges
33、ted and strained,grid operators need to find new ways to manage voltage and thermal issues or upgrade the grid to avoid future ones.One alternative for grid operators making large investments in the grid is to use flexible distributed energy resources like residential batteries,though the structures
34、 for compensating owners for providing flexibility In a future where flexible distributed energy resources play a more active role in supporting the grid,residential batteries could have an advantage over other flexible distributed energy 0070809010000:00 02:00 04:00 06:00 08:00 10:00 12:
35、00 14:00 16:00 18:00 20:00 22:00 00:00GW net load or solar generationHighsolar generation means low net load,low power prices.Opportunity to charge.Belly of the duck.Sun goes down,cooking and airconditioning demand can remain high,power prices rise.Opportunity to discharge.Head of the duck.Solar gen
36、erationElectrical load minus solar(correlates strongly with power price)Hour of the dayResidential batteries can also reduce strain on distribution grids caused by uptake of rooftop solar and electric vehicles Figure 5:Hawaiian Electric PV penetration as a percentage of daytime minimum load Source:H
37、awaiian Electric.Note:DML=Daytime minimum load.050100Maui ElectricHawaii ElectricLightHawaiian Electric%of distribution feedersPV penetration 250%of DML250%=PV penetration 100%PV penetration=100%DML Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of
38、this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies
39、 throughout.5 resources such as electric vehicles,smart heat pumps and grid-connected thermostats.Residential batteries do not require consumers to actively change their behavior and adjust comfort in the home if the grid requires such a change during critical hours.Batteries can be programed to aut
40、omatically respond and discharge,while changes to other distributed energy resources in the home may lead to minor changes in home temperature or travel patterns,or adjustments to the schedules of individuals.Policy decisions about how to support residential battery uptake should consider these bene
41、fits to the wider power system in addition to benefits to individual customers(Figure 6).Even though residential batteries today may not provide a clear economic benefit to the individual,they should be an essential part of long-term planning and can play a key role in decarbonization.Figure 6:Benef
42、its of residential batteries Source:BloombergNEF.Note:*transmission and distribution investment deferral are location-specific.Size of boxes does not correlate with size of benefit.This figure does not illustrate costs of batteries,for example grid exports can generate a cost that networks take on s
43、ome of these may be embedded in how the export rules and tariffs are designed.Decentralized energyGenerationTransmissionDistributionC&IResidentialRenewables:advancedThermal:early stageExtend asset lifetime of thermal generation,improve renewables forecastingAdvancedAlgorithms to balance supply and d
44、emand,full roll out of predictive maintenanceEarly stageDeployment of automated tools,transparency of behind-the-meter assetsEarly stageEnergy management algorithms,behind-the-meter optimizationRetailPilot projectsSmart homes and energy management,pairing of smart devicesPilot projectsMachine learni
45、ng of blockchain platforms for automated tradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregate
46、d balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid s
47、tability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingModernizing power plants
48、,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext
49、stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingTodayThe challengeDecentralized energyGenerationTransmissionDistributionC&IResidentialRenewables:advancedThermal:early stageExtend asset lifetime of thermal generation,improve renewables forecastingAdvancedAlgo
50、rithms to balance supply and demand,full roll out of predictive maintenanceEarly stageDeployment of automated tools,transparency of behind-the-meter assetsEarly stageEnergy management algorithms,behind-the-meter optimizationRetailPilot projectsSmart homes and energy management,pairing of smart devic
51、esPilot projectsMachine learning of blockchain platforms for automated tradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projects
52、Virtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdva
53、ncedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersT
54、radingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using mach
55、ine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingTodayThe challengeDecentralized energyGenerationTransmissionDistributionC&IResidentialRenewables:advancedThermal:early stageExtend asset lifetime of thermal generation,improve rene
56、wables forecastingAdvancedAlgorithms to balance supply and demand,full roll out of predictive maintenanceEarly stageDeployment of automated tools,transparency of behind-the-meter assetsEarly stageEnergy management algorithms,behind-the-meter optimizationRetailPilot projectsSmart homes and energy man
57、agement,pairing of smart devicesPilot projectsMachine learning of blockchain platforms for automated tradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated
58、 demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithm
59、s for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionD
60、istributionUtilitiesProsumersTradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing
61、Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingTodayThe challengeEnergy retailersGenerationTransmissionDistributionDecentralized energyGenerationTransmissionDistributionC&IResidentialRenewables:adv
62、ancedThermal:early stageExtend asset lifetime of thermal generation,improve renewables forecastingAdvancedAlgorithms to balance supply and demand,full roll out of predictive maintenanceEarly stageDeployment of automated tools,transparency of behind-the-meter assetsEarly stageEnergy management algori
63、thms,behind-the-meter optimizationRetailPilot projectsSmart homes and energy management,pairing of smart devicesPilot projectsMachine learning of blockchain platforms for automated tradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvanced
64、Full automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradi
65、ngModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting aggregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine
66、learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingModernizing power plants,automating grid controlsEarly stageAdvanced algorithms for optimized operationsAdvancedFull automation for grid stability,optimizationEarly stageFast acting ag
67、gregated demand responsePilot projectsVirtual power plants,aggregated balancing Automated platforms using machine learningCurrent stateNext stepsEarly stagePilot projectsGenerators TransmissionDistributionUtilitiesProsumersTradingTodayThe challengeResidentialGeneration offsetReduced network usage an
68、d distribution investment deferral*Improve customer engagement and retentionLower billsReduced transmission usage and investment deferral*ResilienceEmissions reduction(sustainability)Cost certainty and stabilitySystem and network support services(eg,capacity,energy,ancillary services,voltage support
69、)Land use avoidanceReliability Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written cons
70、ent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.6 Section 3.History and background The global residential battery storage market has grown quickly in recent years.Progress has been concentrated in a few l
71、eading markets including Germany,Italy,Japan,the US and Australia.Combined,BloombergNEF expects these five markets to represent around 88%of cumulative residential battery storage capacity installed globally by the end of 2023.Uptake in other markets today is limited by economic viability.Growth in
72、the next five years will be driven by both economics and policy:battery costs will fall,and countries will support the use of batteries to manage rooftop solar and EV growth.3.1.Market overview BloombergNEF expects over 15GW/34GWh of cumulative residential battery capacity to be installed globally b
73、y the end of 2023(Figure 7).Leading markets will be Germany,Italy,Japan,the US and Australia,accounting for 88%of cumulative residential battery capacity installed by the end of 2023,with a similar share of new installations expected in 2023(Figure 8).Uptake in major markets has been driven by suppo
74、rting policies such as subsidies and mandates.Rising consumer interest in increasing solar electricity self-consumption and back-up power has also played a role,but batteries are still too expensive for most consumers to purchase without some form of support.As a result,cumulative residential batter
75、y capacity in all other markets combined will be less than 1.2GW/2GWh by the end of 2023,due to the relative lack of supportive frameworks.Demand in other markets will rise over time as battery costs fall and governments phase out policy mechanisms like feed-in tariffs and net metering,which pay con
76、sumers for excess solar generation.When such policies are phased out,consumers become more inclined to install batteries to ensure that they maximize self-consumption of solar generation.Figure 7:Cumulative residential battery additions by region Figure 8:Annual residential battery capacity by regio
77、n Source:BloombergNEF Source:BloombergNEF 055200222023GWhOthersAustraliaItalyJapanUSGermany02468020202120222023GWhOthersAustraliaJapanUSItalyGermany Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may
78、 be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.7 3.2
79、.Drivers Residential battery uptake in major markets began mainly as a result of battery storage subsidies.Other key factors that have driven uptake in some markets are the phasing-out of PV export frameworks,which reduces incentive to export excess solar generation,as well as customer interest in b
80、ack-up power.Table 1 profiles the main policy decisions that have supported residential battery demand in the largest markets.Table 1:Comparison of residential battery storage drivers across key regions Country Region Storage subsidy schemes PV export tariff Germany National level KfW grant introduc
81、ed in 2013,covered 30%of capex when introduced,gradually reduced Feed-in tariffs,reduced each year to 0.0480/kWh in 2023 Italy National level Superbonus tax rebate since 2020,covered 110%of capex until scaled back in 2023 Tax rebate since 2018,covers 50%of capex Net billing(exports from PV 20 years
82、Source:BloombergNEF 6.1.Veneto,Italy homeowner seeking bill savings A single-family household with annual power use of 14.1MWh installed 9.5kW of PV panels connected to two inverters,at the same time as a 21.3kWh Pylontech battery system and a 7kW charging point for electric vehicles.One inverter is
83、 a 4kW string inverter and the other,a 6kW hybrid PV inverter.The home is fully electric,and no gas is used for water or space heating.The total capex for 9.5kW of PV,21.3kWh of batteries and a 7kW electric vehicle charger was 26,700 including installation and VAT,with 50%of the cost amortized in an
84、nual instalments over 10 years.This helped inform the decision to make all the upgrades at once and install the very large system.The battery was delivered in January 2023 by Italian firm Energy SpA,which is listed on the Euronext Growth Milan stock market,and its local partners.The installer estima
85、tes that the Veneto home would run on 63%solar with the battery configuration,saving the purchase of about 9MWh of electricity each year(Table 7).Assuming that this is correct,at an average avoided power price of 0.33 per kWh,the system would pay back within seven years and continue to save the home
86、owner money after that.This Italian investment in PV and batteries is expected to pay back in seven years,thanks to Italys 50%tax credit system,and continue to supply power long after that.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this docum
87、ent may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughou
88、t.22 Table 7:Economics of a 2023 home electrification investment(PV and batteries)in Veneto,Italy Year 1 2 3 4 5 6 7 8 9 10 Total electricity produced(kWh)11,156 11,078 11,000 10,923 10,847 10,771 10,696 10,621 10,546 10,473 Total home electricity demand(kWh)14,133 14,345 14,560 14,779 15,000 15,226
89、 15,454 15,686 15,921 16,160 Direct self-consumption(kWh)5,032 4,996 4,961 4,927 4,892 4,858 4,824 4,790 4,757 4,723 Self-consumption via battery(kWh)3,933 3,862 3,793 3,724 3,657 3,592 3,527 3,463 3,401 3,340 Energy fed into the grid(kWh)3,213 3,191 3,168 3,146 3,124 3,102 3,081 3,059 3,038 3,016 E
90、nergy purchased(kWh)5,169 5,487 5,806 6,128 6,451 6,776 7,103 7,432 7,763 8,097%self-consumption 80%80%80%79%79%78%78%78%77%77%energy of battery in self-consumption 44%44%43%43%43%43%42%42%42%41%of own energy generated(Autarky)63%62%60%59%57%55%54%53%51%50%Electricity price,per kWh 0.33 0.33 0.33 0.
91、33 0.33 0.33 0.33 0.33 0.33 0.33 Savings on bill 2,958 2,923 2,889 2,855 2,821 2,789 2,756 2,723 2,692 2,661 Tax deductions(50%)1,335 1,335 1,335 1,335 1,335 1,335 1,335 1,335 1,335 1,335 Annual maintenance 0-150-150-150-150-150-150-150-150-150 Initial capex-26,700 Annual cashflow-22,407 4,108 4,074
92、 4,040 4,006 3,974 3,941 3,908 3,877 3,846 Payback period 7 years Source:Energy SpA,adapted by BloombergNEF 6.2.Landford,UK solar self-supply enthusiast A single-family house with two occupants and approximate annual electricity consumption of 5,300 kWh per year(mostly from a heat pump),with a 3.67k
93、W west-facing PV system installed in 2011.In August 2022,the homeowners paid a 150 deposit to add batteries under the“Solar Together”aggregate purchasing scheme in the UK,under which local governments organized bulk build of highly commoditized residential solar and batteries through selected firms.
94、The“Solar Together”scheme has had significant difficulties,partly related to labor shortages in the UK in 2022,and many of the selected installers have failed to deliver on their promises.In October 2022,the homeowner received quotes for three products with different sizes a 13.5kWh battery,a 5kWh b
95、attery,and a 3kWh battery.Looking at daily generation(often over 5kWh),the homeowner chose the 5kWh based entirely on size,as recommended by the installer.A recurring theme in the UK purchasing process was that the installer selected by Solar Together could not meet deadlines and cut corners on work
96、.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.F
97、or more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.23 The price was 6,529(including VAT),with a monitoring system.A 25%deposit was paid in October 2022.The battery was eventually installed in January 2023.The homeowner had been assured b
98、y the surveyor that installation up on the wall would be possible,but only one person turned up and since the battery weighed 59kg,it was installed low down on the wall.The original wiring was also much too tight behind the battery,causing the system to cut out and need to be rebooted.The first batt
99、ery installed was dented and had to be replaced and completely rewired.For this,the homeowner finally managed to get in touch with an experienced individual at the installation firm.That individual has now moved to a different company.The entire system was much more complicated and less integrated t
100、han it could be.However,the battery system has been working successfully,significantly reducing the homes grid electricity use.Import from the grid from April to September 2023 was 448kWh,compared with 1,034kWh for the same period in 2022.Figure 16 shows an early day of system operation,and it is vi
101、sible that the battery charges from the sun and discharges in the evening as planned.There is not yet a full year of data to ascertain actual system savings,but the absolute best case of the six summer months being the same as the winter months and therefore the system saving 1,172 kWh per year at 0
102、.27 per kWh would save just 316 per year a payback time of over 20 years.The homeowners may add further solar panels on the east side of the house,or charge at times of low power price when time-of-use power tariffs become more common,but clearly this is not primarily a money-saving purchase.Figure
103、16:Activity of Landford battery on February 8,2023 Source:Homeowner,Solis Cloud,BloombergNEF The payback time for one UK system is almost certainly over 20 years,but the buyers are satisfied with the purchase.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No p
104、ortion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page
105、36 applies throughout.24 6.3.Challenges and takeaways The economics for residential storage in Europe are often poor without substantial subsidies like Italys Superbonus and tax credit schemes.However,many consumers in Europe are enthusiastic about the technology and keen to buy.Challenges encounter
106、ed by these consumers in their battery adoption process,and a summary of potential improvements to help uptake of residential batteries are:Consumers are often put off by complicated installation processes,long wait times and poor customer service.This is likely to improve in future as the market be
107、comes mature,and companies level up.It is important for technology providers,local governments and other stakeholders to select and work with well-run installation firms,to avoid creating a poor reputation for the industry and themselves.Building up a competent installer workforce is also important
108、because,as Section 4.2 found,consumers trust the installers to make the safety decisions and only stock products that will not cause problems.Installers need more guidance from technology providers.As found in Section 5.2 partnerships between technology providers and local operators are very importa
109、nt in market adoption,as firms learn to work with certain designs over time.More involvement from technology providers will also help reduce wait times and issues encountered in installations above.Consumers want simpler and more accurate data on how systems perform.One repeated pain point is a lack
110、 of data on expected performance such as household electricity consumption by time of day,which would enable the household to calculate exact savings.This will also help reduce concerns of consumers that believe installers may overstate the economic benefits of the system.However,the homeowners here
111、 did not find this a major concern,as they were motivated by subsidy(in Italy)and green consumption goals(in the UK).Consumers prefer to make electrical home upgrades all at once.Uptake will likely increase if providers offer multiple different technologies for a holistic electrification upgrade,and
112、 are able to provide maintenance and after-sales service for these technologies as well.The consumer wants to have one responsive point of contact for all their home electrification products,and may choose not to go ahead with a purchase if it requires multiple installations and multiple points of c
113、ontact.This point of contact will ideally be responsive to customer concerns and provide reliable after-sales service.Consumers want greater precision and accuracy in product offerings.This includes installers providing honest advice on system sizing and product choice based on the current and expec
114、ted future electrical load of the household and other factors.Consumers also stress the importance of having a modular or scalable product,and in most instances would benefit from the option to have smaller increments in module size increases,so as not to overpay for more capacity than they need,or
115、to install a smaller system than is ideal.Installers should also correctly measure the space available for a new system,and consider best placement of solar panels,inverters,and batteries.Arrive at the site with the correct number of staff and all necessary equipment.Scaling the Residential Energy S
116、torage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of u
117、se,please contact .Copyright and Disclaimer notice on page 36 applies throughout.25 Section 7.Rewarding power system flexibility services Although residential batteries can provide many power system benefits(see Section 2),the market structures for compensating homeowners for the flexibility their b
118、atteries provide are still nascent.This section explains the different ways residential batteries can help the power system,how homeowners are currently rewarded for this,and suggests potential improvements to encourage uptake as well as improve the impact of residential batteries can have on the gr
119、id.7.1.How residential batteries can provide flexibility There are two ways that residential batteries can provide flexibility to the grid(Figure 17).The first is customer-driven,where consumers that primarily want to reduce their bills or increase solar self-consumption can indirectly help the grid
120、.For example,when consumers charge from solar and then supply the house when the sun goes down,they can help to flatten out the duck curve.Changing electricity tariffs to“time-of-use”rates,for example with cheaper power in hours of maximum solar generation when the“duck curve”has a belly(Figure 4),e
121、ncourages more of this grid-supporting behavior and can incentivize battery adoption.Customers do not have to know anything about what is happening on the grid,but simply respond rationally to price signals.In many markets today,however,electricity is often priced at a flat rate per kWh for homes,so
122、 customers are not incentivized to act this way.The second is market-driven,where residential batteries participate in system level energy,grid service and capacity markets,or local flexibility markets run by distribution grid operators.This requires residential batteries to be aggregated into virtu
123、al power plants,as individual systems are generally too small to participate in markets on their own.Figure 17:Ways that residential batteries can provide flexibility to customers and the wider power system Source:BloombergNEF Customer-driven price signals encourage grid-supporting behavior When cus
124、tomers use batteries to move excess rooftop solar generation from the day to the evening(when electricity demand typically peaks,as in Figure 16),the evening electricity demand that must be met by large power plants reduces.This flattens the net load curve and is good for both grids and carbon emiss
125、ions,as high evening load is nearly always met by the least efficient,most polluting and most expensive fossil fuel plants(gas,coal or even sometimes oil).These Customer drivenTariff-basedHomeowners use their batteries to reduce their own electricity billsMarket drivenControl of residential batterie
126、s in response to a market signal or instructionEnergyLocal flex marketsGrid servicesCapacitySystem level marketsTime-of-useType-of-usePeak pricing Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an elec
127、tronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.26 fossil fuel plants are also expensive
128、,so cutting their use also reduces the amount that the power system operator needs to pay for the system to work.Homeowners are more likely to shift their electricity use in ways that benefit the power system if price signals are passed to them.In Europe,most retailers still offer flat electricity t
129、ariffs that do not reflect differences in wholesale electricity prices throughout the day.This does little to encourage customers to buy batteries that can shift their electricity use away from times of peak demand,when wholesale electricity prices are high.Green-minded customers or solar self-suppl
130、y enthusiasts may install a battery anyway,but customers primarily interested in electricity bill savings are unlikely to do the same.Customers are even less likely to do so if there are feed-in tariffs or export tariffs that pay for exported solar generation,though these are increasingly rare.Intro
131、ducing time-of-use tariffs that allow residential customers to benefit from differences in wholesale electricity prices during a day(a benefit that large electricity consumers and generators already have)can encourage the pairing of batteries and smart charging behavior.Other revisions to tariff str
132、uctures(for example,charging fees to homeowners exporting solar to reflect their use of the grid)can also encourage batteries.A prime case study is California,which gets about 21%of its electricity from solar and has a well-developed duck curve.All of this solar will now be compensated under the NEM
133、 3.0 tariff structure change,which became effective in 2023 despite protests from the solar industry.Under NEM 3.0,solar exports are compensated at the“avoided cost”,or ACC,which represents the long-term hourly value of a distributed energy resource(DER)for the utility grid,measured in$/kWh.The Cali
134、fornia Public Utilities Commission calculates these values every year.California already had time-of-use utility rates,which depend on utility and time of year.In 2022,an average solar owner received about$0.17/kWh during the day and$0.41/kWh in the evening for power.The new proposed rate structure
135、makes the payback period for home solar and storage shorter than for solar-only in California(Figure 18).Figure 18:Payback period for California residential solar and solar-plus-storage in California,before and after NEM 3.0 changes to electricity rates Source:BloombergNEF Note:More information in N
136、EM 3.0 Will Not End Californias Rooftop Solar Market(web|terminal)8876987887766662002220232024202520262027202820292030Payback period(years)SolarSolar-plus-storageNew tariff changes kick inMany European countries still have flat tariffs for electricity,which disincentivizes both
137、 batteries and smart charging and discharging behaviors.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works witho
138、ut the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.27 BloombergNEF expects the California home solar market to slow a little.Permits for new home solar systems from data provider Con
139、struction Monitor show activity has remained strong in 2023,but most of these probably applied for interconnection before NEM 3.0 came into force.However,roof owners in California will continue to add solar and especially solar with storage.Norway is another prime case study where time-of-use tariff
140、s for most consumers have been linked to spot power prices since 2019.Consumers can look up the power price forecast for 12 to 36 hours,and decide when to do laundry or they can automate the charging of batteries or electric vehicles for the periods when prices are lowest.Whats holding back time-of-
141、use tariffs?Utilities frequently resist time-of-use tariffs because they are more complex to administer and require more sophisticated meters to be in place.There may also be a financial disincentive in markets where utilities are integrated across power generation and retail,meaning that some utili
142、ties may not want to implement measures that risk reducing electricity demand and utility revenues overall.Market driven customers give up some control At the system level,residential batteries can participate in wholesale energy and capacity mechanisms,provide grid services such as frequency respon
143、se,voltage control and some black start services(i.e.,can bring the grid back online if it has gone down),though they are not always the best option for these grid services(Table 8).Table 8:Grid service capability of distributed energy resources Application Wind Utility-scale solar Small-scale solar
144、 Electric vehicles Utility-scale batteries Small-scale batteries System level markets Wholesale energy Capacity mechanisms Grid services Frequency Fast Primary Secondary Tertiary Inertia Voltage Black start Local flexibility markets No capability Poor suitability Limited capability Well suited Sourc
145、e:BloombergNEF.Note:Not all markets distinguish between the various frequency applications.Residential batteries can also participate in emerging local flexibility markets,which are being formed by regional distribution grid operators.These local flexibility markets can be particularly Time-of-use t
146、ariffs can be complex to administer and require smart meters to be installed.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of d
147、erivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.28 suitable for residential batteries,due to the small minimum bid sizes,as well as the location-specific need
148、s of these services.The way that residential batteries are aggregated to provide flexibility changes depending on whether utilities in a market are integrated across power generation,system operation and retail,or whether markets are deregulated and competitive.In vertically integrated markets like
149、the Southwest and Southeast of the US,and many developing countries where there is no competitive wholesale market and a single utility is in charge of delivering energy to the end customer,battery owners may be enrolled in a program that is operated by an aggregator(or virtual power plant operator)
150、who is in charge of dispatching that equipment to respond to what a utility needs(Figure 19).The utility then pays the battery owners for being part of the program.In competitive markets like the UK and Germany,distributed energy resources can access the wholesale market by being aggregated through
151、a virtual power plant operator who bids that capacity and dispatches it into the wholesale market(Figure 20).A single residential battery cannot bid into the wholesale market,and would pay heavy associated fees to register in the market and install relevant metering.This mechanism typically requires
152、 that wholesale market rules are revised to ensure that these virtual power plants can access markets.Figure 19:Illustrative operations of utility-integrated battery virtual power plant in vertically integrated markets Figure 20:Illustrative operations of residential batteries in a virtual power pla
153、nt in a competitive market Source:US Department of Energy,BloombergNEF.Note:VPP=virtual power plant.,DER orchestration refers to how the VPP platform manages the distributed energy resources(DERs)to deliver a specific service.Example in these figures are not comprehensive.FFR is Firm Frequency Respo
154、nse,a grid service.Source:US Department of Energy,BloombergNEF.Note:VPP=virtual power plant.,DER orchestration refers to how the VPP platform manages the distributed energy resources(DERs)to deliver a specific service.Example in these figures are not comprehensive.FFR is Firm Frequency Response,a gr
155、id service.Bulk power system operatorsDistribution system operatorsVPP platformsElectricity consumers(residential)VPPUtilityN/A:utility procures services from the VPP directlyPer kWhexportcreditCapacity paymentMonthly incentiveChargeExportFFRPaymentElectricity servicesDER orchestrationBulk power sys
156、tem operatorsDistribution system operatorsVPP platformsElectricity consumers(residential)VPPSystem operatorPer kWhenergy paymentN/A:No direct utility involvementPer kWhpaymentExportPer kWhpaymentPaymentElectricity servicesDER orchestration Scaling the Residential Energy Storage Market November,2023
157、Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright
158、 and Disclaimer notice on page 36 applies throughout.29 Market access Market access rules define how distributed resources such as residential batteries can register and operate in wholesale energy markets.The absence of such rules is a major barrier to adoption of aggregation and virtual power plan
159、t business models,as many of the potential markets that aggregated resources can participate in were designed with large power plants in mind.Defining and implementing these rules is critical for the optimal participation of aggregated distributed energy resources on the grid.The US Federal Energy R
160、egulatory Commission(FERC)Order 2022,issued in September 2020,provides a strong framework outlining requirements that regulators or grid operators setting market rules must follow to encourage participation of distributed energy resources(DERs).This framework includes the review of eligibility crite
161、ria such as minimum size requirements,locational requirements,information requirements and metering requirements.It also outlines requirements for coordination between transmission grid operators,distribution grid operators,aggregators and local authorities.BloombergNEFs assessment of how rules acro
162、ss key markets align with the FERC Order 2022 framework finds that California is currently one of the most advanced(Table 9).In other competitive markets such as the UK,market rules for distributed energy resources have improved over the years,but are not coordinated across wholesale energy,grid ser
163、vice,capacity and local flexibility markets.While grid service and capacity have been open to aggregators for several years,the wholesale energy market is just opening.Still,other fine details such as metering requirements often limit actual participation of residential batteries.Table 9:BNEF assess
164、ment of distributed energy resource market rules based on US FERC Order 2222 framework Requirement Subsection California UK Italy Australia Belgium Eligibility to participate Participation model Technology requirements Double counting Aggregation size(100kW or less)Locational requirements Informatio
165、n requirements Metering and telemetry requirements Coordination Source:BloombergNEF Note:Colors refer to BNEF assessment of compliance:green=compliant,yellow=compliance in progress.FERC=Federal Energy Resource Regulatory Commission.Scaling the Residential Energy Storage Market November,2023 Bloomber
166、g Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Dis
167、claimer notice on page 36 applies throughout.30 7.2.The value of providing flexibility for homeowners In this section,we consider where residential batteries are participating in energy markets,the challenges to participation,and the economic benefits that residential battery owners receive from hav
168、ing their batteries participate in various markets.The most common applications that residential batteries are aggregated for are primary frequency response and capacity markets(Table 10).Residential battery participation in wholesale energy markets is less common as it requires complex rules to be
169、developed around“double counting”(selling services in two markets at the same time).Participation in local flexibility markets is also uncommon,but only because not many exist today.Table 10:Participation of residential batteries in energy markets across selected regions Application UK Italy Austral
170、ia Belgium System level markets Wholesale energy Grid services-Frequency Fast Primary Secondary Tertiary Capacity Local flexibility markets Source:BloombergNEF.Note:Residential batteries participate through aggregation rather than a single battery.Green=residential batteries are participating,Yellow
171、=residential batteries are yet to participate but market rules are evolving,Grey=residential batteries cannot participate BloombergNEF considers local flexibility markets to be the best opportunity for residential batteries.These markets require distributed energy resources to solve location-specifi
172、c grid challenges.Although they are not widespread globally,their emergence as power markets transition will create significant opportunities for distributed energy resources like residential batteries to earn a return from the services they provide.While power systems benefit from residential batte
173、ries being made available for grid services like frequency response,they are unlikely to be economically attractive in the long term.The major challenges include:Demand for frequency response and other grid services tend to be static,so building a long-term business model based on their value is dif
174、ficult,as prices tend to drop steeply as new resources start to participate and eventually saturate markets.Metering and performance requirements for these services are often particularly challenging.Fleets of residential batteries may be unable to submit telemetry data as often as grid operators wo
175、uld prefer and may also be unable to operate continuously.Residential battery participation in wholesale energy markets will depend on complex rules to be developed around“double counting”.Double counting refers to a customer participating in more than one market mechanism at the same time,which,wit
176、hout proper verification,leads to them benefitting twice financially for the same energy delivered,for example.This may occur when a customer is enrolled in a bilateral utility demand response program,while that same capacity is registered with another aggregator that is bidding that same capacity i
177、nto the wholesale market.Double counting rules try to avoid overpaying for system benefits delivered.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed o
178、r used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.31 UK In the UK,residential batteries can participate in wholesale energy,grid service
179、,capacity and local flexibility markets.Participation of residential batteries in grid service markets has declined,following the move from Firm Frequency Response to a new suit of Dynamic Frequency Response services metering and performance requirements that do not suit residential batteries.Partic
180、ipation of residential batteries in the capacity market is typically led by retailers with large virtual power plant portfolios.These are mainly for demand response,where residential batteries play a small part.Access to the wholesale energy market will come from late 2024,following the October 2023
181、 decision by UK energy market regulator Ofgem to allow access of aggregated distributed energy resources into wholesale energy markets.Participation of residential batteries in UK frequency response markets goes back to 2018,when UK-based electricity retailer Social Energy(now rebranded to Levelise)
182、became the first company in the UK to win contracts to provide firm frequency response with an aggregated fleet of residential battery systems.Social Energy was awarded further contracts to provide frequency response in the following two years,and by the end of 2020 was using 80%of its fleet of cust
183、omer-sited batteries to provide 4MW of capacity for the firm frequency response service.The scheme was quite lucrative for homeowners,as Social Energy passed on about 70%of revenues earned from frequency services to its customers,aiming to offer a faster payback for residential battery and solar own
184、ers.The company claimed in 2021 that these revenues helped drive 226 of savings per year for the average customer.UK frequency response prices have declined since,as more and more energy resources participate in frequency markets and push down prices,reducing the value available to homeowners.As fre
185、quency response markets are limited in size and prone to such declines in price,this decline in prices is unlikely to reverse and value will need to come from elsewhere.One possible value stream is the wholesale market,for which reforms are ongoing.To ensure that access to this market comes with val
186、ue for customers,UK regulator Ofgem issued a decision that aggregators will not be liable for unexpected costs that energy suppliers face if aggregator actions result in lower-than-expected customer demand.Ofgem expects the introduction of the proposed solution to lead to increased participation of
187、aggregators and customers that can adjust their demand or generation in response to wholesale energy price signals.The proposed solution is expected to drive greater volumes of flexibility deployment,due to the lower costs imposed on aggregators,and therefore drive greater welfare benefits compared
188、to the alternative.Another key value stream in the UK will be local flexibility markets,which are emerging as regional distribution grid operators become more involved in grid management.The UK has one of the most mature local flexibility markets,as all six distribution network operators operate som
189、e form of local flexibility market.The markets accept all resources,including the aggregation of distributed energy,and have high participation of residential batteries.Products are largely uniform across distribution grid operators,with four standardized options(Table 11).Frequency response markets
190、 are quite shallow,so when a lot of batteries participate,prices go down.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of deriv
191、ative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.32 Table 11:Standard UK local flexibility market products Name Sustain Secure Dynamic Restore Need type Pre-fault
192、Pre-fault Post-fault Post-fault Use-case The DNO knows with certainty where the network will be under strain and at what times,so contracts capacity for those predicted times.The DNO predicts,with limited certainty,when a point on its network will be under strain and so contracts to have the option
193、to activate local flexibility.The DNO requires support for planned but temporary network constraints,for example planned outages for maintenance work.The DNO must respond to an unplanned outage or fault,such as major equipment failure or lighting strike.Minimum bid size 10kW 50kW 10kW 50kW Availabil
194、ity payment No Yes Yes No Utilization payment Yes Yes Yes Yes Dispatch notice Scheduled dispatch Varies by DNO Real-time dispatch Real-time dispatch Source:BloombergNEF,UK Power Networks Note:DNO=Distribution Network Operator.BloombergNEF estimates that a UK residential solar and battery system woul
195、d need an additional annual flexibility service revenue of at least 163 per kW per year to reach a 10-year payback,on top of energy bill savings and export revenues from a PV system(Figure 21).Annual local flex revenue of 47.50 per kW per year,consistent with UK Power Networks Sustain product paymen
196、t,can contribute to that number.This assumes the system receives the local flex revenue every year over the lifetime of the PV and storage system,which is not guaranteed.Seven-year contracts are the longest guaranteed payments available today.Figure 21:UK residential solar and battery system costs a
197、nd revenues,including local flexibility payments Source:BloombergNEF.Note:Analysis using Energy Consumption Optimization Model.Local flex revenue is 47.50 per kW per year the value of UK Power Networks local flex contract.Modeled system was a 4kW PV,2.6kW/7.2kWh battery,PV capex 4,275,battery capex
198、4,835,over a 25-year period from 2020.Battery replacement in year 15.See UK Local Flexibility Markets:A Case Study(web|terminal).-2,000 4,000 6,000 8,000 10,000 12,000CostsRevenuesMissing revenue to achievea 10-year paybackLocal flex revenuePV export revenueEnergy bill savings Scaling the Residentia
199、l Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on
200、terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.33 Australia In Australia,residential batteries can earn revenues from the wholesale energy market,the grid services market(known as Frequency Control and Ancillary Service,or FCAS)and local flexibility market
201、s.The chart below summarizes the additional benefit that residential battery owners in Australia were quoted for agreeing to join virtual power plant programs.The offers across three retailers include a mix of three different flexibility markets potentially open to customers,with the retailer Reposi
202、t offering the most revenues for the most services,nearly an additional$300 a year(Figure 22).Figure 22:Annual extra benefit to residential battery owner in New South Wales,Australia joining different virtual power plant programs Source:BloombergNEF,Energy Consumption Optimization Model.Note:VPP=vir
203、tual power plant,FCAS=Frequency Control and Ancillary Services.Data based on 2022 prices.The availability of multiple value streams can result in more potential value for customers.This can be a virtuous cycle,as more attractive offers can result in more customers and virtual power plant capacity,wh
204、ich in turn can be used to access more value streams.At the same time,offers need to present clear and compelling value to customers in an easy-to-understand package.Offering more services and revenues also comes with higher use of the consumers battery,and operators need to ensure they do not canni
205、balize too much of their own profits in their efforts to attract customers.It is also important to provide simplified offerings,as most consumers find it hard to understand multiple options.One major challenge for retailers making these offerings in Australia is that the frequency control and ancill
206、ary services(FCAS)market,thought to be the most lucrative source of value for virtual power plants in the country,has unpredictable revenues.Since 2018,about 40%of VPP FCAS earnings have come from just two outage events.These were from unexpected coal plant outages in 2021 and a breakdown in the Sou
207、th Australia-Victoria interconnector in 2020(Figure 23).The longevity of FCAS as a lucrative source of revenue is also uncertain.While competition from synchronous fossil fuel generation is falling as those plants are taken offline,Australias fleet of 00EnergyAustraliaSolar HomeBundleSimp
208、ly EnergyVPP Energy PlanRepositNo Bill$WholesalepowerWholesalepower+FCASWholesale power+FCAS+network service Crafting an effective customer offer is complex as grid service market revenues are uncertain Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion
209、 of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 app
210、lies throughout.34 utility-scale batteries is growing rapidly,and residential batteries will have to compete against these assets to serve FCAS demand.This creates complexity for retailers that need to be able to make firm offers to customers even with this uncertainty.Figure 23:Australia monthly vi
211、rtual power plant revenue from frequency control and ancillary service market by asset Source:BloombergNEF,Australia Power Dashboard.Note:VPP=virtual power plant,FCAS=frequency control and ancillary services.Italy In Italy,residential batteries gained access to the grid services market through the l
212、aunch of the Virtually Aggregated Mixed Units(UVAM)pilot project in November 2018.This created a new participation model for aggregators to provide manual secondary(mFRR)and tertiary reserves(RR)in 2019,followed by automatic secondary reserves(aFRR)in 2021.For the first time in Italy,the UVAM pilot
213、offered aggregated assets an availability fee(in euros/MW),in addition to the typical payments for energy dispatched(in euros/MWh).According to grid operator Terna,this added availability fee was introduced to help compensate demand-side resources that incurred fixed costs to install necessary monit
214、oring and measuring equipment to participate.The payment model helped encourage participation,but the capped availability fee of 30,000/MW/year limited the profitability for aggregators as prices rose during the European energy crisis.For many months during 2021 and 2022,wholesale energy prices were
215、 higher than the strike price,obliging aggregators to pay distributed energy resource owners more than they earned from the service.Aggregators started to exit the pilot early as a result,slowing progress towards the development of a grid service market that includes distributed energy resources.Thi
216、s pilot and Italys 012345OctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOctJanAprJulOct20020202120222023Millions$SonnenSimply SAShinHubEnergy LocalsAGLEFirmus Grid BlockEnergy LocalsAS AESActewAGLBoralHydro TasmaniaEnel XResidential storageC&I demand responseItalys UVAM pilot
217、 project for paying virtual power prices hit a snag in the energy crisis of 2022,when high wholesale prices destroyed returns.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distrib
218、uted,publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P.For more information on terms of use,please contact .Copyright and Disclaimer notice on page 36 applies throughout.35 experience so far is a cautionary tale about the complexit
219、y of integrating residential batteries into power markets.Belgium In Belgium,residential batteries can be aggregated to participate in the recently opened capacity market,as well as provide grid services.Participation of residential batteries in the grid service market was led in late 2022 by grid o
220、perator Elia,aggregating residential batteries from over 2,000 families in Flanders into a virtual power plant.According to Elia,the virtual power plant had made 6MW of capacity available by the end of 2022,meeting some of its requirement for 26MW of fast and flexible capacity.Consumers were require
221、d to have a home battery and a smart meter to participate.The transmission system operator has stated that consumers notice virtually nothing as a result of their participation,and that they receive a remuneration depending on the market prices in the balancing market.This approach,where programs ar
222、e directly led by grid operators,can benefit uptake.Scaling the Residential Energy Storage Market November,2023 Bloomberg Finance L.P.2023 No portion of this document may be reproduced,scanned into an electronic system,distributed,publicly displayed or used as the basis of derivative works without t
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