High profit margins in off-grid integrated solar and storage

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By: SGN Staff

By Steven Minnihan and Matthew Feinstein

 

In the recent report Batteries Included: Gauging Near-Term Prospect for Solar/Energy Storage Systems, Lux Research forecasts that the demand for integrated solar and storage systems will reach $2.8 billion in 2018.

 

This market is driven by demand from the residential and light commercial sectors in key markets including Japan, the United States, Germany and Italy. While these grid-tied sectors comprise the bulk of demand, off-grid market sectors offer significantly higher profit margins for both solar and storage players.

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The report compares the break-even price for the addition of an energy storage unit, determining the maximum price that a supplier can charge to customers. Most grid-tied scenarios offer a break-even price under $800/kWh, indicating that there will be severe pricing pressure and margin slashing in these market segments. Conversely, energy storage units have a break-even price between $1,200/kWh and $2,200/kWh in the off-grid sectors, allowing suppliers to defend their profit margin.

 

As a result, those playing in solar-integrated storage need to define their strategy. Those seeking large volumes and low margins can find success in conventional residential and commercial storage applications, if they're able to hit low price points. However, those looking to promote specialty products with improved operational life and higher price tags need to seek out telecommunication customers in the off-grid sector.

 

Steven Minnihan is a Senior Analyst for the Grid Storage Intelligence service and Matthew Feinstein is an Analyst for the Solar Systems Intelligence service at Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. For more information, visit the Lux Research site.

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