The global residential energy storage systems (ESS) market size was valued at USD 8.78 billion in 2023. It is estimated to reach from USD 10.32 billion in 2024 to USD 37.65 billion by 2032, growing at a CAGR of 17.56% during the forecast period (2024–2032). The Residential Energy Storage Systems (ESS) market has grown in recent years due to a number of key drivers. To begin, the rapid decline in the cost of lithium-ion batteries, which are highly efficient and have technical advantages over other technologies, has significantly increased market adoption.
Additionally, the growing demand for consistent and dependable power supply, combined with an increase in solar rooftop installations worldwide, has fueled the demand for residential energy storage systems. Furthermore, there has been a rise in the launch of new products in this market, thereby creating opportunities for market growth.
A residential energy storage system (ESS) is a collection of high-tech devices that store and supply excess electrical, mechanical, chemical, and thermal energy for later use. It can be combined with solar energy generated by photovoltaic (PV) systems, and the battery facilitates the further accumulation of daytime energy.
Residential ESS provides increased power security, a greater reduction in energy waste, enhanced reliability and resiliency, reduced environmental impact, emergency backup, and improved financial savings by lowering the price of the electric bill. Residential ESS also minimizes grid dependence while increasing solar self-supply, which is secure, flexible, and easy to install. As a result, residential ESS is widely deployed in the residential sector to ensure a continuous power supply.
Highlights
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Globally, the average price of a solar PV panel has decreased by nearly 90% over the past decade. Since 2011, the prices of other components have also decreased significantly, lowering the Levelized Cost of Electricity (LCOE) for residential solar PV generation. As a result of the combination of economic and geopolitical factors, the rate of decline in solar PV panel prices will slow slightly. However, it is anticipated that prices will persistently decline over the projected duration.
In addition, the efficiency of solar PV panels has steadily increased over the past decade. With the advent of new technologies and manufacturing capabilities, this trend is anticipated to continue throughout the forecast period. Most commercially available solar panels have efficiency ratings between 16% and 18%; however, the most efficient panels have rates as high as 22.8%. The rising efficiencies of solar panels will likely allow owners and operators to generate more energy and reduce costs while creating a demand for residential ESS systems, thereby boosting market growth.
With the growing demand for lithium-ion (Li-ion) batteries, manufacturers are currently focusing their efforts on reducing the cost associated with Li-ion technology. Over the last decade, the cost of lithium-ion batteries has decreased dramatically. In 2021, the cost per kWh of lithium-ion batteries was USD 132. The price of lithium-ion batteries had a consistent downward trend, with a reduction of 10.2% on an annual basis, as opposed to the 12.2% decline observed in 2019.
Furthermore, it is anticipated that the average price of lithium-ion batteries will continue to decline and reach approximately USD 74/kWh by 2026, making them significantly more cost-competitive than other battery types. Additionally, as Western battery producers expand production capacity to meet increased demand, global prices are expected to plummet further. Hence, the continuous reduction in the cost, leading to the extensive use of lithium-ion batteries, is expected to drive the residential ESS market during the forecast period.
Despite burgeoning demand for residential ESS, the supply chain for battery metals such as Lithium, Nickel, and Cobalt is vulnerable to disruptions. Most large markets, such as the United States and Europe, have significant domestic demand and battery manufacturing capabilities. However, most large markets in North America, Europe, and the Asia-Pacific lack domestic reserves of critical battery metal ores such as nickel, cobalt, and lithium.
The dominant control of China over the supply chain for battery metals poses a substantial challenge for battery makers outside of China. Thus, disruptions in the supply chain are anticipated to impose major limitations on the expansion of the worldwide home Energy Storage System (ESS) market over the projected period.
The increased demand for residential energy storage systems (ESS) has led to a surge in the launch of new products by key participants to improve their market share.
For instance, Mango Power introduced its M Series at Intersolar Munich in May 2022. The system can be used with solar PV and a 10–20 kWh battery for daily and emergencies. The system supports single-phase and triple-phase connections with an 8–14 kW output capacity. In addition, the system can be used for many things, such as an EV charger, backup gateway, and built-in inverter. The corporation introduced multiple variants tailored for the American and European markets.
Additionally, in June 2022, Toyota introduced the O-Uchi Kyuden System, a residential battery product, entering the energy storage market. Toyota unveiled a battery storage system with an 8.7 kWh capacity and a 5.5 kWh output that uses the company's electric vehicle battery technology. A residence can be supplied with electricity during the day and at night if a photovoltaic rooftop system is installed. Such launches by key players are expected to create opportunities for market growth.
| Study Period | 2020-2032 | CAGR | 17.56% |
| Historical Period | 2020-2022 | Forecast Period | 2024-2032 |
| Base Year | 2023 | Base Year Market Size | USD 8.78 billion |
| Forecast Year | 2032 | Forecast Year Market Size | USD 37.65 billion |
| Largest Market | Europe | Fastest Growing Market | North America |
Europe is the most significant global market shareholder and is expected to expand substantially during the forecast period. Europe is the most significant global residential energy storage systems (ESS) market shareholder and is expected to expand substantially during the forecast period. The demand for RESS in the European region is witnessing high expansion due to the rapid adoption of rooftop solar power. Since 2015, the residential energy storage systems market in Germany has grown rapidly, aided by an incentive program that offers a 30% investment subsidy for battery systems. As of January 2022, the United Kingdom had 13.79 gigawatts (GW) of installed solar capacity, of which 26 percent (3.25 GW) came from solar PV installations below 10 kW, primarily residential rooftop solar photovoltaic consumers.
Additionally, Italy has introduced a new super bonus incentive scheme that allows for a tax credit of 110% of the expense from July 2020 to July 2023, encouraging energy efficiency interventions. In order to be eligible for the super bonus, the photovoltaic (PV) and storage system must be installed simultaneously with one of the key interventions. Overall investments must increase the energy efficiency rating. In the event of ineligibility, obtaining the existing 10-year, 50% tax credit for small-scale PV generation assets and BESS is possible. Thus, Europe is anticipated to lead the global residential energy storage systems market over the forecast period.
North America is the fastest-growing region in the ESS market globally. A healthy combination of favorable policy shifts toward promoting the installation of small-scale solar PV systems, coupled with the development of advanced, smarter technology, has resulted in power consumers of the region becoming more selective toward their energy consumption decisions. This has also resulted in the mass deployment of residential energy storage systems in North America.
For instance, in 2021, the U.S. had installed around 23.31 GW of residential solar PV capacity. As per the Solar Energy Industries Association (SEIA), solar energy contributed 43% of all newly added electricity-generating capacity in 2020. At the end of 2021, there were approximately 2.7 million distributed residential PV systems in the United States. The distributed residential solar PV segment is expected to witness significant growth due to emerging state-level markets with robust resource fundamentals like New Jersey on account of favorable incentive programs like Solar Renewable Energy Credits (SREC). All these factors expedite the regional market growth.
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The lithium-ion batteries segment dominates the global market and is expected to expand substantially over the forecast period. Lithium-ion (Li-ion) batteries allow for the same ampere-hours in and out and are nearly 100% efficient in charge and discharge. The demand for battery energy storage is likely to rise in tandem with the capacity of solar rooftop systems. As a result, it is anticipated that during the forecast period, demand for lithium-ion batteries will increase due to the development of new energy storage systems (ESS) for residential applications. In addition, lithium-ion batteries are preferred for this application due to their lighter weight, quicker charging times, higher number of charging cycles, and decreasing cost. Li-ion batteries are becoming increasingly popular because they are the strongest rechargeable batteries.
Additionally, the use of Li-ion batteries is increasing, replacing conventional batteries due to its techno-economic benefits. Moreover, leading battery manufacturers are creating new models of energy storage systems for residential applications.
For instance, in September 2021, Belgian storage system manufacturer launched AQ-Lith Energybox, a lithium-ion battery for residential PV installations with an eight-year guarantee; it comprises a Multiplus II inverter manufactured by Netherlands-based Victron Energy.
The lead acid battery has a low energy-to-weight ratio but can deliver significant surge currents, indicating a high power-to-weight ratio. When price is more important than energy-to-weight ratio, as in off-grid remote storage, lead-acid batteries are also preferred due to their low cost. Battery energy storage systems are the primary use for lead-acid batteries in the residential sector. The preferred battery type for traditional battery inverter systems is lead-acid batteries. Due to their low price, lead-acid batteries are the most cost-effective option for residential battery-based systems. In addition, flood lead-acid batteries are the most economical choice when weighing cost, capacity, and product cycle life. On the other hand, AGM & GEL VRLA options are also available to offer solutions in cases where a sealed maintenance-free product is needed. Moreover, when properly installed, lead-acid batteries in residential applications do not pose the same risks of fire and explosion as those associated with lithium batteries entering the market.
Some of the other emerging battery energy storage technologies in the global residential energy storage system market include nickel-cadmium batteries, sodium sulfur batteries, and flow batteries, among others. Nickel-cadmium batteries (NiCd) were the most popular rechargeable household batteries until the 1990s. These batteries were meant to be disposed of as hazardous waste due to their low capacity and toxic cadmium content. The market share of NiCd significantly decreased after NiMH batteries entered the market with triple capacity, non-hazardous materials, and roughly the same price. Moreover, the market trends for the development of new battery technologies for energy storage systems like nickel-metal hydride (NiMH) batteries, zinc-carbon batteries, sodium batteries, alkaline batteries, and nickel batteries, among others, are likely to be bolstered by the skyrocketing demand for rooftop solar PV installations and growing concerns about climate change.
