European Market Outlook For Residential Battery Storage 2022–2026 GRID GOES OFF. SUN GOES DOWN. LIFE CARRIES ON. Facing soaring electricity costs and potentially unstable grids, more and more homeowners are installing SolarEdge Home to achieve energy independence. This complete smart energy ecosystem enables you to produce, store and manage solar energy more efficiently and cost-effectively than ever before. The SolarEdge Home Hub inverter provides PV, storage, and backup, suitable for single and three phase residential installations and is compatible with our SolarEdge Home Battery 400V and 48V. Plus there’s a full suite of smart energy devices that let you grow your SolarEdge Home as your energy needs evolve. And the mySolarEdge app puts all that power in your hands. All from the world’s #1 inverter company! Scan here to find out more www.solaredge.com Foreword Welcome to our European Market Outlook for Residential Battery Storage 2022-2026. With an unprecedented energy crisis in Europe driving skyrocketing electricity costs, citizens are increasingly looking at home solar power generation as a key tool to gain control of their energy bills. More and more, the climate crisis context causes citizens to turn their back on the predominance of polluting and costly fossil fuels, while river droughts and ageing fleets challenge the reliability of existing nuclear power plants. As citizens seek to hedge on their energy supply, the distributed solar rooftop boom brings with it something that seems to be often overlooked in policy circles – a massive growth in residential battery energy storage (R-BESS). Our latest market outlook shows a R-BESS market that more than doubled in 2021 to 2.3 GWh, after the 1 GWh annual installation level was first reached in 2020. In 2022, our most-likely Medium Scenario forecasts another spectacular growth year – the addition of 71% more capacity of 3.9 GWh, which would lead to a total installed R-BESS capacity of 9.3 GWh in Europe. To put this into more tangible numbers – we estimate Europe will install over 420,000 storage batteries in 2022, resulting in more than 1 million homes across the continent powered with joint solar & battery storage systems. It could have been much more, but a lack of installers across Europe limited the growth of solar systems. Batteries, the cells of which are generally imported, are also facing an acute shortage, sharper than any other part of a solar system. Still, we are upbeat the residential solar & storage boom will continue. By the end of 2026, our Medium Scenario expects over 300% growth of the total operating R-BESS capacity to 32.2 GWh attached to 3.9 million European homes. It could be even more, our High Scenario anticipates over 44 GWh, but also a third less if the right policy frameworks are not put in place. To unleash further rapid growth of solar and storage and its benefits, we need a comprehensive strategy for electricity storage, and this includes an EU target of at least 200 GW by 2030. In Europe’s strongest residential battery storage market Germany, which had a market share of 59% in 2021, RBESS attachment rates to new solar systems were in the range of 70%, and are further rising. This market, which has developed over several years and has also several storage system assemblers, proves that well-thought incentive schemes are very helpful to kick-start a battery storage market until it can stand on its own feet. In order to accelerate solar & storage deployment, we call on EU policymakers to use existing funds to support the battery component in emerging residential solar markets. While mandatory solar for new and renovated buildings, as proposed by the European Commission, would also help the uptake of batteries, another crucial facilitator would be the integration of battery storage targets and national Clean Flexibility Plans in the upcoming revision for the member states’ National Energy and Climate Plans (NECPs). Ultimately, we need to ensure the creation of local flexibility markets to enable the business models for battery storage to support grid stabilisation. In a very short period, residential battery storage has established itself in a handful of European solar markets. In the leading markets, battery storage has essentially become a standard component of a residential solar system. This should be replicated across Europe. It’s now time for European policymakers to recognize and follow the clear market signals coming from