Residential Energy Storage Market Size, Share & Trends 2031

Report Description

The global residential energy storage market size was valued at USD 792.33 Mn in 2022 and is likely to reach USD 5469.47 Mn by 2031, expanding at a CAGR of 19.4 % during 2023–2031. Rising demand for sustainable power generation for residential use is expected to drive the market.

The increasing demand for clean energy generation and the rising environmental concerns are driving the residential energy storage market. The rising usage of high-efficiency home appliances ultimately increases the power consumption for households, which increases the requirement for consistent power backup. This fuels the demand for residential energy storage systems, thereby propelling the market.

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A residential energy storage system is a power storage system that ensures the seamless flow of electricity during power outages. The batteries store the excess electricity produced by conventional energy sources, such as solar and wind energy. On the residential front, solar energy conversion (PV) systems are widely adopted for domestic power generation. The key players in the market are focused on increasing the cost-effectiveness of PV installations. This is expected to boost the number of PV installations, which ultimately boosts market growth.

• According to the report published by International Energy Agency (IEA) on July 11, 2023, solar PV system installations and energy generation have globally increased by 26% in 2022. This growth rate contemplates the one, forecasted by the Net Zero Emission (NZE) by 2050 Scenario, by IEA, for the period 2023-2030.

The residential energy storage market was moderately impacted during the Covid-19 pandemic. In the initial period of the pandemic, the market faced a rapid surge in demand for energy consumption from residential users. The quarantines, lockdowns, and travel restrictions made people stay home worldwide. This consequently increased the demand for household power consumption worldwide. In the latter pandemic phases, the market crossed new profit margins.

During the Russia-Ukraine war, the market received a further boost owing to the rapidly hiked-up electricity consumption costs around the world. The countries that rely on fossil fuels for total power generation had to pay a huge cost for fuel import. To escape from this situation, governments started focusing on clean power generation to save the costs of basic electricity needs for their countries. A year after Russia’s invasion of Ukraine, the global energy crisis continued, while impacting fuel and power price hikes.

• According to the report published by the International Energy Agency (IEA), on February 23, 2023, the EU released a REPowerEU plan on May 2022, which intends to end the EU's reliance on the Russian fossil fuel import by 2027.

Residential Energy Storage Market Dynamics

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Key Trends

Increasing adoption of home automation is a popular trend that is driving the market. Home automation systems require consistent electricity and reliable internet supply during unusual power cuts and power outages, due to weather or technical glitches from the primary electricity provider. The power backup ensures the smooth flow of automated in-house systems, which is expected to boost the market.

Major Drivers

Rising adoption of sustainable energy sources for household power supply is driving the market. Traditionally, the power is generated from conventional energy sources, such as petroleum, fossil fuel, and others.  Growing environmental concerns such as global warming and the increasing carbon footprint encourage masses to opt for eco-friendly alternatives for energy resources. Moreover, the fluctuating prices of power supply are driving the market.

Increasing demand for robust power backup systems is driving the market. Presently, the rising trend of home automation has encouraged many households, especially in Western countries, to adopt a complete home automation setup. The setup automates daily household tasks by operating home appliances.

Incorporation of virtual assistant devices such as Amazon Alexa, Microsoft Cortana, Apple Siri, and Google Assistant with home automation streamlines the workflow, as the assistants help operate the devices. The devices require constant electricity and internet backup to operate seamlessly. Power backup systems are thus gaining popularity to prevent any obstruction in the home automation operations, which boosts the market.

Existing Restraints

High cost of initial installation restrains the market. Photovoltaic systems incur high initial installation charges. Initial installation comprises a complete setup of the solar panels, backup batteries, inverters, energy converters, and the utility grid, which consists of batteries. Moreover, the damage to certain system parts requires expensive maintenance, which hampers the market growth.

Emerging Opportunities

Technological advancements to improve battery storage capacity create opportunities in the market. Solar batteries currently yield up to 3.3kWh of battery backup. The batteries backup for approximately 1-2 hours, depending upon the output devices. Improvement of battery capacity to store and deliver maximum output is expected to fuel the market.

Rising adoption of electric vehicles (EVs) is generating opportunities for growth in the market. This rise in demand for electric vehicles is attributed to the fuel price hikes happening around the world. EVs need to be charged timely to maintain their optimum output. Rising demand for EVs is directly proportionate to the increasing demand for solar power backup systems, which is expected to drive the market in the coming years.

Scope of the Residential Energy Storage Market Report

The market report includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Residential Energy Storage Market Segment Insights

Power Rating Segment Analysis

Based on power rating, the residential energy storage market is divided into 3-6kWh, 6-10kWh, and 10-20kWh. The 3kWh segment held a major market share in 2022, owing to its power storage efficiency to provide backup for an average household or a small business.

3kWh storage batteries are efficient and highly durable. Key players in the market are focused on creating batteries that are light in weight and maintenance-free. Growth of the segment is thus attributed to the development of various features in batteries to ensure efficiency.

The 6-10kW segment is expected to expand at a significant growth rate during the forecast period, due to the versatility of the product in residential as well as industrial usage. The batteries offer a battery backup for large-scale applications. The batteries store enough energy to run home appliances such as air conditioners and refrigerators that using a large amount of energy. Furthermore, the compact structure of the batteries is suitable for household use, which is expected to drive the segment in the coming years.

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Technology Segment Analysis

On the basis of technology, the market is segregated into lithium-ion, lead-acid, and others. The lithium-ion segment dominated the market in 2022 and is projected to expand at a considerable CAGR during the forecast period. This is attributed to the increasing demand for off-grid solar batteries, owing to their operational efficiency.

Residential solar systems generate power, which is used to run multiple activities in households. This energy is first utilized by the users and the excess generated energy is then stored in lithium-ion (Li-ion) batteries. The batteries are well-suited for residential use, due to their compact and lightweight structure that saves space. Moreover, the batteries charge rapidly and are highly durable. 1 Kg of lithium-ion battery stores around 150 kWh of energy. The batteries ensure uninterrupted power supply for household activities, in the event of uncertain power cuts, power outages, and during peak hours High operational efficiency of lithium-ion batteries drives the segment.

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Ownership Segment Analysis

On the basis of ownership, the residential energy storage market is segmented into utility, third-party, and customer. The customer segment is expected to expand at a robust growth rate during the forecast period, owing to the increasing awareness about energy storage among people amid environmental concerns.

Increasing emissions of CO2 and greenhouse gases are attributed to the uncalibrated usage of petroleum, crude oil, and fossil fuels for energy production. This leads to global warming and ozone layer depletion. Moreover, the reliance on solar energy as a power source saves electricity costs. Increasing efforts toward sustainable development are expected to fuel the market in the coming years.

Operation Segment Analysis

In terms of operation, the market is fragmented into solar and standalone. The solar segment is anticipated to grow at a rapid pace during the forecast period, as it offers extended power backup. Solar battery backups provide a power backup that lasts for days.

Residents from areas where the power outages are frequent and prolonged, prefer using solar batteries to keep their basic home appliances running. Moreover, the use of solar energy systems as a power source to run home appliances that consume energy is popular worldwide. Appliances such as refrigerators, water heaters, and air conditioners consume a lot of power. Connecting such appliances to the solar power source helps consumers cut down their overall electricity bills. The user-centric approach of solar energy systems drives the segment.

Regional Analysis

In terms of region, the global residential energy storage market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Europe dominated the market in 2022, owing to the increasing adoption of residential energy storage systems. Majority of households in the region use the residential solar PV setup to meet the energy requirements during power cuts. Furthermore, the rising trend of a complete home automation setup in the region drives the market in Europe.

Asia Pacific is expected to dominate the market during the forecast period, owing to high dependency of people in the region on conventional energy sources for power generation. High demand for power generation in the region is attributed to the increasing population and the rising costs of raw materials for energy generation. Countries such as China and India are highly populated countries in the region that majorly depend on coal and petroleum for power generation.

• According to International Energy Agency (IEA), India is the third largest country in the world in terms of energy consumption. According to the article published by IEA on February 9, 2021, India is required to bring in a clean energy transformation to achieve clean energy transition in the country, in the coming 20 years.

Moreover, the increasing population is directly proportional to the increasing demand for energy in the region, whereas, the rising per capita income is another factor that is expected to boost the market in the region in the coming years.

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