The battery firm expects sales to rise as renewables cause dramatic price swings in the country.

Sonnen, the Bavarian residential energy storage specialist, is bracing for an uptick in German sales on the back of falling electricity costs. The company suspects electricity prices could hit new record lows in the coming weeks as renewable energy floods onto the system.

“New records for renewable generation are usually set in late April or early May,” said Felix Dembski, Sonnen’s vice president of strategy.

As a result, “we expect a continued uplift in storage due to falling prices for renewables in Germany,” he said.

The current record low for electricity in Germany was set on May 8 last year, when solar, wind, hydro and biomass production accounted for 87 percent of the country’s 63 gigawatts of demand, and energy prices went negative.

The power price went to -€12.89 (USD -$14) per megawatt-hour, meaning users were effectively being paid to take electricity off the system.

Data from the European Climate Foundation-linked Agora Energiewende shows German electricity prices dipping into negative territory a couple of times since. On Dec. 26, 2016, Germans received a late Christmas present when the price hit -€12.25 (-$13.30) per megawatt-hour.

Low solar output and variable wind production, coupled with high demand, seem to have exacerbated winter price swings in the German market. A month later, on Jan. 24, 2017, prices spiked at €101.92 ($110.67), a differential of almost $124 in just 30 days.

In the last month, per-megawatt-hour prices have remained mostly in the €20 to €40 ($22 to $43) range, and on April 23 they went negative once again.

At the same time, new renewable capacity is coming onto the system at increasingly low price points. This month, for example, Danish developer Dong made headlines by committing to build two offshore wind farms in Germany without any direct subsidies.

“In German renewable auctions, the reductions in price for solar — and now offshore wind — are staggering,” said Dembski. “It’s going to keep going.”

Under these conditions the business case for batteries can only get stronger, he said. “Storage is the only technical solution to make sense of cheap, abundant, but intermittent electricity.”

Storage adoption could be further boosted by changes in German regulations, which could see landlords getting incentives to offer rooftop solar to their tenants, said Dembski.

Sonnen doubled its worldwide battery system sales in 2016, from 3,600 to 7,200 in 2015, and “we wouldn’t mind doubling it again this year,” Dembski said. “But our focus is not only on hardware. It’s also on extending grid services.”

At the same time, however, Sonnen is facing growing competition in its home market, both from international brands such as Tesla and homegrown players such as E3/DC. Its also seeing competitive pressure from utilities — last year E.ON partnered with Solarwatt to offer residential battery systems.

Sonnen has doubled down on its sonnenCommunity energy exchange platform, which Dembski said is in the process of being extended to Austria. It is also expanding elsewhere internationally.

The sonnenCommunity platform provides energy to 80,000 people, “and we want to double that number each year as well,” said Dembski.

On the international front, the company has so far shipped products to 26 countries, with a focus on Europe, the U.S. and Australia, working with more than 500 solar installers worldwide. Dembski hinted that Sonnen is not limiting itself to residential customers in some markets.

“Depending on the market you can always have a different strategy,” he said. “As a young company, we can move very quickly. We would be stupid to ignore any opportunity.”

He also suggested Sonnen was preparing for a product-related announcement at the forthcoming Intersolar Europe trade show in Germany, at the end of May. He did not give further details.

Sonnen’s entry-level 2-kilowatt-hour sonnenBatterie product costs €3,599 ($3,900). It can be scaled up in 2-kilowatt-hour increments to 16 kilowatt-hours.

Last October the company was reportedly considering a stock market listing after raising $85 million from investors, including eCAPITAL, MVP, SET Ventures, Inven Capital, GE Ventures, Envision Energy, and Thomas Putter, former CEO and ex-Chairman of Allianz Capital Partners.

Germany Trade and Invest, an agency supported by the Federal Ministry for Economic Affairs and Energy, predicts PV battery systems could reach an annual installation volume of around 50,000 systems by 2020.

“On average, the own-consumption share of PV-generated electricity can be increased from 35 percent to more than 70 percent with the use of a battery,” it said.

 

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