We are generally bullish about the markets for energy storage and smart energy management. The market will grow fastest in countries and cities with the greatest penetration of intermittent renewable energy sources and high electricity prices. Declining costs of battery storage and business models that amortize the cost of installation over monthly payments will be positive for all segments of the market.
The residential segment – consisting of rooftop solar, residential storage, and smart energy exchange with the grid – is nascent but growing very rapidly in the EU and the U.S. We are bullish on companies like Sonnen, which are introducing a “virtual power plant” model that connects consumers with rooftop solar and/or energy storage into an “energy community.”
In addition to revenues streams from the sale and installation of their batteries, Sonnen charges a small monthly membership fee and offers members the ability to purchase “top-up” electricity from the Sonnen community for a 25% discount off German grid prices. Sonnen has access to the community’s batteries and can sell any unused surplus energy to the grid. Companies, like Sonnen, that establish market leadership in the high-growth residential segment will offer attractive investment opportunities – especially if they can penetrate the Southeast Asian market, which will likely offer the largest long-term opportunity.