This report assesses the prospects for residential solar, batteries and electric vehicles (EVs) in Britain and Germany. These technologies are expected to be at the centre of global energy system disruption in the future, because of declining costs and their close fit with a global energy system increasingly transitioning towards decarbonisation, decentralisation, digitalisation and democratisation. Strong mutual benefits make these technologies even more disruptive together than in isolation. The potential contribution of battery storage towards the electrification of mobility and heating further increases its relevance and impact.

Our focus is on Britain and Germany, as two of the top four solar and EV markets in Europe. As time goes on, it is expected to see even bigger opportunities in southern European and emerging economies. Like many European countries, both Britain and Germany are now reducing support for solar power, potentially slowing the transition to renewables. Britain ended all residential solar subsidies as of March 31, 2019 and support is steadily falling in Germany, and could be phased out under present guidelines, in the second half of 2020.

This report looks at opportunities for near-term growth in the residential solar, battery storage and EV markets. The authors show that batteries and EVs can boost the economics of rooftop solar, by enabling households to use more of the solar power they produce, thereby increasing savings on their electricity bills. These savings rise over time, as the cost of rooftop solar, batteries and EVs falls. In addition, we review how regulators can reform grid services markets, to put these technologies on a level playing field with conventional generation, which further boosts income. While not a focus of this report, we note that smarter domestic tariffs that reward consumers for using off-peak power can further drive demand, as will smarter EV chargers that contribute towards grid stability.

The authors' analytical approach was to estimate how many years of electricity bill, road fuel and other savings it would take for households to recoup their initial investment on various combinations of solar, batteries and EVs. Such payback periods are a useful measure familiar to households making these investment decisions. The models were developed using actual cost data as provided by a range of solar, battery and EV providers in Britain and Germany. Various cost reduction assumptions were made to calculate the payback periods for new projects through 2030.

Main Findings

1. Solar feed-in tariffs and higher retail power prices in Germany result in far shorter payback periods for residential solar systems.
2. Smart devices almost halve solar payback periods in Britain.
3. Adding an EV and/or battery system reduces solar payback periods in Britain.
4. Solar-battery-EV systems presently compete on an unlevel playing field in grid services markets.
5. Combined solar-battery-EV systems could quickly become an obvious choice for households with available roof-space and EV home-charging if the cost reduction assumptions bear out.