Cooling off in Europe: Residential Energy Storage Rushes to Southeast Asia

In 2022, the European residential energy storage market boomed, attracting a large number of suppliers to enter, resulting in a destocking phase that continued into 2023. With the decline in energy and electricity prices in Europe, users have a wait-and-see attitude towards purchasing residential energy storage products. In addition, large-scale strikes by local workers have severely delayed the installation progress of residential energy storage.

Overall, the European residential energy storage market has significantly cooled in the first half of this year. In this case, residential energy storage manufacturers are pursuing new business growth by expanding into new markets, and the Southeast Asian market has recently received much attention.

Extreme weather + favorable policies drive the development of the Southeast Asian residential energy storage market

Firstly, extreme weather has catalyzed the power generation and consumption conflicts in Southeast Asia. This year, El Niño has challenged the power supply of Southeast Asian countries.

Specifically, countries such as Thailand and the Philippines, which generate electricity from fuels such as diesel, natural gas, and coal, have experienced large-scale power rationing and blackouts due to insufficient fuel supply. Vietnam, which relies heavily on hydroelectric power, has also reduced its power generation due to drought, which cannot meet the needs of local life and production.

Secondly, with the advent of the era of affordable photovoltaics, it further stimulates the development of the "distributed rooftop photovoltaics + residential energy storage" power self-consumption model in Southeast Asia. Moreover, due to the overall fragile power infrastructure in Southeast Asia and the predominance of off-grid grid forms in some island countries, coupled with the scattered nature of island residents and poor standards for overhead lines, the investment and use of rooftop photovoltaics + residential energy storage can better guarantee the stability of residential electricity consumption.

In terms of policies, some Southeast Asian countries have introduced preferential policies for the installation of rooftop photovoltaics, expanding the scope of electricity transactions, and stimulating the demand for installed capacity of residential energy storage to some extent.

What are the opportunities for Chinese residential energy storage companies entering the Southeast Asian market?

Currently, the Southeast Asian residential energy storage market has not yet cultivated local companies with monopolistic positions. Under the Belt and Road Initiative, Southeast Asian countries have reached good two-way cooperation with Chinese companies. The local market can deeply explore the Southeast Asian residential energy storage market with the advantages of Chinese companies in terms of funding, technology, and talent.

Leading battery companies are seeking a second growth curve, and the strategy of developing both dynamic and storage drive is the trend. Some companies can quickly enter the energy storage battery production while deploying power battery capacity in Southeast Asia.

In addition, inverters are also a good sector to enter the Southeast Asian residential energy storage market.

According to the application scenarios in Southeast Asia, from the perspective of off-grid and grid-connected analysis, off-grid inverters are more suitable for areas with no large-scale power grid and isolated grid systems; for areas that can profit from excess power on the grid, grid-connected inverters are more economically viable. In addition, hybrid inverters with both off-grid and grid-connected functions have a broader market outlook for diversified demand.

From the perspective of high and low voltage, although the trend of high voltage in residential energy storage is obvious, residential energy storage systems under high voltage test the consistency of battery cells, have higher requirements for BMS, and the total cost projected to the product is higher. , low-voltage residential energy storage inverters are more popular in the price-sensitive Southeast Asian market.

In addition, the Southeast Asian residential energy storage market tends to be a sinking market. Its users have relatively weak purchasing power and are more price-sensitive. In addition, residential energy storage systems are highly professional and consumers do not have enough brand awareness. Price products have an advantage.

However, low-price products are a "double-edged sword" for residential energy storage in Southeast Asia. On the one hand, new players such as small and medium-sized enterprises can occupy the local market through low-price strategies; on the other hand, low-price strategies may induce companies to "pass off inferior goods as good ones," disrupting the local market and eroding user trust.

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