Elon Musk, CEO of luxury electric car company Tesla (TSLA) , made a big splash with the introduction of its new product the Powerwall, a high-storage lithium ion battery for use in homes and businesses. The presentation of this new product came with a lot of pomp and circumstance, something that may have confused some industry watchers in Europe. For many living in Germany, a nation that has made a firm push to increase the use of solar power, home battery systems are nothing new.
As big as Elon Musk’s new product is, the fact is that he’s not the first into this particular pool. If you’re looking for how the home battery market may play out in North America, the first place to look would be Germany, a market where it’s already gotten real traction. Investors looking for the smartest play on Elon Musk’s bold vision for the future can likely find the market leaders of tomorrow by picking the winners from Germany’s today.
Germany Already Installing Home Battery Systems
The benefits of a home battery systems include acting as a back-up in the event of a blackout or allowing a home or business owner to avoid pulling power off the grid during peak hours when it’s costlier.
However, the real long-term benefits of getting a battery system like the Powerwall would come when it can be paired with a rooftop solar system. If your solar panel charges your battery during the day while the sun’s at its peak intensity, you can then use that power during peak usage hours later that night, reducing the power you pull from the grid at the time when it costs the most.
While solar power is rapidly growing in the United States, it’s already well-established in Germany due to a series of hefty government subsidies over the last decade. There are some 1.4 million solar systems or varying sizes throughout the country, combining for 38.6 gW of capacity by the end of March.
That’s part of why, in Germany, they’re rapidly approaching 15,000 home battery systems installed. None of which are coming from Tesla.
Germany Home Battery Market Already Strong
The German market for home battery systems is a strong one, well-established and expected to grow ten-fold by 2018. The suppliers of the technology for these systems offer up several names that may not be familiar to American markets…yet.
Elon Musk’s grandstanding may be part of his efforts to sell more Tesla products, but his efforts are also raising awareness for an entire industry. The growth of this industry is likely to be a rising tide that raises all ships, and there are a number of other successful players in the segment. That’s particularly true for those companies that already have experience in the German market, giving them a successful business model to expand on.
The leading global provider of these systems is Bavarian-based Sonnenbatterie. Sonnenbatterie is already well established, having already shipped more than 4,000 units in Germany and neighboring countries controlling more than a third of the market there. After their successful market entryin Austria, Switzerland and Luxemburg; the company tapped into the next European market by opening its first Sonnenbatterie-Center in Italy in 2014. Future expansion plans include establishing sales channels in the UK, Australia, and other European markets like Spain and France.
In America, Sonnenbatterie has already signed a deal with Sungevity and made plans to expand its already-successful business model into North America. Sungevity is the largest private third party solar PV ownership company in America.
Further, the companies’ latest residential energy storage system, ECO4, is based on Sony battery cells which gives the system further credibility with home and business owners which will assist to assuring the company continues to grow.
Sonnenbatterie has selected to partner with Eguana Technologies (EGT:CA) to provide the necessary power control and conversion system, Eguana’s Bi-Direx power control system (PCS). As plenty of the coverage of the Powerwall has pointed out, solar panels produce DC power while these batteries, and the electrical grid, function on AC. That means a good power control system, as well as other technology to ensure that your house is using the right power from the right source to ensure maximum efficiency for that time of day, are essential pieces of the puzzle.
The relationship between Sonnenbatterie and Eguana Technologies goes back over 2 years. Since then, Eguana has delivered over 4,000 of the companies Bi-Direx PCS to enable Sonnenbatterie’s energy storage systems, and Eguana recently reported that the demand for the companies Bi-Direx PCS continues to grow in Europe. Product volumes during Fiscal Q2 2015 were up approximately 28% quarter over quarter with customer forecasts also tracking higher for the balance of Fiscal 2015, making the Bi-Direx PCS the leading power control system for European residential solar self-consumption markets.
Eguana Already a Leader in Germany, Poised to Capture Market Share in United States
Eguana is another familiar name in the German industry that could be poised to break in big. Not only is Eguana the provider of power technology systems for Sonnenbatterie, it recently announced its partnership with LG Chem (LGCEY) , the number three provider of li-ion batteries for electric vehicles, for a home storage system available in America.
Eguana’s strategy of providing top-tier technology has its perks. While the average consumer may not be familiar with the name, those people selling batteries are. Battery companies are dead set on pleasing customers at this stage. Getting traction for the segment is important, so being able to ensure that customers are happy with the performance they’re getting is key.
As a leading technology provider, Eguana is likely to continue getting interest from battery companies. As the segment expands, more and more companies are likely to sign on with Eguana, making Eguana’s technology something that’s automatically installed along with their product, making Eguana a play that could be poised for tremendous growth as the industry takes off.Disclosure: In the purview of Section 17(B) of the Securities of 1933 and in the interest of full disclosure, we call the reader's attention to the fact that Equities.com, Inc. may be compensated by the companies profiled in the Spotlight Companies section. The purpose of these profiles is to provide awareness of these companies to investors in the micro, small-cap and growth equity community and should not in any way come across as a recommendation to buy, sell or hold these securities. Equities.com is not a registered broker, broker dealer, investment advisor, analyst, investment banker or underwriter. All profiles are based on information that is available to the public. The information contained herein should not be considered to be all-inclusive and is not guaranteed by Equities.com to be free from misstatement or errors. Readers are reminded to do their own due diligence when researching any companies mentioned on this website.
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