Energy storage price war: Quality is the critical factor, says Andreas Piepenbrink of E3/DC
pv Europe: How has business been for E3/DC in 2016?
Andreas Piepenbrink: Last year was extremely successful. We grew by 65 percent, virtually went through the roof. And we will be able to achieve that this year as well, although we didn't expect that to such an extent. With this in mind, we can be very happy with what we did in marketing and distribution. We are currently increasing our market share.
How do you view the start of 2017?
In March we had 700 orders; and this is set to rise. No one could have predicted that, not even at our most optimistic. Clearly, the installing companies are satisfied with what we do. And the same goes for their customers. This is also borne out by independently commissioned analyses such as by EuPD. We were in the black by March – just like for all of 2016. However, this will only cover the operative side of things. It is not enough to take care of investments into further growth. So the over-all result is still slightly negative.
How high were your losses last year?
Almost 600,000 euros. This came from our investments into new battery warehouse, new products for 2018 and 2019 as well as substantially more staff for 2018 and 2019. Our core business is steady, while we are growing rapidly. We are on track. And by 2018, we intend to be profitable for all our business activities.
Two thirds greater turnover does not mean two thirds more funds available. The struggle over prices is hard in the storage segment. How has it affected you?
Early in October 2016, we lowered our prices significantly. And we brought out our new Mini Black Line as an affordable entry-level product. Since then, we are no longer expensive: At 700 euros per kilowatt hour and with our unique system warranty we can keep up with the competition. This also opens up new markets for us, such as Italy and Australia, which we will start supplying in the coming months and years.
When the incoming orders start piling up, this might result in shortages and longer delivery times. Do your customers have enough patience?
Currently, we have our work cut out to keep up with demand, although our customers are also working to capacity so we have not had any complaints. The batteries are transported from Asia by cargo ship, which effectively takes three months. But we also operate without restrictive or ‘take-or-pay’ contracts, so that we have to be very flexible in how we deal with our customers.
Which target groups are most important to you?
Definitely installing companies. Three quarters of the systems we distribute go straight to that circle of customers. The other quarter will go through new partners such as N-Ergie in Nuremburg, the municipal utilities that are part of the Thüga Holding or our participating interests in RWE. That is a sales channel that we have opened up for ourselves and that the utilities are willing to join us in.
You mentioned generating more business overseas. How large is its share currently?
Too small to mention. In this respect, it is still early days for us. About a tenth of our storage systems are sold in Austria and Switzerland, and these markets are very closely linked to the German market. All told it is just a few hundred units.
How soon do you intend to get involved in Italy and Australia?
At first we will move into Italy, where the market promises sales of 3,000 to 4,000 storage units per year. We will take that on this year. The Australian market already is larger, reaching almost 10,000 units last year. We will need to think about logistics first. It would make sense to ship the batteries directly to Australia and to complete them there. After all, there already is a market, which will work to our advantage. We want to sell ten to 15 percent in these two markets by 2018.
How do you see the US?
The United States are mostly about back-up systems. We see a huge market developing there, but that will still take some time. These days, self-consumption is still stalled by net metering tariffs and economical concepts have yet to develop. Companies such as Tesla are the world’s largest battery manufacturer, and are poised to become even larger. Tesla Energy will easily be able to serve that market very flexibly.
Let us return home: How could the storage market in Germany develop?
At the moment, the political sphere seems to put on the breaks and is unwilling to accept batteries as beneficial to the grid. It also does not want to encourage commercial enterprises to continue to self-supply using PV. But this market is unstoppable. What works for private homes will also and in particular work for the commercial sector and industry. I am convinced of that. So far, we have seen a certain amount of demand from North Rhine-Westphalia, where some subsidies for commercial storage are in place. Anywhere else, this segment should experience only very moderate growth this year.
In what way are storage systems expected to develop from a technical stand point?
There are two trends that I can see: First, batteries will become larger. For the Black Line of our E series we have introduced new battery types and a larger battery, which might even be a little larger than necessary. By controlled discharging and through the system reserves we can even achieve a discharge depth of 100 percent. The energy density will continue to increase and with rising sales of electric cars, the price per cell will also continue to fall. In 2018 and 2019, we will again see slightly falling prices for batteries.
For the Intersolar, you have announced the new system Quattroporte. What innovations will it bring?
Quattroporte is Italian for ‘four doors’. The system is fully modular. It allows you unlimited options to put together any amount of output – just like stacking Lego bricks. The Quattroporte always fits. It is our first AC unit for commercial applications, and also with an eye on entering the international markets in Italy and Australia. However, this product is simple in its set-up and is also aimed at competitors that have so far been able to hold their own with highly simple products or as first-movers.
Why not introduce the tried and tested home power stations overseas?
It is too heavy and not really portable enough. With the Quattroporte, it is very easy to exchange individual modules. It is based on an extremely simple service plan. Maintenance is much easier than in a home power station. The cabinet is quite small, with an inverter module, a battery module and the energy management unit. The version Duo can store up to 21 kilowatt hours, and it is a three-phase system. This can be infinitely multiplied. For example, nine inverters and 12 battery modules can easily be combined to add up to 63 kilowatt hours or – quite easily – much more.
What else are you presenting at the Intersolar?
Along with the Quattroporte, we will present the next generation of the home power station, which has an output of 12 kilowatts. This is interesting for the market of primary regulation energy or for electric mobility. 12 kilowatts are sufficient to properly charge an EV or provide emergency power to a commercial business.
You mentioned two trends: What is the second development that you can see for storage systems?
The trend towards system warranties. Again, here we are ahead of the field. We do not give our customers a current value replacement warranty. This has no real definition. If a battery module stops working that usually renders the system useless. That is a bit of a sham. Our customers get a full warranty, which means that we will repair the system at no cost, even the electronics that is in the system. We can do this because we have excellent quality ratings: 95 percent of our customers rate us to be good or very good. When it comes down to it, I believe that it is quality which currently and in the future will make or break a supplier in this market. (Heiko Schwarzburger)
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