This article is being written the week after SpaceX successfully brought two astronauts to the International Space Station, which has been celebrated across the country as a great achievement for the United States Space program.
I certainly share the feeling that it is good to be back in space, but there is also this lingering feeling that 50 years after we landed on the moon, we might be somewhere further along than just getting back into space on American-piloted rockets.
Combining that with a pandemic that has brought us to a public health and economic situation more appropriate for the early 20th century than the early 21st century, and protests over racial inequality issues that many hoped we’d be further along with 60 years after the Civil Rights movement, it feels appropriate to reflect on the phenomenon of future-hype.
The blog article Why Have Home Battery Forecasts Been Staggeringly Wrong for Years? examines the future-hype specifically around home battery systems. Specifically, why were predictions made only four years ago, not 50 or 60 or 100 years ago, so wrong about where home battery systems would be now?
The author takes Morgan Stanley to task as representative of prognosticators, because they predicted in 2016 that by now, one in 10 Australian homes (where the author lives) would have a battery, and optimistically that it might be as high as one in 5. The reality is that about one in 136 homes do, even in regions with relatively high energy costs.
Furthermore, the number of batteries installed on homes flatlined between 2018 and 2019, despite high electricity prices and large subsidies on batteries.
The author argues that analysts have made the mistake of extrapolating demand from the falling cost of battery packs. The price of a battery pack has fallen on a trajectory that would have justified optimistic predictions, halving about every three years to 1/8 the price in 2019 as in 2010.
Given only that information, it might be reasonable to assume that the quantity of battery packs demanded might increase on an equally optimistic trajectory. But, he argues, consumers do not largely respond to incremental changes in the price of batteries, even if they are large increments.
They respond to batteries saving them money, and the price has not fallen that far yet. Until that happens, the market for home battery systems is just early adopters who want the technology for non-monetary reasons, and that market shrinks with each purchase, largely regardless of any incremental price drops. Any mass adoption will require that threshold to be crossed.
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PSR Analysis: Home battery systems are not something that we currently forecast at PSR, but trends in that technology are closely related to one of our core segments: engine-powered generator sets.
Currently, most home battery packs are used for peak shaving purposes, allowing homeowners to avoid paying higher energy prices at times when utility energy is in higher demand. That does not directly impact the residential gen-set market yet, as most of those units are used for emergency standby rather than peak shaving. But at the risk of engaging in future-hype, it is not difficult to imagine that the technology might improve enough to store sufficient reserves for emergency power, or to the author’s point, cheap enough to justify multiple units for that purpose.
Home battery systems may not generate enough revenue on their own to draw investment in process improvements or reach production economies of scale, but they benefit from the success of more-popular technologies that also run on modular lithium ion cells.
Readers can keep an eye on these trends by subscribing to our OE Link Production database, or to our PowerTracker North America report, which receives insight from 200 generator set dealers and 900 business consumers of gen-sets each quarter about the state and direction of the market. PSR
Tyler Wiegert is Project Manager and Power Systems Analyst
