Home furnishings mega-brand IKEA has taken a bold step into the energy sector with the release of its new Solar Battery Storage offering. They promise to help UK homeowners make savings on their electricity bills, as well as increase the rate at which they can reap the benefits from their solar investment. Considering their brand recognition, it would be hard to overlook the potential for disruption. The UK is likely just the beginning.
The first thing to clarify is that IKEA is not making the batteries themselves. As the de facto kings of flat-pack wooden furnisher, IKEA has branched out in many directions but stationary battery engineering would have been a impressive feat. The batteries will in fact be sourced from existing battery suppliers including LG and German manufacturer Sonnen, coordinated by their solar storage partners, Solarcentury, the UK’s biggest solar supplier.
“We’re committed to helping homeowners reap the benefits of going solar and our business partnership with IKEA is a significant step forwards for the renewable energy industry. The cost of solar installations has dropped considerably in recent years and is in fact 100 times cheaper than it was 35 years ago. We believe IKEA and Solarcentury are bringing the most competitive package to the market yet so more people than ever before can profit financially and environmentally by producing their own energy,” said Susannah Wood, Head of Residential Solar at Solarcentury commented.
The batteries, starting at £3000, are designed to work alongside existing solar panels or as part of a brand new combined home Solar Panel and Battery Storage system, starting at a total cost of £6925. This is not the cheapest on the market – UK startup Powervault offers its own home battery product from £2,500 – but it is 25% cheaper than Elon Musk’s Tesla Powerwall.
You also have to admit that the leading global one-stop-shop for all things “home,” is a far more advantageous platform than, say, a thinly spread electric car dealership. There are more players in the market of course, and the average modern consumers are more savvy than to buy a lower grade system based on reputation in a different field alone.
Consumers interested in solar plus storage will care about return on investment above all. By adopting the Solar Battery Storage system. “Homeowners would see their savings doubled and their electricity bills cut by up to 70%” say IKEA. With the average UK household electricity bill coming in at £584, homeowners who install solar panels could benefit by £380 in the first year after purchase if only using 40% of the solar consumed electricity or £560 if using 80% of the solar consumed electricity.
It will be 12 years – at a 6% annual return based on current prices – before homeowners can expect to pay off the initial capital invested in the system. They will however be generating and using clean energy, with obvious moral and environmental value.
“At IKEA we’re always looking for ways to help customers take positive actions at home for both the environment and their wallets. We know that our customers want to live more sustainably and together with Solarcentury we will help them to get more value from their solar panels and do just that. With energy bills already going up 15% this year, there’s never been a better time for customers to take back control of their electricity bills and maximise their savings by switching to solar and solar storage,” said Hege Saebjornsen, Country Sustainability Manager, IKEA UK & Ireland.
With relatively high and increasing energy bills the UK is an unsurprising launchpad for IKEA energy storage business. UK Government ministers also recently launched the Faraday Challenge, pledging £246m of funding for battery research, £45m of which will be used to create a national battery institute, a virtual grouping of universities across the UK focused on developing battery technology.
“Its work will quite literally power the automotive and energy revolution, where the UK is already leading the world,” said Greg Clark, the government’s business secretary. “For individual consumers, I think the opportunities are for businesses coming in, for the Amazons and Netflixes of the world coming into a traditional sector and offering different ways for consumers to engage,” added Andrew Burgess, an associate partner at Ofgem – regulator for the electricity and downstream natural gas markets in Great Britain.
Tesla certainly fits the consumer facing business profile Burgess eludes to, and while IKEA’s reputation and success is much longer-lived they still portray the key values of a modern consumer focused retailer. What’s more, IKEA provides global reach and convenience for new homeowners and home-improvement consumers. If, as it seems, they are backed up by experienced energy partners and a good product, they could represent a very disruptive force on the global energy storage market.