Market research firm IHS has projected in a new report that installed residential PV storage system capacity could likely hit 2.5 GW by 2017.

Naturally, Germany is leading the way in this arena, where a home energy storage subsidy went into place on May 1. In the leading solar PV country, it is increasingly competitive to store power collected via home solar panels and use it when the sun is down (especially in the early evening hours of peak demand and higher electricity prices). While this is still a very nascent market, it is increasingly attractive for consumers to generate and store electricity than to buy electricity from the grid.

“Residential PV customers are striving to maximise their own consumption of the energy they are generating,” said Abigail Ward, PV analyst at IHS.

This is because rising electricity prices and decreasing feed-in-tariffs are serving as a disincentive for consumers to export their power to the electricity grid.

Such developments, combined with the introduction of the German Energy Storage Subsidy, are forecast to accelerate the overall growth of the residential solar storage market.

“Not only will the incentive reduce the upfront cost of residential storage solutions deployed in Germany by up to 30%, it will also generate volume in this immature market—and price reductions achieved by mass production will also benefit installations in other countries,” said Sam Wilkinson, PV research manager and co-author of the report.

“For battery-based residential PV energy storage systems, IHS predicts an average cost reduction of around 45% during the next five years, largely due to decreases in battery prices.”

Previously, an IHS report projected that the PV storage would hit $19 billion by 2017.