MUNICH Solarwatt, a German manufacturer of batteries that store power generated by domestic solar panels, expects to more than double sales next year compared with 2015 thanks to a new deal with E.ON (EONGn.DE), it said on Tuesday.
The exclusive distribution agreement, announced by German utility E.ON in April with little detail, would be beneficial for both sides, Solarwatt's Chief Executive Detlef Neuhaus said in an interview with Reuters.
Under the agreement, Solarwatt's MyReserve power storage system will also be sold by E.ON under its own E.ON Aura brand.
The deal will be a litmus test both for the growth in the retail market for battery storage and whether formerly conventional utility firms such as E.ON can harness the transition to new energy business models.
Germany, which is second to China in solar power capacity and derives 6 percent of its electricity from the sun, has 1.5 million mainly small rooftop photovoltaic systems whose power output used to be generously subsidized.
But the subsidies are no longer as generous and this is encouraging home owners to store unused solar power for their own use at times of peak electricity demand, or even to sell it back to the main power suppliers such as E.ON.
"We will have sales of 70 million to 80 million euros ($78-90 million) this year after 50 million in 2015 and we're aiming for more than 100 million in 2017," Neuhaus said.
"E.ON cannot develop storage systems and we cannot sell power. That's why we are a good fit," he said.
Dresden-based Solarwatt sold just 200 to 300 units last year but is aiming for sales of 2,500 in 2016 and between 5,000 and 8,000 in 2017, including both its brand and E.ON's.
Neuhaus said Solarwatt hoped to become one of the top three makers of storage batteries, a list that he said was made up of Germany's sonnen and Varta, and LG Chem (051910.KS) from South Korea.
Battery prices have fallen by a third over the past two years, thanks to economies of scale as well as cheaper materials and designs, and now cost between 5,000 and 7,000 euros apiece.
There are 35,000 battery systems in place in Germany and in 2016, another 20,000 will likely be added.
Solarwatt, whose main owner is BMW (BMWG.DE) heir and shareholder Stefan Quandt, has yet to make a profit though Neuhaus was confident that would change in one or two years. To avoid becoming to reliant on E.ON, Solarwatt is also strengthening its own distribution network.
E.ON, which has six million retail power customers, is set to spin off nuclear, gas and coal-fired plants and energy trading next week to focus instead on growing renewables, networks and services operations. [nL8N1AR0UF][nL8N1BE1KX]
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(Editing by David Clarke)