In this paper, we present a novel simulation model designed to estimate the regional diffusion of residential battery storage and its associated effects on the electricity system under alternative policy scenarios. A significant shortcoming of existing models for residential battery storage is their failure to consider regional variations, which results in diffusion estimates that are inherently inaccurate. Such regional disparities may stem from factors such as climatic conditions, income levels, and levels of innovation.

A similar pattern is evident with solar panels, where the adoption rates exhibit considerable regional variation. Such discrepancies in the adoption of solar panels and residential battery storage can result in local grid imbalances.

The model simulates the number of residential battery adopters by taking into account both financial and non-financial factors. Agents with typical load profiles make annual decisions on whether to invest in battery storage. This study examines the diffusion of residential battery storage in Hungary under various policy scenarios, including subsidy schemes with different levels of ambition.

Our findings suggest that an ambitious subsidy package of EUR 838 million could result in a total residential battery storage capacity of approximately 4 GWh, which would lead to a reduction in evening peak load of between 2.5 and 5%.

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