The World's #1 Renewable Energy Network for News, Information, and Companies.

Price Pressures Squeeze Solar Inverter Shipment Outlook

Larger inverter suppliers, especially those targeting utility-scale business, are increasingly feeling the burden of the supply chain's pricing pressures to lower costs, which will negate growth on the demand side.

In a new report, IHS says worldwide solar inverter unit shipments will rise 7 percent this year, but PV inverter revenues are heading the opposite way, a 9 percent decline this year to $6.4 billion, worse than the firm's earlier prediction of a 5 percent drop. (2014 will see a 9 percent rebound in revenues back to around $7.0 billion, while shipments will surge 19 percent to more than 41 GW.) That's because overall inverter prices are sinking fast, sliding to $0.18/W this year vs. $0.22/W in 2012. It's especially painful for big utility-scale projects; IHS says these will make up a third of global demand this year, up from 29 percent last year, but global prices for large central inverters will decrease 16 percent to $0.12/W.

One reason for the divergence is that solar PV technologies further up the supply chain — silicon, cells, and modules — have been bearing the brunt of the market's relentless cost-cutting demands, but now those pressures are moving further down the chain into the balance-of-system technologies, explained Cormac Gilligan, senior PV market analyst at IHS. Meanwhile, some of the larger established solar markets, especially in Europe, are slowing down dramatically, so an increasingly crowded market of inverter suppliers is fighting for less business. Favorite markets such as Germany and Italy also are reducing or eliminating subsidies, he pointed out, so project developers are submitting tenders at rock-bottom prices to win the business, which means they'll have to squeeze out even more costs.

Ironically, some of the emerging global solar markets are also ones where utility-scale solar is taking off, such as China, India, South America, and South Africa — and it's in these markets where pricing pressure can be most severe, with inverter prices as low as $0.06/W in China, India, and Thailand, IHS noted.

Gilligan said that makers of central inverters are trying to answer the market pressures by offering features that translate to some savings on the operations and maintenance side, such as higher input voltages (>1,000 V) and liquid cooling. Some inverter companies also are broadening their portfolios to include smaller three-phase inverters targeting more commercial-scale opportunities. China's still a relatively unique case where several domestic utility-scale inverter companies have held their turf, and western inverter suppliers are trying to get into the market, creating massive price pressure.

However, price pressures also are being felt for smaller three-phase inverters (20-35 kW) in utility and commercial applications, Gilligan pointed out. Some European markets will see prices for those lower-power inverters sinking 20 percent to $0.14/W. This is a growing sector in the U.S. for these types of inverters, he noted, predicting more than 200 MW of shipments this year, and pricing is still relatively higher than in Europe. But there's increasing competition too (he pointed to SMA and Power-One) so look for prices to start declining as they have in Europe.

Lead image: Stack of gold dollar coins being squeezed in a silver adjustable spanner, via Shutterstock

RELATED ARTICLES

Intersolar Europe 2015: Spirits Up, Stats Down

William P. Hirshman, Contributor Intersolar Europe, billed at the world’s leading exhibition for the solar industry, is indeed big. But Intersolar Europe 2015, one of five Intersolar-branded gatherings around the globe each year, was not as large as the an...
US Capitol

Republicans and Democrats Back Bill to Level the Playing Field for Renewable Energy

Vince Font, Contributing Editor U.S. Senators Chris Coons and Jerry Moran are leading a bipartisan effort to reintroduce tax code legislation aimed at leveling the playing field for renewable energy investment. The Master Limited Partnerships Parity Act w...
Solar thermal desalination

Solar Thermal Desalination Now Underway in Water-hungry California

Susan Kraemer, Correspondent Regional droughts are being exacerbated by climate change, which is mostly caused by what is tasked with bailing them out — fossil fuels. Israel, Australia, and now southern California have all turned to expensive energy-gu...
Memo pad on table

IRS Issues Solar Tax Equity Memo Stating the Obvious

David Burton and Richard Page, Akin Gump On Friday, the IRS issued a heavily redacted Chief Counsel Advice (“CCA”) memorandum, that addresses the intersection of solar investment tax credit partnership flip transactions and the wind production tax credit part...
Jim is Contributing Editor for RenewableEnergyWorld.com, covering the solar and wind beats. He previously was associate editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, ...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

SAP for Utilities

The SAP for Utilities conference is the most comprehensive SAP for Utili...

Training: Preparing for Rule 21 - SPI 2015

What: Rule 21 Training When: September 16th @ 4:30-5:30pm Wher...

Training: NEC 2014, AFDI, & Rapid Shutdown - SPI 2015

What: NEC 2014, AFDI, & Rapid Shutdown When: September 15t...

COMPANY BLOGS

Harnessing Emotions

Think about how you interact with your prospects. Are you going from the...

More Middle-Class Massachusetts Residents Are Going Solar

Massachusetts is known for the Pilgrims, Boston cream pie and its excell...

Solar Power Helps Detroit Community Light Streets

Residents of Highland Park, a city almost surrounded by Detroit, receive...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS