LONDON -- Prices for solar photovoltaic (PV) inverters will fall sharply in 2013 under fierce global competition for market share, new analysis has found, while this competition will encourage innovation.
In the latest edition of its annual report on The World Market for PV Inverters, analysis firm IMS Research (now part of IHS) has predicted a drop of 5 percent in this year’s global inverter market, to US $6.7 billion.
Although PV inverter shipments have risen to 34.2 GW in 2013, IMS forecasts an 11 percent drop in average global inverter prices for the year. This will pose significant challenges for suppliers as shrinking profit margins coincide with growing competition due to a fragmenting supplier base.
As existing and new inverter suppliers expand their presence in the world’s PV markets, the market share of the top 10 suppliers has fallen from 2010’s 66 percent to 57 percent in 2012. Several recent major acquisitions – ABB’s acquisition of Power-One in April, Advanced Energy’s acquisition of Refusol in April and SMA’s majority purchase of Zeversolar in December 2012 – have had no real effect on the market, IMS said.
IMS analyst and report author Cormac Gilligan explained, “You could assume that, given that there have been three major recent acquisitions, the inverter market is consolidating – but in fact, because it has become more globalised, that is not the case.” For some major companies such as Power-One and Refusol and the companies that acquired them, he said, there were mutual benefits to be had.
“Power-One now has access to a multinational company with a global presence, allowing it to provide cost-effective servicing for its inverters as well as access to parts and components, and to develop a local manufacturing presence in new markets a lot quicker than if it was on its own,” Gilligan said. “Similarly, Refusol’s strength was predominantly in smaller three-phase string inverters where it was very strong in Europe, so that was one benefit for Advanced Energy, which was strong in the U.S. They could have access to two markets and combine their strengths.”
IMS predicts sharp decreases in demand for a number of markets in 2013. The Europe, Middle East and Africa (EMEA) region, which accounted for 18.5 GW or 82 percent of global inverter shipments in 2012, will contract to around 12.6 GW or 37 percent this year, leading to intense competition among the major suppliers. IMS predicts shipments of 14.6 GW in 2014 and subsequent further growth.
Price declines are expected across all power classes in EMEA in 2013, with three-phase string inverters projected to decrease by as much as 15 to 20 percent.
“We’re still forecasting shipments of 4.2 GW for Germany, so still a very large market, but relatively smaller when compared to some other markets,” Gilligan said. In 2012 IMS reported 7.8 GW for Germany.
“Europe will still be an attractive market, but not as high as it used to be,” said Gilligan. The majority of growth is predicted for the Americas and Asia; China, the U.S., India and Japan are expected to be the key markets this year.
Average inverter prices are already at very low levels in China, which will be the largest market for inverter shipments this year. IMS forecasts a further price drop for China, to US $0.09/W, as the market is dominated by low-price central inverters.
A strong increase in the demand for high-power inverters, which typically have a lower price per watt, will also drive down global pricing and will not be unique to China, the analysis firm said. A number of the largest markets will continue to be focused on utility-scale installations, and will see shipments of large inverters grow as a result. IMS forecasts that Japan's three-phase 250 kW-and-higher inverter market will grow from $50 million in 2012 to $290 million in 2013 as utility-scale projects are installed.
Innovation Becomes a Necessity
Under the intense price pressure, inverter suppliers are becoming more innovative in how they can create savings and value for their customers, IMS found. Many suppliers are releasing new inverters with advanced features or new designs, while inverter manufacturers are releasing new outdoor-rated and turnkey products. And inverters are continually being released that are rated at 1,000 voltage direct current (Vdc) or greater in order to allow longer strings and reduce DC cabling.
“Although the upfront capital cost of inverters that can handle 1000Vdc or greater is higher, there are many other benefits for customers, such as reduced upfront balance of systems costs and increased energy harvest, as cable losses are lessened,” Gilligan said.
IMS points out that some growth opportunities exist for suppliers in certain segments and regions, and this will contribute to a 2014 recovery and double-digit growth moving forward. Revenues are predicted to grow by 11 percent to reach $7.3 billion next year.
“There’s going to be upside potential in 2014 and onwards where the market will recover – opportunities in the U.S.’s smaller string inverter market and in Japan’s utility-scale market,” Gilligan said. “Inverter suppliers will have to establish themselves in new markets and carefully select which ones they enter. If they do so, there will be plenty of opportunities for them. But the idea is that they would enter these markets quckly and establish themselves early in order to reap those benefits,” he said.