2011: The rise of solar inverters

Solar PV projects are increasingly weighed in terms of reliability, power delivery, and “bankability” –and inverter technology is poised to make a difference in both areas, says GTM Research.

June 3, 2011 – One of the last steps in solar power delivery is flexing its muscles.

Solar PV developers, owners, and financial backers are increasingly looking to improve their projects’ economics with both reliability and power delivery, especially in the current climate of tightening incentive programs (take a bow, Italy). It’s a story about both technology and “bankability.” And PV inverter technology has a play in both fields, explains GTM Research analyst MJ Shiao in a new report.

“Advances in PV inverter technology promise to improve the commercial viability of solar power,” Shiao writes. In an increasing world of regional solar incentive cutbacks (FiTs) and competitive PPAs, long-term project generation and reliability are becoming crucial for project bankability, and inverter technology will continue to attract greater attention.

Solar inverters can be a key for solar project cost savings — inverter losses account for more than half (59%) of total PV project failure costs, GTM notes. Meanwhile, inverters can offer improved power quality and operability — grid-support features (fault ride-through, reactive voltage support) for larger systems make PV more grid-friendly, while microinverters and distributed power optimizers for smaller-scale systems can reduce installation costs and boost performance. (Distributed optimization and microinveter companies more than tripled their shipments in 2010, in a year seeing 21GW of overall global inverter shipments.)

The brightening spotlight on inverters also means challenges and opportunities for the suppliers themselves, from regional suppliers looking to expand to large electrical conglomerates seeing solar as a growth engine — and their efforts to differentiate will drive new technology development, Shiao notes. Europe’s dominance in the inverter sector will continue to be challenged by regional players in emerging markets such as North America and China. SMA, Power-One, Kaco New Energy, and Fronius make up >61% of global PV inverter shipments, but “a new guard of US- and Asia-based manufacturers” will expand — and EU-based incumbents must diversify and establish new market inroads to avoid stagnation.

Global PV inverter manufacturer taxonomy.
(Source: GTM Research)

(Note that while GTM Research projects $6.9B in inverter sales in 2011, the sector is somewhat stuck for the moment — PV inverter shipments actually declined 39% in 1Q11 vs. 4Q10, a second straight quarter of decline in the wake of late-2010 inventory builds, exacerbating what is traditionally a weak year-opening period, notes IMS Research. The company predicts slow growth in 2Q11 as well, with several GW of inventory plugging the supply chain as European demand remains weak.)