Providing Value Throughout the Entire Solar PV Supply Chain

Within the past decade or two, the solar industry has experienced a great deal of evolution and expansion. In the U.S., one of the largest shakeups was in 2010 when PV panel prices dropped. The inverter market has also been subjected to changes, especially in terms of new topologies and increased functionalities.

While inverters continue to improve in price point, the question remains whether inverters are as prone to sharp price declines as PV panels. Inverters, the component that actively manages and monitors a PV system, are very different from static panels. Unlike panels, which are a more of a commodity, inverters are a highly-sophisticated, multi-functional, central component of the PV system and thus are possibly less prone to price gauging. Another aspect of this is that inverters provide value throughout the entire downstream value chain from distributor to homeowner. As such, it is important for PV inverter manufactures to design and develop inverters that offer an added value to each stakeholder in the value chain.

A PV distributor’s main goal is to provide value to installers and supply as much PV equipment as quickly and efficiently as possible. Distributors are able to do this if manufacturers provide products that help installers optimize their business and systems that improve their return on investment (ROI). Sometimes this can mean offering a wide variety of products in their portfolio, while at other times it can mean offering top-selling products.

There are many measures that manufacturers can take in order to support distributors, ranging from marketing and sales support to providing in-depth technical training. But when a manufacturer designs for value, then all stakeholders benefit. One of the most important ways is through innovative products that create demand from installers and homeowners. An example of this is a new innovative inverter design that uses a novel power conversion topology to achieve record efficiency. In addition to meeting market demand, these inverters are lighter and smaller, and thus are easier to ship and store compared with previous generations of inverters. This allows distributors to better manage their inventory and shipping costs.

The basic business model for installers is to install more and larger PV systems in the timeliest and most cost-efficient manner. There are a few ways that inverter manufacturers can help installers achieve this. The first is by helping installers close more sales with solutions that offer the homeowner a lower levelized cost of energy. However, there are many other areas in which manufactures can provide value to the installer.

One way is through improving design flexibility and simplicity of systems so that larger systems can be installed on roofs. This might mean enabling longer strings, strings of uneven lengths, modules in multiple orientations and different roof facets in a single string. Another way is through enabling oversizing — some inverters can even offer up to 155 percent oversizing. Other ways that inverter manufactures can provide value is by embedding more functionalities into the inverter as part of its standard offering, such as monitoring, revenue grade metering, and rapid shutdown. These additional features help installers have an advantage over competitors, especially if it allows them to offer a more competitive price quote.

The main focus of the end user of the system is to get an improved ROI or shorter payback period. Improved financials can be offered in a number of ways — by reducing costs or improving energy production. One way of reducing costs is by embedding more functionalities into the inverter. As mentioned above, in some systems enhanced safety and monitoring may incur additional costs, but when these functionalities are included then overall system costs are lowered.

Another option is through increasing energy production. This can be done through optimizing each module or improving the efficiency of the inverter. For instance, new inverters with innovative technology can reach 99 percent CEC efficiency rating. This increased efficiency means more solar energy is turned into useable energy. But efficiency isn’t the only area that can improve production, increased system uptime is also key and this is where O&M businesses enter the value chain.

Inverter manufacturers can also impact O&M companies in many ways. Module-level monitoring and remote troubleshooting, managed by inverters, have been key over the past few years in helping O&M companies become more effective and efficient as the amount of PV systems grow and age. However, this is not the only way that inverter manufactures can provide value to O&M companies. Additional options include extended warranties and design flexibility that mitigates expensive stocking. Another key way is through building more reliable products based on more reliable components — for instance, using film instead of electrolytic capacitors to improve reliability. This helps to increase system uptime.

With inverters playing a key role in providing value throughout the entire PV system, it means that the support services offered by the manufacturer might be more important than a reduction of a few cents per watt. Services such as training and post-sale technical support, are key to providing additional value throughout the value chain and not all manufacturers are necessarily poised to offer this type of support. 

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Lior Handelsman founded SolarEdge in 2006 and currently serves as our Vice President of Marketing and Product Strategy in which he is responsible for defining and steering SolarEdge’s strategic global marketing activities, media outreach, product roadmap and vision, corporate product strategy, as well global product management, and corporate business development. Prior to founding SolarEdge, Mr. Handelsman spent 11 years leading power electronics research and development teams and directing large-scale, multidisciplinary research and development projects. Mr. Handelsman holds a B.S. in Electrical Engineering (cum laude) and an MBA from the Technion, Israel’s Institute of Technology.  

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