PV inverter outlook: Small is king, for now

Researchers from iSuppli and IMS break down the market for PV inverters: what technologies and applications are hottest, what’s still holding back supplies, and where the future growth is.

September 22, 2010 – The market for PV inverters will be led by three-phase inverters (small and large), though emerging markets will eventually give a boost to larger centralized inverters, according to new market analysis from IMS Research.

PV inverter shipments should top 2009’s record levels with close to 17GW in 2010, with highest growth in the <35kw and >500kW range, at nearly 50% faster than the rest of the market. Suppliers in tangential markets (e.g. industrial drives and uninterruptible power supplies) are leveraging their power technology know-how to larger central inverters. Smaller three-phase inverters (10-20kW), though, are seen growing 170%. 500kW inverters will grow similarly and see “much faster growth” as utility-scale installations emerge — though their lower price/W will keep them with only ~10% of revenues by 2014.

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World market for grid-connected PV inverters by power rating. (Source: IMS Research)

Though midsized central inverters represent the lower initial investment, the market for commercial installations currently focuses on very small (three-phase) and very large (central) inverters, notes IMS Research PV analyst Tom Haddon. A range of suppliers have come out with new products in the 10-20kW range this year (SMA, Kaco, SolarMax, Power-One) that “offer greater system design flexibility, easier installation and higher energy yields — and also better grid integration, a crucial factor given the medium voltage directive and reactive power legislation in Germany,” he writes.

As utility-scale projects e.g., MW-sized substations come to fruition in the US, India, and China, the larger central inverters are expected to shine. But, smaller three-phase inverters, flexible enough to handle small commercial to multi-MW utility-scale installs, should be the sector’s prime revenue source for the medium-term.

Microinverters vs. optimizers, IGBTs MIA

Balancing short-term demand and component scarcity with long-term costs is the key for all inverter suppliers, notes Greg Sheppard, iSuppli’s chief research officer, in a separate research note. He pegs a ninefold spike on global inverter shipments to 23.3M units in 2014, with sales jumping 68% to $8.9B over the period.

Despite a new emphasis on “bankability,” average inverter price/W is declining >13% this year, in part due to pressure from Asian vendors, and also from the increasing use of larger inverters — and partly to keep pace with customers’ expectations of price reductions. Going forward, Sheppard sees inverter suppliers being valued more on their impact on levelized cost-of-energy (LCOE) metric that takes into account not just the inverter’s price but also total energy production and lifecycle costs within a 20-year installation. And reliability may be the key, since inverters are the most failure-prone part of a PV system, he notes.

Component availability is still a big problem. For this sector, the main culprit is insulated gate bipolar transistor (IGBT) modules, which are finding hot demand in other areas from automotive electronics and wind power systems. “Conservative investments in new IGBT capacity have exacerbated the problem, he adds.

Among trends to follow in inverters is “module-level power management” technology, i.e. microinverters and optimizers, to ensure optimum output at the individual module level — they can help installations raise energy harvest levels by 2% to as much as 15%. Microinverters incorporate DC-AC functionality, while optimizers needs to be coupled with a string inverter. Microinverters are seeing rapid adoption for US residential installations, whioe optimizers are favored in Europe, he notes.

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