Tough competition in the upstream solar market means increased consolidation in the PV inverter and module-level power electronics (MLPE) industry in years to come. But the nascent energy storage and hybrid solar-battery sectors will take longer to shake out.
That’s one of the key takeaways from GTM Research's latest report, The Global PV Inverter and MLPE Landscape. It analyzes country-specific pricing and forecast details for microinverters, single-phase string inverters, three-phase string inverters, central inverters and DC optimizers across 25 vendors. (The number of vendors may shrink slightly if consolidation in the space continues as expected.)
"Inverter prices show no sign of stabilizing, current technology trends have not exhausted their cost-reduction potential, and many markets are still extremely fragmented,” wrote GTM Research analyst Scott Moskowitz.
It’s worth breaking each of those factors down one by one, starting with unstable prices.
Looking back, the new data for the second half of 2017 is positive for the industry. In a shift from figures released in June, it’s now set to be a record-breaking year for inverter and MLPE shipments, hitting 88 gigawatts worldwide, up from 80 gigawatts in 2016 and 59 gigawatts in 2015.
But 2018 will put an end to that upward trend. Falling demand in China, the United States and Japan will likely lead to flat shipment growth for next year. GTM Research projects that revenue will decline through 2022 due to price declines and “irregular demand,” with growth expected to pick up again in 2019 in most markets.
By then, pricing will be facing its next challenge -- this one technological.
“PV inverter pricing has actually stabilized in 2017,” Moskowitz noted in a multi-part tweet storm last week, “but it will re-accelerate downward with intro of next-gen 1,500V string inverters.”
String inverter architectures are taking market share away from central inverters in utility-scale solar applications, as well as opening up the potential for new hybrid structures that take advantage of each architecture’s best characteristics.
The next technological step is use of wide band-gap switching materials like silicon carbide and gallium nitride, which could provide cost-competitive alternatives in lower-voltage, high-performance applications over the next several years.
Beyond that, however, “there are few technology developments in the pipeline that will result in step-function price declines in the medium term,” he wrote. “We expect annual pricing declines to minimize post-2020 as a result.”
Still, that’s a lot of years of competitive pricing markets to contend with, likely leading to more consolidation. This trend has played out every year since 2013.
As of mid-2017, nearly one-quarter of the market was owned by two companies, Huawei and Sungrow, with runners-up SMA, Sineng and ABB each holding less than 10 percent market share apiece. Excluding China, SMA was the leader by both shipments and market share.
Still, more than one-fifth of the market belongs to the “all others” category, indicating the breadth of companies with a stake in the market. A significant number of these are in the energy storage and solar-plus-storage sectors where “so far the market is small, crowded and non-standardized,” Moskowitz wrote.
You can access the report here.