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Will SMA Solar Die like Q-Cells and Centrotherm as Chinese Solar Inverter Companies gain Traction

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SMA Solar

The stock price of the company has touched new lows, as investors are anticipating that the company will be unable to face the onslaught of the Chinese solar inverter manufacturers. Note SMA Solar held a dominating 40% solar inverter global marketshare in 2010, compared to the solar panel manufacturers, none of which has managed more than a 10% marketshare. SMA Solar however, is now feeling the heat of the competition as solar energy prices continue to go down steadily. Chinese solar inverter makers are also selling photovoltaic inverters at almost 30-40% discount over the Western producers. Though the quality of the ChineseSolar Inverter made inverters is lower they are slowly improving it and the price differential is quite huge.

Many of the Chinese electrical heavyweights have entered the industry lured by the massive domestic market in China which is set to dwarf other countries from 2012. It is notoriously difficult for a foreign company to make a mark in China where local companies have a huge advantage through cost and implicit support. So SMA Solar is set to lose out in the biggest solar inverter market. Also SMA Solar Inverters suffer from the problem of higher costs compared to the Asian solar inverter players. Even US solar inverter companies like Solectria have lower costs than SMA. As solar system price has come down drastically, pressure has increased tremendously on solar inverter companies to lower prices. The days of 40-50% GM for solar inverter players are gone for good and the stock price has already discounted that.

The biggest fear is that SMA will go down like the previous industry leaders in solar technology, Q-Cells and Centrotherm. Both of these companies were the leaders in their respective solar segments only 2-3 years ago. But competition from China has changed their fortunes quite dramatically such that both have gone bankrupt. SMA Solar too faces the same outcome unless it is able to pull off a miracle. Times have been tough for Western Green Companies even as leaders like First Solar and Vestas have seen their stock prices tank by more than 90% from their peak.

Here is a list of some of the major Solar Inverter Companies:

1) SMA Solar – The Big Daddy of the Solar Inverter Market with a   40% Marketshare of the Global Market. This German company has become the most valued solar company in Germany beating out the old stalwarts like Q-Cells  and Solarworld. SMA Solar has managed to maintain its marketshare and grow as fast  with the global solar demand unlike some of its competitors. SMA Solar faces tough times ahead as the growing inverter industry attracts numerous competitors and it remains to be seen whether it can avoid the fate of Q-Cells.

2) Power-One - The US power management company has shown the fastest growth in 2010 and has increased its marketshare to around 13% to become the No.2 global player. Power-One is mainly concentrated in Europe and is now expanding to Asia and its home market of USA.

3) Kaco New Energy – Like SMA, this is also a German company though privately held. It too benefited from the strong growth in German solar market in 2009 and 2010 to become a large players.It is has not grown as fast as SMA but is still a big players.

4) Fronius International – Very similar to Kaco in terms of its growth and being German. Fronius was a top 3 player in 2009 but has seen upstarts  like Power-One take more marketshare.

5) Satcon - Satcon is similar to Power-One but has not grown as fast nor does it have the high margins of its bigger competitor. It is strong in the US utility market and is growing its operations there. Like Power-One shifting its manufacturing.

6) Schieder Electric – This European Electrical Equipment Giant got into the solar inverter market by buying up Canadian Producer Xantrex.

 7) General Electric – GE is trying to become an integrated player in the solar PV market supplying everything from products to services. GE is a big producer of wind energy inverters so getting into this allied business is not too tough for this company.

8 ) Sputnik Engineering - Sputnik is a Swiss company that has used the European solar growth to become a reasonably big player in the solar inverter market.

9) Advanced Energy – AEIS which is a US semiconductor company  is also a big manufacturer of solar inverters. It stands to benefit from the future growth of the Solar Market in the US.

Other solar inverter producers are Siemens, Delta Electronics ( bought Solon solar inverter division), ABB and many other small players. The Solar inverter market has also seen a major shift with the entry of micro-inverters by companies like Enphase. The Solar Inverter Market is seeing increasing competition as its large growing size attracts numerous companies.

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Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in or call me on +913340606492.

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