Solar Inverter Market

The Solar Inverter Market is seeing increasing pressure of competition even as the solar panel prices have started to stabilize. The solar module makers do not have much room to decrease prices given that most panel makers are still making losses and the gross margins remain near the low double digit level. On the other hand solar inverter makers have long enjoyed fat margins, thanks to low competition. But in the last couple of years, dominant inverter players such as SMA Solar have seen their profitability sharing with the entry of Chinese companies into this space. The entry of competition has been slower but with the growing importance of the Asian markets, the lower cost Chinese companies have increased their market share rapidly. This has led to a consolidation in the western solar inverter industry with companies such as Power-One being bought over by ABB and the bankruptcy of the smaller inverter makers. Even larger ones such as SMA Solar have not been immune.

SMA Solar, the biggest German Solar Energy company lost marketshare to the new solar inverter manufacturers in USA and China. SMA Solar held a dominating 40% solar inverter global marketshare in 2010, compared to the solar panel manufacturers none of which managed more than a 10% marketshare. SMA Solar however felt the heat of the competition, as solar energy prices continued going down steadily. The Chinese solar inverter companies have captured a massive chunk of global marketshare, given that foreign companies have a tough time in competing in China.

The going is getting tougher for the solar inverter companies, with 2013 revenues expected to shrink due to the sharp erosion in solar inverter ASPs. Even as the volumes will increase, the sharp erosion in prices have meant that the overall revenues have come down following the equation: volume X price = revenues. IHS reports that the solar inverter revenues this year will come down by 9%, as ASPs have fallen sharply in the utility inverter market. While the prices of solar inverters for the utility markets are 12c/watt in the western markets, they are 50% lower in the low price markets like India and China. This shows that the pain will continue for the solar inverter companies and we may see even more bankruptcies in the western world, where companies cannot compete at such prices. The western companies will be best serviced by moving their manufacturing centers to Asia, or they will meet the same fate as the solar module companies such as Q-Cells and Solarworld. This will also help them to better serve customers in the biggest solar markets such as Japan and China. SMA Solar has already bought a Chinese solar inverter company, but it remains to be seen if it can fully transition itself to a Asian focused strategy.

PV Tech

German inverter manufacturer Solutronic has filed for insolvency in a German district court.News of the company’s difficulties follows recent predictions of a worse-than-expected decline in revenue for inverter manufacturers and evidence of a slowdown in the inverter market in Germany. Solutronic was formed in 2004 and manufactures a range of inverters and energy management systems. In 2010 it posted what it said were record earnings, driven by a boom in its core German market. Total inverter shipments to Germany and Italy will drop by more than half to 5.7GW this year, down from 11.5 GW in 2012, IHS said, as subsidies in these countries are phased out.

Solar Inverter Market Sees Huge Price Pressure even as the Module Market Stabilizes

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