New arrivals transforming the market

This impressive result for inverter shipments in 2011, which was an increase of 10 percent over 2010, came despite the large inventory overhang from the previous year. However, although the industry saw a healthy increase in shipments, manufacturers were forced to make steep price discounts, particularly in Germany and especially for string inverters. This resulted in zero revenue growth for the industry in U.S. dollars and a slight drop in euros.
The table, “PV inverter shipments, installations and inventory” (see p. 66), shows that inventory levels on average have now returned to more healthy levels, although some countries, such as the U.S., had higher than normal levels of channel inventory at the end of last year. This is not unusual in countries that are set for high growth in the following year, nor for those markets that have a rapidly increasing customer base (it’s only natural for stocks to increase, if the number of buyers is also increasing). The situation in the U.S. was somewhat compounded however by the expiration of the 1603 grant program which led some customers to stockpile inverters towards the end of 2011 in order to qualify for projects to be completed in 2012.
2012 is shaping up to be another difficult year for inverter manufacturers (and all PV component suppliers) given the great uncertainty over incentives in most major European markets. Germany, Italy, France, and the UK which all drove substantial growth in 2011, are all set to fall in 2012. This means that inverter suppliers will need to diversify outside of their traditional markets in order to support their business.
Whilst 2012 is unlikely to see either revenue or shipment growth for the PV inverter industry overall, there still remain some hot spots within the market that could benefit some suppliers. There are still many countries that will see installation growth (although unlikely to be enough to counteract the major markets’ falls), such as China, USA, Japan, India, South Africa and Eastern Europe. All of these offer significant opportunities for inverter suppliers, though trying to address these new markets will be no simple task.
Similarly, although for all PV inverter products combined, shipment growth will be hard to achieve this year, IMS Research forecasts strong growth for microinverters, small three-phase inverters below 20 kW (outside of Germany) and also very large central inverters for utility-scale projects. Some of the microinverter suppliers like startup Enphase, which is preparing for its imminent Initial Public Offering (IPO), will undoubtedly be well placed to capitalize on this growth, but also those suppliers with a complete product portfolio that are able to address all segments of the market, even up to megawatt-sized inverters for utility-projects. Market leader SMA Solar Technology is an obvious supplier within this category, which may be well placed to take advantage of the challenges that a diversifying market presents.

Top 10 newcomers

There were many new entrants to the PV inverter market in 2010 and early 2011, while the market was really booming. However as the market has slowed, so have the number of new entrants. The below list of 10 newcomers to the market are a selection of companies that either could have a significant impact on the market (in terms of sales volume) or bring a new approach or technology to the industry. Some of these companies are likely to capture market share relatively quickly, whilst others may simply bring about a new approach to DC-AC conversion that other suppliers follow.
Now that the industry has reached annual volumes in excess of 25 GW, in order to enter and compete in the inverter market, new suppliers need access to the latest inverter technology, significant capital and manufacturing capabilities (or at least a partner that can provide these) and a wide sales and service network into dozens of countries’ markets. To simply be considered one of the top 10 suppliers of inverters, suppliers now need annual shipments of at least 800 MW and revenues of more than US$250 million. This will be beyond the reach of many of the newcomers featured here for some time.
The following summary shows IMS Research’s list of the top 10 newcomers to the PV inverter market. Some have been chosen as they’ve made an entry into the market via strategic acquisition, many are fast growing Chinese suppliers, and some are newcomers just entering the field.
LDK – Sunways: Although not a new supplier, German supplier Sunways recently became the acquisition target of China’s LDK Solar. Whilst Sunways has had only limited success in the global inverter industry with a sub-two-percent market share, having the might of major module and wafer company behind it, as well as opening up access to the booming Chinese market may change things. IMS Research estimates LDK was the world’s second largest supplier of wafers in 2011.
Bosch – Voltwerk: Another acquisition features in our top 10 list. Bosch Solar Energy recently signaled its intention to enter the PV inverter market by announcing its plans to acquire Voltwerk. Voltwerk, which was spun out of the struggling supplier Conergy was sold for 68 million euros. Like Sunways, Voltwerk has failed to make major inroads in the inverter market, but having a major conglomerate like Bosch behind it, could well change this quickly. The move to acquire Voltwerk shows Bosch’s commitment to becoming a complete solutions provider to the PV industry, and it is likely to invest heavily in further developing its inverter offerings.
Sungrow: Whilst not strictly a ‘new’ supplier, Sungrow is worth a mention as it is the first Chinese supplier to really make inroads into Europe. It is also the largest supplier to its domestic market, which is well known to be booming. IMS Research estimates it holds roughly a 30 percent share of the Chinese market and if China can install five GW this year (which looks very possible), and if Sungrow can maintain its market share, this would propel the company to easily become one of the top 10 suppliers globally in 2012. Sungrow also recently filed for an IPO and is now listed on the Shenzhen Stock Exchange, raising capital for its future expansion, highlighting its commitment to this market.
SolarBridge Technologies: Certainly not the first – or last – microinverter company to enter the market, but SolarBridge is perhaps one of the key challengers to Enphase’s grip in the North American market. SolarBridge has had a slightly different approach and is aggressively targeting the market with AC modules. SolarBridge’s route-to-market is going to be decidedly different to Enphase and rather than targeting installers and wholesalers, it’s aiming for partnerships with some of the leading module companies, which could well lead to very rapid uptake of its products, particularly at a time when module suppliers are trying to stop prices collapsing further and looking to increase product differentiation. SolarBridge has already announced partnerships with some of the key module companies including SunPower and Kyocera.

Samil Power: Another Chinese company that we consider more likely to become a global challenger. Having entered the inverter market back in 2008, it originally started as a manufacturer of variable speed drives (which is a very similar technology to that of solar inverters) and thus already have several years of experience. Unlike many Chinese suppliers, it has a high focus on product quality (its products score well in independent performance tests), possibly coming from its Australian CEO’s background in engineering. Although only a relatively small player in its home market it has managed to capture significant share in Australia and is also making inroads into the UK market.
Alencon Systems: Possibly an inverter manufacturer few have heard of, Alencon recently emerged and showcased its products at Solar Power International 2011 in Dallas. Its main product is a 2.5 MW inverter capable of delivering efficiencies up to 99.1 percent. What’s different about their product is that it can combine 3 to 40 of its 2.5 MW modules at 2,500 volts DC and its water-cooled modules are delivered in a 2.2 m³ package. These kinds of power densities are unheard of in the PV industry and could prove extremely attractive to developers of utility-scale plants. Although relatively new to the PV industry, it has several years’ experience in induction melting furnaces and is now attempting to transfer its expertise to inverters.
ArrayPower: Yet another disruptive technology supplier, however ArrayPower has a unique approach to module level power conversion using its so-called “three-phase sequenced inverter.” Its approach is to eliminate the standalone inverter and replace it with AC modules, by using high-frequency, amplitude-modulated current pulses at the panel level to produce a synthesized, three-phase AC wave. The approach is very different and may struggle to gain wide adoption, but could potentially see some great success if it manages to team up with some of the leading module suppliers and convince system developers of its approach.
Eltek Valere: Another entrant coming from a telecommunications background. Although more commonly working with DC power, it is now aggressively targeting the solar inverter market and is starting to see some penetration in Europe. Unlike many new suppliers attempting to get a piece of the market, Eltek benefits from being part of one of the largest power electronics companies with a widespread sales and service network. Being able to expand effectively outside of Europe and serve the global market will be crucial for any solar inverter supplier to succeed in the coming years and if Eltek can get traction for its products, it may be in a good position for the future.
Zeversolar: The new name for a newly merged company offering customers two Chinese inverter companies for the price of one! Eversolar and ZOF recently merged to create the new company and now being one of the top-five suppliers to the Chinese market, the combined strength of the company could see it become a major supplier in the global inverter market. Its new ability to offer products all the way from 1.5 kW right up to one MW is rare for a Chinese company and allows it to target all segments and countries.
Involar: Not strictly new, however worth a mention as Involar is the first Chinese microinverter we’ve seen enter the market. The company’s product is certified for most major European markets and claims to already be shipping in volume to many markets. Like most microinverters, it is also using AC modules as a route-to-market and plans to complete a 50 kW system in Shanghai, having already signed partnerships with several Chinese module companies.
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