2010 on Track to Be a Record Year for PV Inverters; Will 2011 Derail Expectations?

August 17, 2010

Demand returned with installers rushing to complete their systems and take advantage of current renewable energy tariffs before any cut was made. Germany emerged once again as the largest PV market and inverter revenues generated in this country doubled in a year to close to €1.5 billion. The country’s importance to the global inverter market is unquestionable as it accounted for over half of all inverters shipped worldwide.

Uncertainty in other markets this year, most notably Italy and the Czech Republic, contributed to a record first quarter, and year-to-date shipments of more than 8 GW point to an incredible year for inverter suppliers.

IMS Research’s analysis of the evolving PV inverter industry has highlighted several technical trends that are shaping the market today. Many suppliers are releasing products that are designed to comply with both the reactive power and medium voltage legislation as well as providing scalable three-phase feeding for commercial installations in Germany including SMA with the Tripower inverter and Kaco with the new Powador inverter. Products released of this type are typically three-phase inverters between 10kW and 20kW in size which also claim to make system design more flexible and efficient.

The growth of utility-scale PV installations in Italy, USA and China has also led to greater demand of turn-key solutions. Fully pre-constructed inverter sub-stations, which are generally 1 MW or more in size, containing all the components needed to connect directly to the grid, have been released by a number of suppliers over the past 18 months. The turn-key inverter sub-station market has also been analyzed in great detail and strong growth is forecast: by 2014 IMS Research forecasts that 25% of all inverter shipments will be MW-sized turn-key sub-stations. With utility-scale installation pipelines in the US reaching into gigawatts and emerging markets like China and India focusing on utility-scale renewable energy production, the megawatt-sized inverter sub-stations — which provide considerable economies of scale savings — are becoming an increasingly important part of the PV market.

Following on from the strong first quarter of 2010, it is forecast that the PV inverter market will grow substantially building on 2009’s success. MW shipments are predicted to be over 60% greater than in the previous year with installations reaching close to 15 GW. With such high levels of demand, several suppliers are targeting aggressive capacity expansion strategies with SMA bringing its global production capacity to the 11 GW per annum mark and several suppliers are following suit.

However, growth levels of 60% per year are not sustainable for any sizeable industry and IMS Research current forecast models predict that the PV market will stagnate in 2011 with several core European markets showing a likely reduction in demand balancing the “pulled forward demand” effect in 2010. But the emerging markets in Asia and the USA are projected to offset the slowdown in Europe and it will be the inverter suppliers who are able to establish themselves in these emerging markets reaping the greatest rewards. SMA continued to dominate the market in 2009, with a market share of close to 40%, although the competitive environment may be very different in 2011 as the smaller suppliers struggle to match the economy of scale savings the larger suppliers achieve and a consolidation of suppliers could occur. Although 2011 may be a harder year for PV inverter suppliers, the longer-term outlook for the industry is somewhat brighter with a CAGR (compound annual growth rate) for revenues of almost 20% forecast through to 2014.

In-depth analysis of the PV inverter market, including detailed analysis of suppliers is available from IMS Research with the publication of the 2010 Edition of the World Market for PV Inverters.