The solar PV inverter market is about $2.4 billion and growing as quickly as the solar market grows. And as the price of PV modules plummeted in 2009 – the price of inverters and balance of plant became a more significant portion of the entire system install.
While most PV module and cell manufacturers stand amidst a bloodbath of slim margins and murky market conditions, inverter manufacturers have been a bit more fortunate. Judging by the revenue, margin and stock performance of some of the inverter market leaders – it was much better to be an inverter manufacturer than a module manufacturer in 2009.
Here's a review of the inverter field in 2009 and some trends to look for in 2010:
SMA Remains the 500-Pound Gorilla in the Small and Medium Inverter Market
SMA Solar Technology is the leading pure-play PV inverter vendor with deep technological acumen, a wide-ranging product line and a strong global sales-channel. SMA has a global market share of greater than 45 percent, is ramping up production and will continue to win market share due to a strong patent position, aggressive R&D (5 percent of sales goes to R&D) and industry-leading inverter efficiencies of up to 98 percent.
According to recent corporate guidance, SMA's 45+ percent market share gives them more market share than the combined shares of the next four vendors (!). Those four vendors are Ingeteam, Fronius, Kaco and Siemens. It also looks like most of those Tier 2 players lost market share to SMA in 2009. And the "other" vendors, all 169 of them, are left to split up the remaining 35 percent of the market.
There is no player in the PV panel market with anything close to that dominance.
SMA inaugurated its new 18,000 square meter solar inverter factory this year, which takes its annual production capacity to 4 gigawatts. SMA claims that the new factory has the lowest possible energy requirements and includes its' own 1.1-megawatt solar installation (to capitalize on the Alaska-equivalent German sun). SMA announced that it will begin manufacturing North American products in Denver, Colorado in mid-2010 at a manufacturing facility with an expected one-gigawatt annual capacity.
In the third quarter of 2009, SMA increased its 2009 revenue guidance for the second time and revealed a record 1.2-gigawatt sales quarter at an improved margin even as the inverter price dropped to $.365 per watt.
Any aspirant in the small and medium-sized centralized inverter market in 2010 is going to have to go through SMA.
Market Acceptance of Microinverters and Distributed Inverters will Continue
Though met with some skepticism just a few years ago – microinverters and distributed inverters electronics are winning orders in residential, commercial and even in utility-scale applications. We've covered this market trend extensively; for a list of aspirants in this market you can visit this link or check out this report.
Microinverters and Distributed Maximum Power Point Trackers convey a number of advantages to solar installations compared to central inverters. By individuating the panels – maximum power point tracking is optimized for each panel. Power harvest is improved while losses due to shading, soiling and panel mismatch are reduced and overall system voltages are lowered. There are potential performance and reliability advantages to both schools of distributed PV electronics.
A number of solar suppliers and utilities have made alliances or acquisitions of distributed electronics vendors in what is clearly a validation of the potential for this new solar architecture:
- SMA acquired the micro-inverter technology of Dutch ﬁrm OKE
- Satcon has added DMPPT to its Solstice sub-combiners
- Enphase is working with Akeena Solar and SunTech Power
- Petra is working with PSE&G on a $200 million pole-mount AC module contract See Solar on the Pole.
- Tigo Energy is working with distributor AEE Solar
- Solar Edge is working with Schott, BP Solar and Gerlicher Solar
- NSC’s Solar Magic is working with SunTech Power and SunEdison
From a shipment standpoint, microinverter supplier Enphase is the clear leader with over 100,000 units shipped and in the DC-DC space, SolarEdge claims a backlog of tens of megawatts. Petra has a big order with New Jersey's PSE&G utility but has yet to ship any true volume. Tigo Energy has begun volume shipments through AEE (N. America), DC Power (N. America), and Enerpoint (Italy) earlier this year.
General Electric (and Other Big Players) Enter the $2.4B PV Inverter Market
When markets get big enough and interesting enough – General Electric comes a knocking. Having been in solar since 2004, GE has now entered the PV inverter space. They've spent the past 2 years developing a 600-kilowatt solar inverter, introduced last month, to go after the growing utility-scale solar market - using their expertise in renewable energy power electronics to bring a "smarter," inverter into the industry.
General Electric developed the first power conversion unit for its steam turbine in 1900 and has been active in power electronics for wind turbines for decades. Its 1.5-megawatt wind turbine is an industry workhorse and they have deployed 12,000 wind turbines in the market, totaling over 185 million operating hours to date. Each of its wind turbines has a two-stage converter module performing the power conversion function – in the case of wind: AC to DC to AC.
Expertise in wind power electronics translates very well into solar power electronics and now that utility-scale solar is front and center – GE's power plant expertise is a differentiator. GE has watched wind go through its growth stages and expects solar to go through similar growing pains.
"We have to be sure we can actually deploy that power into the grid," said Minesh Shah, GE's Renewable Systems Platform Leader. "Solar needs the capability to ride through disturbances on the grid. That's where GE brings its power plant experience. That's how we're different from Satcon or Xantrex," Shah added. (This concept is called “low voltage ride-through," a feature required as part of Germany’s 2008 Medium Voltage Directive. SMA has also incorporated this capability into some of their systems.)
The utility-scale solar inverter market is officially in the big leagues with GE joining the ranks of Siemens and ABB.
Smart Grids need Smart Inverters
The distribution and transmission grid will be increasingly stressed as PV installations become more prevalent and as power production becomes two-way instead of just downhill from utility to user (see Will Solar Crash the Smart Grid?). Inverters can serve a crucial role in adding intelligence to the rooftop whether it be in adapting to disturbances on the grid or to adjusting for power factor.
Add plug-in hybrids and distributed energy storage to the mix and it becomes more and more important to have smarts in the system. And where better to locate this smarts than in the electronics already at the site – in the PV inverter. The DOE's Solar Energy Grid Integration Systems (SEGIS) Program is the first salvo in this quest to add intelligence to the PV array and integrate it with an increasingly smarter grid.
As an example of intelligence in the inverter -- GE believes that their inverter line, "is making solar's interaction with the grid ‘smarter’ because of its ability to regulate voltage.” GE has studied large-scale renewable energy projects (>100MW) across the US that and believes that the grid can take the increased penetration... if certain guidelines and technologies are in place.
Amongst the many inverter (and storage) firms working on adding intelligence to the grid are Apollo Solar, Enphase Energy, Petra Solar, Premium Power, Princeton Power, PV Powered, Satcon and SolarBridge.
Photo via Apollo Solar.