We've heard word of a solar PV inverter shortage for a while now. Feed-in tariffs often require the system to be "on and producing power" to garner the subsidy -- and no inverter means no money for the power producer.
We just caught this letter from Marko Werner, Chief Sales and Marketing Officer at PV inverter leader SMA, regarding solar inverter delivery:
The delivery situation in the PV inverter market has continued to come to a head over recent weeks. As you already know, the global market is currently experiencing a severe shortage of semiconductors and electronic components. The reason is that the semiconductor industry substantially reduced its production capacities last year due to the economic and financial crisis. However, since that time, the demand for electronic components, especially in the automotive and entertainment electronics industries, has once again significantly increased. The consequence of capacity shortages and the resulting scarcity of electronic components is a dramatic delay in delivery times for these components. Although the situation is affecting many manufacturing sectors, it has hit solar inverter manufacturers particularly hard.
We are well aware of what this difficult situation means for you and deeply regret the current development. We, too, relied on delivery schedules provided by the semiconductor industry and used them as the basis of our planning. Accordingly, we were the only inverter manufacturer to increase our manufacturing capacities to nearly five gigawatts as compared to the previous year by constructing the “Solar-Werk 1” back in 2009. In order to meet continuously high demand, we were also able to again more than double our capacities to around eleven gigawatts by constructing additional manufacturing facilities in recent months. Despite these developments, we are currently “only” producing at the high level of the fourth quarter of 2009 because we are currently unable to realize the planned doubling of our production quantities due to the component shortages.
Key suppliers, especially semiconductor manufacturers, have now informed us that they cannot keep their promises for additional delivery quantities. Due to the ensuing material situation, we are forced to accept certain consequences as a result: we will be reviewing our planned delivery quantities and informing you as to what quantities we will be able to deliver by June 30, 2010 in order to at least give you some material planning security. For all other quantities deliveries will presumably be delayed. Nevertheless, we are doing everything we can to continue to deliver a portion of these quantities on time. Still, from where we stand today, we estimate that we will not be able to deliver all confirmed units on time by June 30. We are currently rescheduling delivery dates based on the quantities we can confirm.
We can assure you that we are examining every conceivable solution and are continuing to work to improve the situation on a company-wide level. It goes without saying that we are holding ongoing negotiations with companies from the semiconductor industry to realize an increase in delivery quantities in addition to a number of actions being taken here at our site. In addition, the Bundesverband Solarwirtschaft e.V. (BSW) (German Solar Industry Association) is currently holding talks with power supply companies to evaluate whether connecting currently-installed solar power plants to the grid without inverters by June 30, 2010 would be a potential option. Such an approach would not only limit the use of so-called “temporary inverters,” but would also contribute to preventing economic difficulties for specialist trade companies.
As already mentioned, we have expanded our capacities to eleven gigawatts in order to meet high demand with short delivery times. However, these measures will only be completely effective when an adequate quantity of electronic components once again become available. According to estimates provided by the semiconductor industry, the situation should gradually improve during the third and fourth quarters.
We regret the current development and pledge we will be doing everything in our capacity to improve the situation.
Joe Scarci of microinverter firm SolarBridge put it a little more succinctly: "We are seeing longer lead times for a variety of electronic components. During the recession, semiconductor factories cut production, laid off workers, and reduced inventories. Now that demand has increased much faster than anyone expected, component suppliers are not prepared to handle it."
SolarEdge's VP Product Strategy & Business Development Lior Handelsman said, "Yes, there is a global shortage in electronic components and this is slowing everyone's ability to deliver inverters. To add to this, the coming drop in the EEG FiT in Germany is causing huge demands there, as companies need to complete installation before EOF June."
Handelsman sees the shortage in DSPs, FETs, diodes, and amplifiers, but foresees the lead times improving as additional capacity is brought on.
Raghu Belur of Enphase Energy said, "There is a huge inverter shortage in Europe...primarily because of IGBT shortages...We do not use IGBTs and also, we have long-term supply agreements with our key vendors that insulate us to a great extent."
Research house IMS presented at a solar conference a few weeks ago and here are some of their findings:
- delays in inverter delivery
- inverter shortages
- supply constraints
- projects not completed due to inverter shortages
- 20-week delivery times
They peg inverter shipments at 8.1 gigawatts in 2009, nudging 11 gigawatts in 2010, with SMA at 42 percent market share.
The components most in demand are IGBTs, microcontrollers and capacitors, according to IMS.
But Paul Detering, the CEO of commercial solar project developer and PPA provider Tioga Energy, believes the shortage might be affecting Europe more, saying, "While we have heard of shortages in Europe, we have not seen any shortages or increased lead times for the types of inverters that we typically use for large commercial projects in North America...We are working closely with our key partners as we plan the balance of the year."
The shortage of components and inverter lead-time expansion is likely hitting smaller inverter sizes more and, in any case, should abate in the second half of this year as we return to an over-supplied inverter market climate.