Solar Inverter Trends

Prices decline as demand and competition increase

With solar tariffs falling to a record low in the recent auctions, developer margins continued to be squeezed, resulting in a strong market push to reduce capital costs. Consequently, module prices fell from Rs 33 per watt in the first quarter of 2015 to Rs 22 per watt in the first quarter of 2017, a decline of 29 per cent year on year. Similarly, engineering, procurement and construction (EPC) prices fell from Rs 49 per watt to Rs 35 per watt during the same period, decreasing by 22 per cent year on year. In tandem with the downward spiral in solar module and EPC prices, balance of system (BoS) costs too have fallen sharply over the past year.

One of the most critical components of BoS is the solar inverter. In addition to being a vital element for deciding the transformer rating and other such significant parameters, solar inverters are responsible for a large part of BoS costs. Increasingly, technologically advanced and cost-effective inverters are being introduced in order to tap the opportunities in the Indian solar segment, which looks to add another 87 GW of capacity over the next five years.

Central versus string inverters

While central inverters have been traditionally used to convert the direct current generated by solar power plants, string inverters are now being increasingly deployed across the world. Central inverters differ from string inverters in their basic design. While the former is centrally connected to all solar power module arrays, the latter is a smaller inverter connected to and controlling only a single array or string of solar modules. Central inverters have lower per unit power cost but higher installation costs. String inverters, on the contrary, help in lowering BoS costs despite having a higher per unit cost. Moreover, a central inverter has simpler connections due to fewer components, whereas a string inverter has more interconnections but requires lower ongoing maintenance. String inverters offer greater modularity that helps in case of untoward incidents, allowing only the affected array to be turned off instead of the whole system.

String inverters have evolved over time, from four- and six-string systems to 12-string inverters. The new inverter systems are equipped with advanced grid features to accommodate smart grids as and when introduced into the system. Further, string inverters are modifying themselves into enhanced energy management centres with the use of sensors and weather monitoring tools.

Modular inverters

Technological evolution has given birth to another class of inverters called modular inverters. Similar to a string inverter that is connected to a central junction box, this technology typically comprises a number of modules within one inverter. Each of these modules has independent components such as capacitors and inductors, which allow the inverter to function in the event of any component failure. The number of modules functional at any given point in time is dependent on the irradiation recorded by the system. As a result, the system usually starts with only one module that receives sunlight in the morning and the other modules get activated later as the sun charts its trajectory through the day. The auxiliary consumption of power required to start an inverter, which is typically 1 per cent of the inverter capacity, is significantly low for modular inverters. For a 1,000 kW monolithic inverter (with a single module), about 10 kW is required to start the system. However, since a 1,000 kW modular inverter is made up of 10 modules of 100 kW each, the power needed to start the module will be only 1 kW or 10 per cent of what is required by a traditional inverter.

Manufacturing trends

In India, the use of central inverters is predominant because utility-scale projects dominate the solar industry. The most common offering in this category so far has been the 1 MW inverters. Of late, several companies have started offering bigger inverters with capacities ranging from 1.8 MW-2.5 MW. Currently rated at 1,000 V, most companies are planning to make their new range available in India, driven by a global shift towards 1,500 V inverters.

Driven by the government’s target of achieving 100 GW of installed solar power capacity by 2022 and the Make in India initiative, a number of foreign players such as ABB, Schneider Electric and Hitachi have established inverter manufacturing facilities in the country. In September 2016, ABB opened its second manufacturing facility in Bengaluru, doubling its production capacity in India. Meanwhile, Bonfiglioli has incorporated Bonfiglioli Renewable Power Conversion India, which has set up an inverter manufacturing unit in Bengaluru. Schneider Electric too has a manufacturing unit in Bengaluru.

From a taxation point of view, the effective cost of assembling solar inverters in India is slightly higher as compared to that of direct imports. There is currently a concessional duty of only 5.15 per cent on the import of fully assembled products as against 7 per cent on locally assembled products. With the implementation of the goods and services tax, this anomaly in favour of imports is likely to be removed. This will further boost inverter manufacturing in the country.

Price trends

Prices have continued to fall in tandem with the fall in general capital costs in the segment. As the demand for solar equipment continues to grow, the supply is also increasing significantly, leading to a drop in prices. The competitiveness in the market has brought down prices further, encouraging investments in the segment. Inverter prices are likely to fall further, although not by a large margin.

Market trends

The Indian solar inverter market is highly consolidated with the top 10 companies accounting for 95 per cent of the market. However, competition among the top companies is high, which leads to constant price revisions. Globally, in the past year, inverter prices have eroded by 17 per cent to reach $0.03 per watt for most companies. SMA and GE, however, continue to sell their inverters at a premium.

As the Indian solar space is dominated by the utility-scale segment, manufacturers are now offering higher-capacity inverters. But the shift to 1,500 V inverters is sluggish due to their high price. Despite the small installed capacity so far, the rooftop segment witnesses strong competition from inverter manufacturers as the prices are a tad higher than the utility-scale segment. Prices vary from $0.07 to $0.17 per watt, depending on the size and specifications of the installation. In the utility-scale segment, ABB, Schneider, SMA, Toshiba and Mitsubishi Electric (TMEIC), and Hitachi are the dominant players. Barring SMA, all the others now have domestic assembly units. Delta Electronics, SMA and Zever Solar, along with Kaco and Fronius Solar, are some of the top manufacturers in the rooftop segment.

According to BRIDGE TO INDIA, the country’s inverter market has been dominated by ABB, with a market share of 26.7 per cent or 2,015.6 MW installed during the period October 2016 to September 2017. It is followed by TMEIC with a share of 15.6 per cent of the total market or 1,177.6 MW installed during this period. The third largest player for the period is SMA with 1,132.4 or 15 per cent of the market share. Other notable companies include Hitachi HIREL (12 per cent), Sungrow (8.3 per cent), Huawei (6 per cent) and Schneider (4.7 per cent).

Future outlook

Going forward, as the country pushes to meet its solar capacity addition targets, the demand for solar inverters is expected to rise proportionately. There will be an increase in demand in the utility-scale segment, including medium-scale, large-scale and ultra mega power projects, as well as for rooftop, decentralised and off-grid installations. Easy-to-use and modular-styled microinverters will also foster future growth. Moreover, the Indian market is likely to become less concentrated with several new domestic and international players looking to enter this space.


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