Integral Components: Market overview of solar inverters

India has committed to achieving carbon neutrality by 2070, and solar energy is expected to contribute the lion’s share to this transition. Consequently, so­lar projects are rapidly being deployed in India. Ac­c­ording to the Ministry of New and Re­ne­wable Energy, India occupied the fourth position in solar PV deployment across the globe at the end of 2021. Solar power ins­talled capacity has reached around 61.97 GW as of November 30, 2022.

An integral component of solar installations is the solar inverter. Often termed as the brain of the solar system, an inverter plays the integral role of converting direct current (DC) to alternating current (AC) to make it usable across varied applications, industrial and residential ones. DC is not usable in consumer applications, making the solar inverter an extremely crucial com­ponent of a solar system. In addition to converting the solar energy captured and harvested by solar panels, solar inverters are also responsible for the supply of energy to the grid as well to off-grid connections in households. Moreover, solar inverters play a key role in ensuring the safety of a solar energy system, as the inverters automatically shut down during burnouts and severe fluctuations, thereby preventing damage from fires, and possible electrocution.

The global solar inverter market is set to grow over the coming years owing to the massive deployments expected for utility-scale solar power consumption as well as in residences, commercial establishmen­ts, industries and institutions. The solar in­verter industry is likely to be largely driven by technological improvements, inc­rea­s­ing demand for solar power and cost re­duction of components.

Renewable Watch presents a market ov­erview of the solar inverter segment, the key regions and players, challenges, and the way forward…

Market trends and technologies

The global solar inverter market has been estimated to create a market opportunity of roughly $18.97 billion by 2029, with the total market opportunity being $12.1 billion in 2021, according to a recent report by Maximize Market Research. The compound annual growth rate for this market between 2022 and 2029 is expected to be 5.78 per cent. In India particularly, the so­lar high capacity inverter market is ex­pec­ted to reach $1.19 billion by 2030 from $426 million in 2021, at a growth rate of over 12 per cent.

The solar inverter industry can be categorised into a multitude of segments ba­sed on the type of product, connection type, application and phases. By product type, the market is primarily segmented into string inverters, central inverters and mi­cro inverters.

For string inverters, the main working principle is that they are directly connected with the strings in the solar panels. A string inverter therefore receives DC po­wer directly from the main source, the solar panel. This power is converted into AC, making it usable across varied applications. The principal working model of a central inverter employs a centralised approach, wherein it combines all the DC received from the solar panel and converts it into AC. Micro inverters, meanwh­ile, work on the same principle as string in­verters. However, they differ in size, be­ing much smaller, yet their capacity is often greater than that of standard string inverters. Battery-based and hybrid solar inverters have also emerged in recent times. They have been created as advan­c­ed forms of the existing battery and str­ing inverters. According to JMK Resear­ch’s Annual India Solar Report Card: FY2022, string inverter shipments in India reached 11,193 MW during financial year 2022, while central inverter shipments stood at 8,683 MW AC.

Based on system/connection type, the industry is segmented into on-grid and off-grid inverters. According to Allied Market Research’s Solar PV Inverter Market Outlook 2030, the on-grid segment holds the largest share of the total revenue at present, due to a significant rise in investments in direct supply of electricity over electricity that demands battery storage. On-grid solar inverters also provide a cost advantage compared to off-grid ones, are easier to install, and provide easy energy feeding and better load management during periods of high electricity demand. Given these advantages, the subsegment is expected to hold its leading position over the coming years. India is also witnessing an influx of investment in utility-scale solar plants, solar parks and related infrastructure. Thus, the utility-scale segment is likely to hold a large share in ter­ms of application of solar inverters over the coming years.

Key regions and players

Over the past few years, the solar inverter market has been dominated by Asia Pacific in terms of both demand and supply, with countries such as India and Chi­na rapidly greening their power grids as well as large industries. The region not on­ly provides a solid consumer base for solar in­verters, but is also a solar inverter manufacturing hub. Data gathered by Maximize Market Research suggests that the Asia-Pacific region will continue to dominate so­lar inverter market growth between 2022 and 2029, holding over 43 per cent of the total market share by the end of this forecast period. This will be largely due to the rising power demand, the increasing push for clean energy by national governments, the upcoming and existing large infrastructure projects, and the increasing size and capacity of renewable energy projects in the region. Within Asia Pacific, China is the leading global market and is expected to grow further over the coming years. China’s significant growth has been attributed to the country’s strong hold on manufacturing, supported by the increasing demand for solar power in countries across the globe, which China can cater to. An overall rise in solar installations over the coming years will thus also complement the solar inverter industry.

The global solar inverter market includes several players, many of whom are now adopting technological advancements and innovations to keep pace with the growing demand in the market. Various strategic routes in terms of partnerships, mergers and acquisitions, new and im­proved business models, and rapid re­se­ar­ch in cost cutting technologies are be­ing adopted to improve one’s competitiveness in the market. The major players in the global market include Huawei Tech­nologies Co., Sungrow Power Supply Co., Go­od­we, Canadian Solar, SMA Solar Technology AG, SolarEdge Technologies, Sie­mens AG, Delta Electronics, Inc., Fimer S.p.A., Fronius International GmbH, Gin­long Technologies, Sunpower Corpo­ra­tion and Sineng Electric Co.

In India, the largest player in the string inverter market in financial year 2022 was Sungrow with a share of 27.9 per cent, followed by Huawei at 22.3 per cent and Solis at 12.9 per cent in terms of sales, as per JMK Research. In August 2022, Sun­grow surpassed the 14 GW mark for in­verter shipments in India for the first time since it entered the Indian solar market in 2014. The company added over 4 GW of inverter shipments in less than one year between November 2021 and August 2022. The company was also the biggest overall inverter supplier in India in 2031 as per JMK Research, holding a market sha­re of over 30 per cent. The company has maintained this position in the first half of 2022 as well.

Among central inverters, Sineng held the largest share in financial year 2022, with a total market share of 38.4 per cent. This was followed by Sungrow at second position with 20 per cent, and Fimer at third position with 19 per cent.

Challenges and the way forward

The increasing inclination of governments, industries and the public towards the greening of power supply will play a leading role in enhancing the scope of growth in the solar inverter market. The on­going oil and energy crisis in Europe has also instigated a need for self-sufficiency and energy security. Renewable energy, primarily solar power, will play a significant role in this endeavour. Yet, the sector is not free of challenges. An abundance of alternative clean sources of power have now entered the market, thereby increasing the competition faced by solar manufacturers and developers. Moreover, the design of solar inverters is often complex, and improving them would require tremendous investment in terms of both time and money. The cost of installing inverters is also high in many regions. Additionally, large solar inverters entail the challenges of high heat loss and inadequate panel-level monitoring.

However, new and improved inverters have been introduced in the market, whi­ch provide real-time data transfer for in­creased performance efficiency and grea­ter safety of the solar system. Going forward, product differentiation will play a key role in improving the competitiveness of the players in the solar inverter market. For this purpose, strategic investment in research and development can be ex­pec­ted to rise among solar inverter ma­nufac­turers. Moreover, greater collaboration and partnership can also foster greater innovation in the sector. Thus, the sector can expect a positive growth trajectory until the end of this decade.

By Kasvi Singh