Solar inverters are critical components of solar PV systems, converting DC power generated by solar panels into AC power that can be fed into the grid. The solar inverter market has experienced rapid growth in recent years, driven by rising solar PV installations, technology innovations, and falling prices. In this article, Renewable Watch reviews the current state and future outlook of the global and domestic solar inverter market, the competitive and technological landscape, and the key market trends.
Market size and growth trends
The solar PV market has expanded exponentially over the past decade, with global installed capacity reaching over 1,200 GW by the end of 2022, according to the International Energy Agency (IEA). This growth has been fuelled by continuing cost declines in PV modules and balance of system components like inverters, as well as favourable government policies.
According to the IEA’s Snapshot of Global PV Markets 2023, China continues to lead in new solar PV capacity additions. In 2022, China added 106 GW of new PV capacity, reaching a cumulative solar capacity of 414.5 GW, accounting for 44 per cent of global PV additions. Strong growth was seen in both centralised and distributed PV systems. Europe also witnessed a significant growth of 39 GW capacity led by major markets such as Spain, Germany, Poland and the Netherlands. High electricity prices have made solar more competitive in Europe, with policies aligning with energy security and sustainability goals. Meanwhile, the Americas’ market reduced to 18.6 GW due to factors such as supply chain issues, with the exception of Brazil, which doubled installations to 9.9 GW. Other major markets such as India (18.1 GW), Australia (3.9 GW) and South Korea also experienced strong growth. Notably, India has seen exponential growth in solar PV, with the installed capacity rising from 17.9 GW in 2017 to 73.3 GW as of December 2023, witnessing a compound annual growth rate of 26 per cent. Going forward, the sustained growth of solar, globally and domestically, is expected to drive the growth of solar inverters.
An International Solar Alliance (ISA) publication on global PV supply chains reported that global inverter shipments grew 22.2 per cent in 2021 to 180 GW, driving overall PV demand growth. This was a rebound from pandemic-related declines in 2020. In 2022, shipments rose 48 per cent year on year to 333 GW as supply chains normalised. China continues to dominate inverter production, accounting for 69 per cent of global supply in 2022. Meanwhile, European firms still maintain a 16 per cent global market share of shipments.
As reported by Wood Mackenzie, Asia Pacific (APAC) represented 50 per cent of the 332 GW global market in 2022, with 167 GW of inverters shipped to the region. This was 44 per cent higher than 2021. China alone accounted for 78 per cent of the APAC demand, as the country continued to record exponential growth. This is followed by India, but it faced a 25 per cent volume decline amid policy issues. Japan overtook Australia to secure the third position in the APAC region, with a 23 per cent growth.
Europe represented the fastest growing region with 92 GW and 82 per cent shipment growth in 2022, while North America accounted for a 13 per cent global share, with 42 GW shipped to the US in 2022. Inverter-storage hybrids made up 10 per cent of the US volume as solar-storage integration increased.
Competitive and technological landscape
The solar inverter market has seen shifting supplier and technology dynamics in recent years. In terms of technology, in 2015, central inverters held over 60 per cent share in the global market as they were commonly used for utility-scale projects. However, the share of string inverters grew significantly to account for 64 per cent of the market in 2022, driven by greater adoption in commercial and residential PV systems, according to the ISA report.
Market concentration among the top vendors remains high. According to a news release by Wood Mackenzie, the top 10 suppliers accounted for 86 per cent of shipments in 2022, up from 82 per cent in 2021. The two largest manufacturers, Huawei and Sungrow, currently supply 50 per cent of the global market. Huawei secured the top position with a 29 per cent share, while previous leader Sungrow achieved a 23 per cent share. The top ranking has remained stable, with only the third and fourth positions swapping between Ginlong Solis and Growatt.
Key trends and developments
Prices: Inverter prices across all segments have consistently declined, though at a slower pace recently. The most dramatic price drop was witnessed in microinverters, with central and string inverter costs plateauing. This can be attributed to maturing technologies and economies of scale. Continued declines will rely on further cost reductions across the supply chain.
Technology: Grid-forming inverters with robust communications and control are emerging to provide inertia response and grid-forming capabilities. The growth of distributed PV is also driving hybrid inverters that integrate storage for residential and commercial self-consumption. Emerging applications include electric vehicle (EV) charging and virtual power plants. Artificial intelligence and machine learning are also being incorporated for smart monitoring and optimisation.
Solar-storage integration: Hybrid inverters that combine solar PV and energy storage are an important emerging trend, especially for commercial and industrial as well as residential applications. These enable customers to store excess solar generation and provide backup power during grid outages. With improving battery economics, favourable policies and increasing power reliability needs, hybrid inverters are expected to grow significantly in the coming years.
Module-level electronics: According to the IEA, micro inverters and power optimisers currently comprise a small but fast growing segment of 1-2 per cent of the market. The US is the largest market for this technology due to rapid shutdown needs. China is looking to implement similar codes, which would further boost demand. This technology provides module-level monitoring and shutdown capabilities while optimising the output of shaded panels.
Supply chain issues: The solar industry continues to be impacted by supply chain disruptions and rising commodity and shipping costs. However, increasing polysilicon production capacity is expected to stabilise PV module prices. In 2022, inverter suppliers faced shortages of key components such as insulated-gate bipolar transistors and chips, causing delayed deliveries. However, this situation is improving. Diversifying manufacturing across regions will be crucial to mitigate future risks.
Market outlook
The solar PV and inverter markets are projected to sustain strong growth over the next five years. The IEA forecasts global PV demand to reach over 370 GW in 2025, with 2026 seeing the first year of solar surpassing new wind additions. Despite recent spikes, commodity prices are expected to stabilise, while new production capacities come online.
China will continue to dominate supply and demand, though Europe and India have the potential to gain share through supportive policies and localisation goals. Innovations in smart inverter capabilities and integration with storage, EVs and distributed energy resources will open up new opportunities. With solar becoming increasingly cost-competitive, the outlook for both upstream manufacturers and installers in the solar inverter value chain looks bright. However, the industry needs to continue derisking with diversified and localised supply chains to ensure it can fulfil its immense potential.
Conclusion
In summary, the global solar inverter market has seen tremendous growth due to rising PV adoption, driven by improving cost competitiveness, energy transition policies, and climate goals. Market concentration remains high among Chinese vendors like Huawei and Sungrow, though European and American suppliers still account for one-third of the supply. The competitive landscape continues to evolve with new geographies and innovations focusing on smarter inverters designed for more complex grid applications. The industry’s future looks promising but will rely on navigating ongoing issues such as supply chain constraints, hardware costs, and integration challenges as solar penetrations rise. Solutions that offer greater system intelligence, adoption in emerging markets and alignment with broader decarbonisation efforts will shape the next wave of growth and innovation in the solar inverter space.
