PV inverter service plans and extended warranties to grow five-fold

According to a new report from IMS Research, the market for extended warranties on string and multi-string inverters, and service plans on central inverters was less than 10 percent of the inverter hardware market last year. But, the research company believes this is expected to grow substantially to 2014, and will outpace revenue growth from hardware sales.

The company goes on to explain that two of the highest attach rates for extended warranties in 2010 were in the Czech Republic and Germany, due to the high proportion of decentralized plants installed there and the inverter topologies used in commercial sized installations.

It says that products, including SMA’s Tripower, Kaco’s Powador and Sputnik’s SolarMax MT series, provide three-phase grid-feeding and greater system design flexibility. Additionally, the installations using these types of inverters are usually backed by an investor and will often require an extended warranty to minimize risk.

North America recorded the highest attach rates for service contracts for central inverters in 2010, says IMS. It attributed this to the high proportion of large, megawatt-scale PV plants developed in Ontario and the U.S.

In a statement, it says: "Companies such as Satcon and Advanced Energy Industries aggressively promote service plans as a key differentiator in a highly competitive market for large-scale central inverters. Attach rates are forecast to increase over the forecast period, this is partly due to rapidly growing markets such as the USA, China and India favoring large utility-scale installations, but also greater emphasis being placed on reducing risk and also suppliers more aggressively targeting these highly profitable service plans."

IMS Research PV analyst and report co-author Tom Haddon adds: "With greater adoption of PV as a viable utility-scale power generation source, service contracts are going to become an increasingly important factor in customers’ decision making when choosing an inverter supplier. When just an hour of downtime can cost investors huge amounts in lost income, the breadth and reputation of suppliers’ service contracts will become a key differentiator amongst vendors."

SMA is also said to dominate the service market, with an estimated market share in excess of 35 percent in 2010, according to IMS. "The supplier appears to have an even stronger position in service than inverters due to its high focus on this segment via its SunnyPro club and strong brand reputation," it says.