Across the inverter industry revenues have fallen by 1.3 percent in the second quarter (Q2) of 2011, largely driven by factory-gate prices falling 20 percent year-on-year. IMS Researchs Senior Research Director for Photovoltaics Ash Sharma told pv magazine that while these declines were significant, margins in the inverter industry were generally good and that Q2 saw a bounce-back in the market.
"Essentially the market has recovered pretty well in the second quarter and shipments were very strong in Q2, so all suppliers did pretty well," said Sharma. Increased shipment figures also illustrate how high inventory levels across the photovoltaic industry may be clearing, however geographical shifts in market demand are causing further pressures on prices.
In an industry wide trend, that has been evident for the previous year, inverter demand continued to move away from established markets such as Germany and into places such as India and China in Q2. This geographical transition can mean increased prices, said Sharma, however in the case of inverters, it did not assist to maintain prices.
"Having a new market can have two opposing effects, often when we see a new market emerge, the customer base can tend to pay a higher price than a mature market like Germany." High government incentive levels and a lack of market knowledge in new markets can cause these high prices, explained Sharma. However in the inverter market in Q2, the contrary effect was observed. "If a supplier of inverters is looking strategically at a market and is wanting to position itself as a leading supplier they can low-ball price or reduce prices significantly, just to buy market share [ ] and thats what weve seen happen [ ] at the start of this year."
IMS Research saw inverter prices reduced by as much as 45 percent in one emerging European market, however Sharma told pv magazine that he doesnt expect that to be repeated. "Its certainly not sustainable at the cost levels were looking at the moment [ ] I think theyre one offs really." The quarterly report shows inverter prices under 0.20per-watt (USD$0.29p/w).
Q2 saw inverter market leaders SMA Solar Technology compete on price with its rivals, increasing its market share eight percent, to more than 30 percent. Sharma said that while reporting strong results, it too mentioned geographical shifts when speaking to researchers. "We saw that SMA [ ] had a pretty outstanding Q2, recaptured a lot of market share but also increased their shipments significantly. Despite that, they were still commenting on the very weak German markets. They were seeing demand increasing outside of Germany considerably."
Product mix has also been sited as a driver of inverter price decreases, with a shift from higher-priced string converters to three-phase products, which are lower cost and price.
IMS Research repeated its forecast of inverter shipments for 2011 exceeding 20 gigawatts (GW) in its report. This still falls short of inverter supply capacity, which Sharma added, will exceed 45 GW this year. "We do see capacity of inverters still very, very large. It is still outstripping demand and this obviously isnt going to help pricing with so many suppliers competing for this business."