According to the new report "The World Market for PV Inverters – 2013 Edition" from IHS, PV inverter shipments in 2Q13 were down 5% to 8.3 GW from 8.7 GW in the same period in 2012. The sharp slowdown in the European market has been pinpointed as one of the main reasons for the fall in shipments for the first time in 7 quarters. IHS states that shipments in the Europe, Middle East and Africa region (EMEA) fell more than 40% in the first half of 2013 to 6 GW, compared to the first half of 2012 which saw 10 GW.
"The pace of contraction for inverter shipments in critical European countries such as Germany and Italy has been faster than expected, with some of these markets seeing their demand decline by more than 70% this year," said Cormac Gilligan, senior PV market analyst at IHS. "Some inverter suppliers have been very reliant on these historically large markets. Because of this, inverter suppliers are seeking new markets and have expanded their presence internationally in high-growth countries, including the United States, China, Japan and India."
A crowded European market
In 2Q13, only 3 European inverter suppliers made it to the Top 10 suppliers (in terms of market share) list. This was half the number compared to a year back. European suppliers are struggling to keep pace, plagued by decreasing European revenues. The falling revenues in the European market has impacted the market share of domestic manufacturers who have depended on a few key European markets. "Delays in gaining inverter certification for individual PV markets, decreasing revenues and difficulty in establishing a presence in new markets have posed significant challenges for the entrenched inverter suppliers from Europe," Gilligan noted. "The problem of decreasing revenues is further exacerbated by new market entrants, such as Chinese suppliers in Europe, and by the very competitive inverter prices in an already very crowded domestic market."
Falling inverter prices
Average global inverter prices continue to fall as well, stated IHS. The prices fell by 10% in 2Q13 compared to the first quarter. One reason stated for this is the shift of inverter shipments to lower-cost markets in Asia as well as the erosion of price in mature solar markets. Revenue decreased by 18% year-on-year in 2Q13 to $1.6 billion.
Europe has been hit the hardest. Inverter revenue in Europe fell by more than 50% in 2Q13 with traditional markets like Germany and Italy seeing revenue declines of more than 60%.
The Golden Sun surge
Despite the annual decrease, shipments did grow on a sequential basis, increasing 24% in 2Q13 compared to the first quarter. This quarter-to-quarter shipment growth is largely attributed to China, stated IHS. Thanks to the rush to complete projects under the Golden Sun program, inverter shipments increased by 174% in 2Q13 to reach almost 2 GW.
Domestic inverter suppliers dominate the Chinese market though, keeping it challenging for western inverter companies to enter. "Although Chinas inverter shipments nearly tripled during the second quarter of 2013, the countrys inverter market is still dominated by domestic suppliers," Gilligan added. "China remains a challenging market for western suppliers to penetrate despite its size. Average inverter prices have decreased by 14% in the second quarter of 2013 to reach as low as $0.07 per watt, which means that inverter suppliers really need a local presence in order to have competitive pricing in this market."
IHS sees inverter shipments increasing in the second half of 2013 to reach more than 34.5 GW for the full year. Still the majority of inverter demand will come from the Americas and Asia, mounting the pressure on inverter suppliers who do not already have a firm foot in these markets. IHS stated that owing to this market shift, inverter suppliersparticularly Chinese and Japanese firms such as Sungrow, Omron, Tabuchi and TMEICare expected to increase their market share substantially in 2013 at the expense of some of the European suppliers.