The market for global PV microinverters and power optimizers will more than triple in the coming years, rising to more than $1 billion in 2018, according to IHS Technology.
The market research group reports that established and new regions are increasing their adoption of the emerging technology. Worldwide market revenue for PV solar microinverters and power optimizers, collectively called module-level power electronics (MLPE), will rise at a compound annual growth rate of 27% to total $1.1 billion in 2018, up from $329 million in 2013.
Although they are more costly, microinverters can in some cases harvest up to 25% more electricity than conventional string or central inverter devices, which convert power from multiple solar panels.
Power optimizers take a similar approach by performing the maximum power point tracking (MPPT) at a module level. However, a centralized inverter is still used for the DC-AC stage.
"Demand for MLPE has been driven by key markets such as the United States, the United Kingdom and Australia," says Cormac Gilligan, senior analyst for solar inverters at IHS. "The market has grown to more than $300 million in size, despite continued price pressure due to new entrants into the business and decreasing PV system prices. Future demand for microinverters and power optimizers is expected to be spurred by continued acceptance in mature European PV markets, such as Germany and France."
Gilligan points out that some of the major Asian markets, like Japan and China, will offer huge opportunities in the next few years as MLPE technology begins to penetrate these markets in large volumes.
U.S. to maintain microinverter leadership
According to IHS new report, PV Microinverters and Power Optimizer 2014, the United States is the largest region for microinverter shipments, with residential systems representing the largest market for microinverters in the region.
U.S.-based microinverter supplier Enphase has built market leadership serving this segment, although the penetration rate of microinverters in this segment is starting to saturate.
During the next few years, however, an increasing number of microinverters are likely to be installed in commercial installations in the U.S., allowing the country to remain the largest market for microinverters through 2018.
The U.S. is one of the fastest-growing markets for power optimizers with shipments increasing by 160% in 2014, IHS says, adding that all of the leading suppliers, including SolarEdge, Tigo and Ampt, are expected to increase shipments.
Japan to boost MLPE demand as prices decline
Lower microinverter and power optimizer prices will mean that MLPE will become more competitively priced compared to traditional inverters. As a result, total shipments will increase to 6.6 GW in 2018 as MLPE technology gains acceptance in new regions, the report adds.
Power optimizers have been shipped in Japan in relatively low numbers to date. However, IHS expects that the penetration rate will increase dramatically to 7% of total installations in 2018, as increased energy yields that result from using MLPE will allow a higher return on investment (ROI). Moreover, microinverter suppliers are expected to gain Japan Electrical Safety & Environment Technology Laboratories (JET) certification in the near future, which will allow them to ship microinverters into this huge residential market.
"There still will be some challenges for microinverter suppliers, even if they gain JET certification in the Japanese market," Gilligan noted. "There is a huge preference for local brands in this market, and inverters or microinverters would normally be sold in kits to residential owners via the module manufacturer. As a result, developing strong partnerships with module suppliers will be paramount in Japan."
New suppliers continue to enter the market
Although Enphase and SolarEdge continue to lead the microinverter and power optimizer market, new suppliers continue to enter the field. Leading inverter suppliers such as Kaco and Delta, for example, have released new microinverter models recently as they continue to expand and diversify their inverter portfolio.
"Traditional inverter suppliers have been cautious to date in entering the microinverter market. But as the market has matured, an increasing number have moved in by acquiring a pure-play microinverter supplier or by designing in-house, Gilligan says.
In the power optimizer market, new suppliers like Maxim Integrated have recently developed partnerships with module suppliers, adding to the number of active suppliers in the trade. This will intensify the competition and may lead to lower power optimizer prices in the future.
IHS predicts that new suppliers will put further pressure on existing players to innovate by developing next-generation models and new sales channels. While some prominent suppliers, such as SolarBridge and Tigo, have decided that integrating their products directly onto the module to create "AC modules" or "smart modules" is the way forward, other suppliers, including Enphase and SolarEdge, have had success with solar lease companies such as Sunrun and SolarCity in the U.S. as an alternative sales channel.
As a result of new microinverter and power optimizer suppliers entering the market and existing suppliers entering new markets, MLPE revenue is expected to increase some 28% per year to reach more than $1.1 billion in 2018, representing great opportunity for new and existing suppliers alike to grow their business, according to the report.