Smart and AC module market to grow nine-fold by 2020

In the past few years, a wide range of PV module makers have unveiled “smart” and AC modules. These incorporate electronics to maximize output, and in the case of AC modules additionally integrate a microinverter into the module.

These regular announcements of smart and AC modules included some of the world’s largest PV makers, such as Trina Solar, Canadian Solar, JinkoSolar, Hanwha, Sunpower and LG. And yet, three years after the first AC modules hit the market they retained a tiny share, at roughly 0.2% of solar panels deployed in 2014.

While remaining a niche market, a new report from GTM Research finds that this share is set to increase. The company expects smart and AC module shipments to grow from 73 MW in 2014 to 1 GW in 2020, a roughly 14-fold increase. Due to declining costs, the company is predicting that revenues in the sector will rise a mere 9-fold, from $70 million in 2014 to $603 million in 2020.

In understanding the expected growth of this technology, GTM Research looks back to its beginnings. Report author and Solar Analyst Scott Moskowitz says that a number of module makers began offering smart and AC modules in 2011 as a way to differentiate their offerings in a “massively oversupplied market”.

These premium products have commanded much higher prices, and GTM Research says that this is part of what needs to change for broader adoption. The company cites high product markups from vendors, but also distributors having difficulty selling the value proposition of extra features, as well as providing customer support.

With more of these fully embedded solutions on the market, GTM Research expects prices to fall. Moskowitz says that with lower prices a number of advantages, including simplifying labor, elimination of redundancy and lower overall costs will come to be more appreciated.

GTM Research expects part of the growth of AC and smart modules to come from increasing acceptance of module-level power electronics (MLPE). The company finds a total MLPE market of 1.3 GW in 2014, and is forecasting that the sector will see a 39% average annual growth rate through 2020.

However, GTM expects that smart and AC modules will grow even faster than the overall MLPE market, increasing from a 3% share of MLPE solutions in 2014 to 7% in 2020.

One of the reasons cited for this anticipated growth is the 2017 version of the National Electric Code in the U.S. GTM Research expects that this new code will include the requirement the PV systems can be shut down at the module level, which it says will increase the attractiveness of integrated solutions.