Battery use to drive 4.5 GW global surge in storage inverters, finds IHS Markit

The latest Energy Storage Inverters (PCS) Report 2016 from research and analyst firm IHS Markit forecasts GW-scale growth in the segment on the back of a globally expanding grid-connected energy storage market.

Currently, the market for energy storage inverters and power conversion systems (PCS) is around 910 MW per year. However, IHS Markit expects that figure to grow to 4.5 GW by 2020 as current price premiums evident in the storage industry erode in line with wider uptake.

"While prices in the energy storage industry are still relatively attractive for suppliers compared to similar industries, the price premium they hold will likely reduce over the coming years," said IHS Technology senior research manager Sam Wilkinson. "We forecast that global PCS prices will decrease 13% a year on average from 2016 to 2020."

This downward pressure on price will also be helped along by more and more new suppliers entering the market and increasing the volumes, and choice, available. Storage inverters are still relatively costly when compared against their solar PV counterparts – chiefly due to increased complexity under the hood – but as the market grows the size of this premium will decrease, Wilkinson added.

The markets for energy storage inverters and PCS remain distinct, with commercial and industrial (C&I) systems set to grow faster than residential (or behind-the-meter) adoption of storage. The market for large-scale storage inverters will grow by an average of 70% over the next five years.

"Competition in the large-scale sector has already led to prices being significantly lower, and we forecast the average global price per watt of 1 MW+ inverters will fall below $0.10 in 2020," revealed Wilkinson. "However, prices will undoubtedly be below this average on occasions as large-scale tenders attract highly competitive pricing."

In the residential market, AC-coupled inverter systems, ie, those that can handle the flow of power to and from a battery system, will account for 60% of the market by 2020, said the IHS report. These systems are easier to retrofit to existing PV arrays and, as homes begin to play a larger role in the growth of the virtual power plant and grid and load management, demand for such systems will naturally increase.

Among suppliers, Japanese firms have something of a stranglehold in the smaller inverter segment, with Panasonic, Sharp and Omron in the top five for 2015 for shipments of storage inverters sized below 100kW. In the large-scale segment, BYD, Parker Hannifin and Woojin accounted for nearly half of systems shipped last year.