Despite a steady increase in solar PV installations, the inverter market is expected to transform as result of lowering prices. The traditional inverter business is not sufficient to establish a dominant profile on the market anymore.
With growing interest in EV-charging integration, power optimizers, technological competition between string- and micro inverters as well as emerging applications of virtual power plants and grid services from battery storage, suppliers of inverters and solar PV solution must keep up with the rapid pace at which the market is changing.
At the moment, the PV inverter market is extremely competitive, with serious players emerging in China, and western manufacturers continuously broadening their product portfolio. While such a competitive market might indicate that the market is still developing and bears great potential in the future, IHS Markit see that the global revenues in the PV inverter sector are slightly declining.
Reportedly, the prices for inverters from 2018 to 2022 are forecasted to further decline, by as much as six percent. The total addressable market (TAM) for solar PV inverters is expected to go down this year compared to last year, with a forecast of nearly US$8 billion in global revenues.
At the same time, the market for uninterrupted power systems (UPS) prompted a stable size and is forecasted to grow in the future. UPS deliver services mostly to hospitals or other critical infrastructure to secure power supply in case of an outage. From a technological perspective the merging of the inverter and UPS business is a fairly logic step.
UPS applications overlap with behind-the-meter storage systems, though usually on a lead acid basis. To link that technology with modern lithium-ion battery solutions and digital energy management tools could see the products improving, while saving R&D costs as compound technology could be sourced from other regular solar PV applications that many solar cpompanies are already involved.
On May 9, Israel-based supplier of PV-inverters and other solar equipment announced that it joins the UPS market. It will do so via an asset purchase agreement with UPS solution provider Gamatronic. After all, the market size for UPS is roughly the same as the PV inverter market, thereby SolarEdge has doubled its total addressable market (TAM).
In 2017, before the acquisition of Gamatronic, SolarEdge’s TAM was nearly $8 billion, while in 2018, following the acquisition SolarEdge’s new TAM is set at $15 TAM. Furthermore, Solaredge has also hinted that it will look to further diversify its business into smart meters and energy management systems.
According to IHS Markit, increasing price pressure in the inverter market is responsible for manufacturer is the field to look for new applications of their technology. The recently announced asset acquisition of Solaredge is exemplifying the new market dynamic.