Health check: MLPE

To date, the United States has been the key market for MLPE, and has largely accounted for the overall growth in microinverter and power optimizer shipments. IHS Markit estimates that it accounted for 61% of global shipments in 2016, due to both Enphase Energy and SolarEdge, the market leaders in microinverter and power optimizer shipments, selling a large amount of their product in the United States. However, the MLPE market is poised to grow further, through increased adoption in new markets and by new system sizes, further integration with modules, regulation, and more partnerships between MLPE and inverter and module suppliers.

Next generation MLPE

While the United States is forecast to remain the largest market in the world by shipments over the next five years, MLPE technology is expected to grow rapidly in other markets, and global shipments are forecast to reach 9 GW in 2021. For example, the MLPE market is expected to benefit from the current boom in the residential segment in China. Also, Enphase Energy’s next generation of microinverters is designed to allow it to meet global grid requirements more easily, thereby helping it penetrate new markets in Europe, Latin America, and India. The market for power optimizers is also expected to grow substantially, however the growth will not be tied as much to specific countries since local grid requirements are usually met by the inverter and not the power optimizer.

AC and smart modules

Over the last few years, MLPE suppliers have touted the benefits of integrating microinverters and power optimizers with modules in the factory to create AC or smart modules. In 2017 however, several MLPE suppliers have increased the number of their partnerships with module suppliers. Enphase recently announced partnerships with LG, JinkoSolar, and Waaree Energies to create AC modules, while SolarEdge recently announced partnerships with LG and Boviet Solar. For installers, these module-integrated power electronics simplify and speed up the installation process. MLPE suppliers also gain access to higher volumes and new sales channels by selling their products through module suppliers. The pace at which AC and smart modules are adopted will depend on the number and pace of new partnerships between MLPE and module suppliers, and on how seriously module suppliers promote the new product. Although installers sometimes prefer to have system design flexibility by using stand-alone MLPE hardware, AC and Smart modules are forecast to be the fastest growing routes to market for MLPE suppliers over the next five years.

The commercial rooftop market

Although the commercial segment to date has been relatively price sensitive and dominated by three-phase string inverters, IHS Markit has identified two market drivers that will significantly boost adoption of MLPE in commercial installations. First, National Electric Code (NEC) 2017 rapid shutdown requirements dictate module-level rapid shutdown in the event of a fire or other emergency event. This requirement is expected to contribute to substantial growth in MLPE shipments, especially approaching 2019, when

the United States is expected to fully enforce the requirement. In fact, traditional inverter suppliers are increasingly partnering with MLPE suppliers to meet these requirements and reduce the burden of developing an in-house solution. For example, Tigo recently announced that 35 inverter suppliers are now compatible with its power optimizers. While the U.S. has been one of the leading markets in recent years with respect to roof-top solar safety, large Asian markets such as India and China will present a huge opportunity in the next five years as more distributed PV is installed on rooftops and as safety becomes a higher priority.

Second, prices are forecast to continue to decline, making MLPE more attractive in the commercial segment. This trend is driven by module-level power electronics being paired with higher-power modules. Also, some microinverters are designed to operate with more than one module, lowering the total price per watt of the microinverter solution.

O&M opportunities abound

Ground-mounted utility-scale installations are increasingly realizing the benefits of MLPE technology. Suppliers such as Ampt, Alencon, and Maxim Integrated offer solutions to optimize the energy harvested, especially for non-rectangular array geometries, on hillsides, and in shady locations. Repowering and optimizing older systems is also a significant opportunity for these suppliers as power optimizers can help increase energy yields without having to replace the inverter. Additionally, as O&M becomes more important, developers and EPCs are noting the advantages of low-cost power optimizers, which can help in fault recognition, and reducing up-front balance of system (BoS) costs and module degradation. Suppliers are offering different approaches to achieve competitive cost solutions: Alencon and Ampt are providing string-level optimization; Maxim is fully integrating cell optimizers into the module and forming module partnerships.

New market entrants to increase intense competition

While SolarEdge and Enphase Energy continue to dominate microinverter and power optimizer supply, inverter suppliers that develop partnerships or design an in-house solution will enter the MLPE market and intensify competition in the coming quarters. Major multinationals such as Huawei have recently developed their own residential inverter and power optimizer solutions, to expand into a growing global residential PV market. While the Chinese residential PV market is taking off in 2017, Chinese suppliers are eager to expand into the large residential markets in Europe and the United States. Other leading inverter suppliers such as SMA have changed direction in recent years, and instead of developing a next generation MLPE in-house, they have partnered with a leading power optimizer supplier, such as Tigo, to meet new regulatory requirements such as NEC 2017 and Rule 21 in the United States and offer a competitive solution in the global marketplace.

While to date, major multinational power semiconductor and electronics suppliers, such as Flex and Texas Instruments, have preferred to be component providers for existing MLPE providers, it is highly likely that, as the PV market continues to grow and prices continue to fall, a major new player will enter the market. Additionally, it could be possible that major technology companies, such as South Korean LG Electronics or Samsung, will expand further into this segment, particularly as they are active in the module and energy storage market and seek to expand their portfolio

Author: Miguel De Jesus