Is the module-level power electronics (MLPE) market on the cusp of delivering disruptive change to the solar industry? A report in October last year by Navigant Research suggested that the sector will grow from the 1,158 MW installed in 2013 to 12,844 MW installations annually by 2020. Worth an estimated $308 million last year, the MLPE market could top $2 billion within a decade, the analysts forecast. Currently, according to GTM Research, the sector accounts for just 2.5% of the global PV market, but is rising fast. In 2013 alone, the industry attracted more than $600 million in venture capital (VC) funding.
In September, IHS Technology published their own report suggesting the market will enjoy a compound annual growth rate (CAGR) of 27% to reach $1.1 billion by 2018 as demand for MLPE takes off in both established and emerging markets. 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, said IHS senior analyst for solar inverters, Cormac Gilligan.
However, solar commentator and former SunEdison CEO Jigar Shah recently questioned the industrys sustained appetite for MLPE technologies. In a Greentech Media podcast in July, Shah asked whether the leading proponents of MLPE namely DC power optimizer and AC microinverter technologies had yet fulfilled their potential, and queried whether the solar industry was in fact too conservative to embrace technologies that are, in the main, progressive.
As the centralized inverter market continues to effectively salve the wounds it suffered in the immediate aftermath of the global solar downturn, Shahs concerns should be taken seriously. The continued pre-eminence of traditional inverter giants SMA and Power-One (the latters ABB acquisition notwithstanding) suggests such conservatism is rife: long-dominant, bankable market players extending their reach in the industry based on reliable reputations and cast iron supply chains abound. Many traditional inverter suppliers have been cautious to date in entering the microinverter market, said Gilligan. The analyst added, however, that an increasing number of inverter manufacturers have begun exploring microinverter acquisitions and even in-house creation of their own products.
Navigant Research evidently expects a disruption of this stranglehold to emanate from within the MLPE market, but Shahs concerns over solars innate reticence are well-founded. With both power optimizers and microinverters vying for their own slice of the solar pie, there is no clear winner, with experts divided over which technology is best placed to lead this anticipated MLPE surge. And there is nothing the solar industry deploresmore than shades of gray. So the question remains: will it be power optimizers or microinverters powering MLPEs drive for disruption over the next decade?
No clear leader
The debate over optimizers versus microinverters has been tackled on only a handful of occasions in the past.
Navigant Research expects 52.7 GW of MLPE technologies to be installed between now and 2020, but shies away from predicting which technology will dominate. A February report by GTM Research found that over half of all residential solar PV installations in the U.S. have a microinverter or DC optimizer installed. IHS forecast last month that power optimizer shipments will increase 160% in the U.S. in 2014, while in Japan the technology will achieve a 7% penetration rate in all PV installations by 2018. In reporting terms, the two technologies are grouped as one, but at an installation and marketing level the battle lines have long been drawn, with proponents from both camps arguing their cause passionately.
Lior Handelsman, SolarEdges VP for marketing and product strategy, and company founder, told pv magazine that SolarEdges edge over its chief rival in the MLPE space microinverter specialist Enphase Energy lies in the fact that power optimizers are more flexible, reliable, and cost-effective than microinverters.
The topology of DC optimizers is better, for one. Microinverters are hampered by their limited geographic range, said Handelsman, explaining that because grid costs and complexities differ across the globe, compliance with microinverters is often more difficult. The elaborate nature of microinverter installations not only increases installation and maintenance costs, but actually limits the technologys ability to grow into new markets. Because optimizers are connected to a central inverter, it is easier to move from market to market. SolarEdges chief growth market is the U.S., but the company has also enjoyed recent success in France, U.K., the Netherlands, Austria, Switzerland, and Germany, and is branching out into Japan and other Asian markets. Handelsman cites cost, efficiency and peace of mind as the chief demand drivers for the technologys growth. Price-wise, microinverters are inherently more expensive. They are usually installed one per module, so the dollar per watt price is the same for a kilowatt system as it is for a megawatt system, he said.
SolarEdge claims that its optimizers offer a cost of $0.40 $0.50 per watt, as opposed to $0.50 $0.60 per watt for microinverters. This pricing decreases as installation size rises, making optimizers a more scalable option. Furthermore, SolarEdge claims, a DC optimizer will also run at approximately 98% efficiency, typically losing just 2% of its performance through heat. The best microinverters on the market can typically only manage a 96/4 split.
Based on a typical datasheet, optimizers do have, by design, higher efficiency, said Zhi-Min Ling, CEO and Chairman of China-based microinverter manufacturer APS. DC to DC is more efficient, so it is not surprising that optimizer suppliers claim these higher efficiencies. But this is not the real argument. The real issue is overall kilowatt hour production, so if you run the two systems side-by-side to assess the true energy production, I am confident that microinverters perform better. Both industries promise potential power increases of 25% claims that can rarely be sustained in real world conditions, experts argue. At the other end of the scale, power increases often come in between 2 4% on average for both technologies, tests have shown. Faced with such difficulty in assessing the true efficacy of either technology, the debate over which is most suitable is shunted on to other decisive factors, namely cost (ROI), ease of installation, and safety.
Commercial and safety issues
SolarEdges Handelsman argues that optimizers come up trumps in terms of cost, installation, and flexibility. You can have two modules to one DC optimizer, which lowers costs and is great for commercial-scale installations, he said. Indeed, you rarely see commercial-scale solar installations with microinverters, and they are unheard of at a megawatt scale. This alleged rarity of microinverters in the commercial rooftop space is disputed by Ling. Although the APS CEO agrees that microinverter technology is not particularly well suited for ground-mounted installations, large commercial rooftops have begun to see the benefits of installing microinverters. The technology has a lot of advantages for factories, shopping malls, government buildings, schools, and public areas, with the key demand driver being safety, said Ling, who revealed that an increased awareness about safety issues such as arcing and DC voltages among the general public has helped swell demand for microinverters.
When we talk to the customer, safety is always our and their number one priority. Since the introduction of the NEC 2014 (National Electrical Code adopted in the U.S.) and a wider awareness of DC safety levels for rooftops in China (below 120 DC), discussions about safety have increased, Ling said. A microinverter limits the amount of DC current on a rooftop, converting the electricity to AC almost immediately a situation that is potentially favorable for some types of rooftop installation, particularly in the U.S. where wooden houses and rooftops present a greater fire risk.
In Japan, microinverter suppliers could soon gain Japan Electrical Safety & Environment Technology Laboratories (JET) certification, says IHS, which may open up the countrys huge residential and commercial market. Even if they gain JET certification, warns Gilligan, there will still be some challenges for microinverter suppliers in Japan. There is a huge preference for local brands in that market, and inverters or microinverters would normally be sold in kits to residential owners via the module manufacturer.
Compliance with safety regulations, allied to invaluable adherence to customers peace of mind, is equally paramount for the optimizer sector. Power optimizers are no less safe than microinverters, because whenever the AC to the system goes down, the product is designed to automatically shutdown the modules, meaning there is no dangerous DC voltage if the inverter stops working, said Handelsman.