[The Vector] PV Inverter Demand Booming – For Now

Demand for PV inverters continues to boom, according to a report from IMS Research. IMS calculates that 8.3 GW of inverters – worth $2.8 billion – were shipped during 2009. That is a 35% increase in GW terms and 17.9% in cash terms over 2008. During 2009, the price of inverters deciined by around 13% in prices per watt.

In 2010 producers are expected to ship 13.9 GW of inverters – an increase of more than 66% – and the growth would be even greater if a sever component shortage was not limiting inverter production. Prices are expected to stabilize despite the dramatic output growth. 14.6 GW of new PV capacity are expected to be added worldwide in 2010 says The World Market for PV Inverters – 2010’, published July 2010. The figures are based on surveys of inverter suppliers undertaken by IMS Research, together with estimates of demand in 40 countries around the globe.

The development of utility-scale solar plants is changing the shape of the market for PV inverters. Here’s how:

Demand for utility-scale solutions is growing in the US, but also in China and India. By 2014 the IMS Research report forecasts that 25% of all inverter shipments will be megawatt-sized turnkey substations.

The other market segment forecast to grow very rapidly is multi-string, three-phase 10-18kW inverters. Shipments of these products are forecast to grow very rapidly in Europe due to high demand from integrators and installers wanting small three-phase inverters for mid-sized commercial installations.

There is a danger of overheating in the market. Germany, Spain, the Czech Republic and others plan to reduce or have reduced their feed-in tariffs or other incentives. IMS Research has also found evidence of double-ordering, where companies order inverters from more than one source in order to beat the shortages with the intention of cancelling the second order once the first is delivered. However IMS Research does not expect a crash in PV inverter prices but rather a slowdown and price softening at the start of 2011. They believe that new Asian markets and demand from the US will reduce the impact of the fall-away in demand from Europe. During the first quarter of 2010 demand from Asia (at 365 MW) was almost triple demand in the first quarter of 2009.

According to the report, Chinese PV cell and module suppliers have been hit hard by the depreciation in the Euro against the US dollar and the Chinese Yuan Renminbi (RMB). The bulk of the Chinese suppliers’ costs are in RMB while a substantial portion of their revenues are in Euros. The Euro is worth 15% less in RMB terms than it was six months ago. It is estimated that over 70% of the PV modules produced in China were shipped to Eurozone markets in H1’10.　

The Chinese government responded to the potential crisis with greater support for growth in the domestic market. It announced plans for 13 PV power stations ranging from 20 MW to 30 MW in North and Northwest China and set up bidding auctions for suppliers. The IMS Research report authors believe the Chinese government is likely to come under increasing pressure to launch a national feed-in tariff if Chinese suppliers continue to struggle with unfavorable exchange rates in Europe.