China PV inverter market to glow brightly

ALEX LIU

USA: Backed by supportive government policies designed to promote clean energy and a strong fi nancial upside that encourages investment, photovoltaic (PV) inverter shipments in China are set to nearly quadruple within four short years, according to an IHS iSuppli China Research topical report.

Shipments in China of inverters—a key component in the production of solar energy—will amount to 5.5 gigawatts (GW) by 2015, equivalent to a robust compound annual growth rate of 31 percent from 1.4 GW at the end of 2011, as shown in Figure 3. Growth this year was particularly energetic as shipments soared 117 percent from 657 megawatts (MW) last year. The market expansion will amount to an impres­sive 85 percent to 2.6 GW next year, after which more modest increases will take place.

The growth of the China inverter market during the next four years will boost the country’s standing in the worldwide solar inverter space. China last year had only a 3 percent share of global PV inverter shipments, compared to 42 percent for Germany, 22 percent for Italy, 7 percent for the Czech Republic, 6 percent for the United States and Japan, and 4 percent for France. By 2015, however, China will account for 13 percent of the market—a substantial increase.

A major supporter and notable driving force behind China PV inverter growth is the national govern­ment. Since 2005, Beijing has released and executed a series of policies that have directly benefi ted the growth of PV inverter shipments from local companies.

Three directives alone were enacted this year by the state-controlled National Development and Reform Council to boost overall solar power initiatives in the country that will benefit the domestic PV inverter segment, though questions remain about the coun­try’s overall PV policy on specific issues, such as grid connection and capital equipment costs.

Financial considerations also are a powerful incentive. Compared to the solar cell and battery module segments, for instance, PV inverters in China are not subject to as much price pressure, representing a much-smaller share of cost in the entire PV system. A PV battery takes up to 64 percent share of the total cost of a PV system, but the cost of share for an inverter is only 7 percent. The number of domestic inverter competitors is also fewer than those of batteries and PV cells, and inverters enjoy better gross margins compared to other components.

Among local inverter manufacturers, Sungrow Power Supply Co. Ltd is one of the few players to have acquired substantial market share, with more than 40 percent of the domestic inverter space, exceed­ing even the reach of foreign firms such as Missouri-based Emerson. Sungrow, located in China’s south-eastern province of Anhui across the basin of the Yangtze river, had revenue in 2010 of approximately $86 million, IHS iSuppli data show.

Other important local PV firms are Aero-Sharp Electric Technologies Ltd. from Shanghai; Eversolar New Energy Co. Ltd of Jiangsu province in China’s southeastern seaboard; Growatt New Energy Co. Ltd. of Guangdong province abutting Hong Kong; and KLNE from Beijing in the north.

China’s utility market last year accounted for 54 percent of total domestic inverter revenue, followed by the commercial market at 42 percent and the residential segment at 4 percent. Inverter output ranging from 10 kilowatts to 499 kilowatts took a majority share of the market, trailed by inverters larger than 500 kilowatts. At the same time, vendors like Sungrow are developing larger-output power inverters because of higher efficiency and lower cost per watt.

Source: IHS iSuppli, USA.

The author is Industry Analyst, China Research, IHS iSuppli, USA.