Innovation essential to stave off 'Inverter Inquisition'

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Dexter Gauntlett is a Portland-based Research Analyst with Pike Research, a Part of Navigant, and is author of the recently published report "Inverters for Renewable Energy Applications." He can be reached at dexter.gauntlett@navigant.com.

The drop in solar PV module pricing that led to numerous Western company bankruptcies is commonly referred to as the “solar shakeout." We will soon find out whether Western solar PV inverter manufacturers will be able to escape a similar style “inverter inquisition."

In 2011, Chinese solar manufacturers occupied 8 of the top 10 solar PV manufacturing slots, rated by module shipments. But Chinese solar PV inverter manufacturers represented less than 1 percent of inverters produced that same year. Indeed, the top four inverter manufacturers alone — SMA, Power-One, KACO new energy, and Fronius — have historically accounted for approximately 60 percent of global PV inverter shipments and are based in Europe and the U.S.

Does that mean inverters are next in line for market domination by low-cost Chinese companies?

The short answer is no. Thus far, China’s primary focus has been, and will continue to be on solar PV cells and modules. This has bought the industry some time and Western manufacturers are using this time wisely.

The longer answer is that inverters — which play the key role of converting electricity from DC to AC electric power for transmission to the grid and ultimately for use in homes and buildings — are not headed toward the same level of commoditization as cells and modules. They're in many ways a more sophisticated technology. Modern-day inverters can be considered one part power electronics and one part information and communications technology. Conceptually, the inverter is the gateway between the generating asset and the grid. From the utility perspective, the inverter is therefore the most important piece of hardware in a solar PV system. But this is also a view shared by the solar PV system owner since the inverter, though only representing about 10 percent of the installed cost, is the source of any problems about 80 percent of the time.