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.

Incumbent inverter company business models are already adapting to generate new revenue sources. The big solar PV inverter companies are offering warranties of as much as 20 years on their products and stepping up their operations and maintenance business under long-term service contracts. We expect to continue to see a lot of merger and acquisition activity in the sector as inverter companies say the industry has entered a period of balance sheet attrition, favoring larger companies.

Our research shows that Chinese inverter manufacturers such as China’s Sungrow are starting to have a larger presence in the US, Canada, and Europe. Sungrow’s inverters are 10 percent - 30 percent less expensive than incumbent inverter manufacturers and is therefore having somewhat of an impact on inverter selling prices today. The primary driver of inverter price declines however, is the high volume manufacturing that parallels the growth of solar PV more broadly.

Inverter performance over the lifetime of the PV system is one of the most important factors determining whether a solar PV plant will be profitable or not. Over time, Chinese solar and wind companies were able to address quality concerns and leading Chinese companies today manufacture cells, modules and wind turbines on par with the best in Europe and (what’s left of) U.S. companies. The inverter industry will soon find out if the same holds true for inverters.

Of course, at some point, it’s all a crystal ball exercise.

I can tell you however, that inverters are increasingly the focus of an industry hell-bent on reducing the non-module costs that are required to enable solar PV to reach grid parity.