According to IMS Research’s latest report on the global solar inverter market, last year the market was estimated in excess of $1.2 billion and is expected to generate a total of almost $12 billion in revenues over the next five years. EMEA still accounts for the largest part of the market, largely due to the success in Germany and now in Spain. In future, IMS Research predicts strong growth in the US; however, this is largely dependent upon a federal support program for photovoltaic (PV) being introduced, although individual states such as California have shown that PV can be financially viable without a nationwide program.

IMS Research estimates that annual photovoltaic installations totalled around 2.5GW last year, having grown by more than 40% over the previous year. By 2012, IMS Research forecasts that this figure will be more than 8GW, meaning nearly 28GW of photovoltaic installations over the next five years. This may sound impressive; however, it still represents just a tiny fraction of global electricity consumption and is likely to remain this way for many years to come.

The photovoltaic market is quite unique in the sense that it is not driven by either the products or by the end-user wanting a solution. The high market growth has been driven by (and will continue to be driven by) government policy and by introducing high feed-in tariffs and other incentives that have made PV attractive enough to both householders and investors.

The PV policy implemented by the government in each country (or each State in the US) largely determines how the market for PV inverters will develop. For example, in Spain the policy has favoured large solar parks and hence has driven the central inverter market. In contrast, the policy in Germany has so far favoured residential systems and hence has driven the <5kW string inverter market.

The feed-in tariff also ultimately decides the PV installation cost. For example, the tariff in Germany has been reduced by 5% each year and hence system installers expect to receive a 5% drop in the inverter (and other components) price. Some inverter manufacturers have tried to escape this by offering larger inverters whilst maintaining prices. These attempts, coupled with the fact that on average installation sizes are getting larger, will actually lead to increases in the average selling price of the inverter.

The recent announcement by Schneider Electric to acquire Xantrex, the largest supplier of solar inverters to the American market, highlights the attractiveness and potential of the solar inverter market. Xantrex’s strong position in North America and also in parts of Europe makes it a particularly attractive target for acquisition, especially given that the US solar inverter market is anticipated to grow five-fold over the next five years.

IMS Research projects that the solar inverter market will grow rapidly over the next 5-10 years. However, the growth will vary considerably each year within each country due to the dependence upon government subsidies and thus market performance is likely to remain volatile for some time.

To obtain details of the latest and most detailed study on the global photovoltaic market, please contract IMS Research at www.imsresearch.com

Provided by Ash Sharma, Research Director for IMS Research’s Power & Energy research group

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