Development of Photovoltaic Inverter Industry: Rapid Growth of Global Photovoltaic Inverter Market

1. Overview of Global Inverter Industry Development

(1) Market demand situation

From the demand side, the growth of the inverter industry is mainly driven by the global demand for new photovoltaic installations, the demand for replacement of existing inverters, and the demand for installed energy storage inverters brought about by the outbreak of the electrochemical energy storage market. In 2022, the global photovoltaic market demand maintained high-speed growth, with approximately 230GW of newly installed photovoltaic capacity added globally, a year-on-year increase of 35.3%. The market demand for photovoltaic inverters in the newly installed market also maintains a growing trend. As the cumulative installed capacity of photovoltaics gradually increases, the replacement of existing project inverters has become an important component of market demand. As an electrical equipment, the service life of inverters is around 10-15 years, which means that photovoltaic power plants built ten years ago are gradually entering a period of stock upgrading, and the demand for inverter replacement in the entire photovoltaic market is continuing to grow. In addition, with the rapid increase in the penetration rate of renewable energy such as wind and solar power, the demand for energy storage supporting facilities is accelerating. As the core unit of electrochemical energy storage systems, energy storage inverters will be driven by the growth of energy storage installed capacity, highlighting higher demand growth rates.

From the perspective of demand product types, the current photovoltaic inverter market is still dominated by string inverters and centralized inverters, with a relatively small proportion of distributed and micro inverters. The selection principle of distributed preferred string inverters and micro inverters for industrial, commercial, and household use, as well as centralized inverters for large-scale ground and surface photovoltaic power plants, is still followed globally. It is expected that with the continuous advancement of global large-scale base projects, the demand for centralized inverters will continue to increase.

The development of the photovoltaic inverter industry in 2022 is exciting, with many old brands expanding their production capacity and business layout, while new brands seize the opportunity to enter IPOs. According to relevant institutions' predictions, the global photovoltaic inverter market space may reach 500GW by 2025.

(2) Market competition situation

From the perspective of product prices, with the steady growth of demand in the traditional photovoltaic market, competition among inverter companies in the traditional market has intensified. At the same time, emerging markets overseas are experiencing rapid development, and Chinese inverter manufacturers are accelerating their pace of going global. More and more Chinese companies with cost advantages are participating in the competition in emerging markets, and the global competition for photovoltaic inverters is becoming increasingly fierce. With the gradual upgrading of inverter products and the continuous advancement of technology, the manufacturing cost of inverters will be amortized, and the cost will gradually show a downward trend.

From the perspective of market competition, in recent years, domestic inverter companies have made efforts to expand overseas channels and accelerate their overseas layout. Due to the fact that product quality is basically comparable to that of overseas companies, and labor and manufacturing costs are lower compared to overseas companies, domestic inverter companies have a more obvious competitive advantage.

From the perspective of competitive trends, the development prospects of distributed markets such as industrial and commercial, household, and microgrid are broad, especially the photovoltaic storage market will become a new growth point. At present, domestic IGBT is gradually being introduced into household string, micro inverter, and energy storage inverters. With the increase of domestic IGBT production capacity, the supply shortage of household inverters has been alleviated, and a fully competitive pattern has emerged.

2. Overview of the Development of China's Inverter Industry

(1) Competition situation in the inverter market

In 2022, benefiting from the significant growth of installed capacity in China's distributed market, the photovoltaic inverter market in China has developed to be dominated by string inverters, with the proportion of centralized and distributed inverters further shrinking. Among them, the proportion of string inverters has increased to over 78%, while the proportion of centralized inverters is around 20%, and the market share of distributed inverters has slightly decreased. In addition, with the change of new safety standards in China, the proportion of micro inverters will increase to a certain extent, but due to price factors, the overall market share has not changed much, and its market is still concentrated in parts of the Americas, Australia, and Europe. Due to various factors such as changes in application scenarios and technological advancements, there is significant uncertainty regarding the market share of different types of inverters in the future.

(2) Inverter export situation

In 2022, even against the backdrop of chip supply shortages, significant price increases in the photovoltaic main industry chain, and supply and demand fluctuations, China's inverter exports will continue to increase significantly, demonstrating strong resilience. Overall, due to high electricity prices and energy shortages overseas, as well as the fact that Chinese photovoltaic companies have the vast majority of global production capacity, the volume and price of the photovoltaic overseas market will increase in 2022, especially with the European photovoltaic market growing by over 150%, the Indian market steadily growing, and emerging markets such as Brazil and South Africa developing beyond expectations, bringing new growth momentum to Chinese inverter companies. Chinese inverter products still dominate the global inverter market, and their market share is steadily increasing. At the same time, domestic inverter companies are continuously shifting their business focus to overseas markets, resulting in a significant increase in their overseas shipments, such as Sunac, Huawei, Jinlang, Grewatt, Goodway, and others. And due to domestic photovoltaic companies expanding their power plant development and EPC businesses overseas, it has also driven a significant increase in the export of inverters. On the other hand, with the intensification of international competition, the evolution of foreign trade barriers and local manufacturing support policies may have an impact on China's photovoltaic manufacturing industry in the coming period.