Competing in the Chinese market: The inverter industry is on the rise

For China's photovoltaic inverter industry, 2014 was a controversial year. The industry was faced with many challenges due to the continuous entry of new enterprises, the rapid technological changes and the ever-expanding market. Especially the latter, according to the 2015 photovoltaic power generation construction implementation plan issued by the National Energy Administration, the scale of new photovoltaic power stations in China will be 17.8GW in 2015. This plan undoubtedly made "whoever wins the Chinese market wins the world" a consensus among photovoltaic companies. And for the photovoltaic inverter industry, its significance is self-evident.

Recently, market research company IHS released the latest "2015 Photovoltaic Inverter China Market Report". According to the report, the global inverter market continued to grow in 2014, with a total shipment of nearly 40GW. Among them, the top ten inverter manufacturers accounted for 68% of the market share. Germany's SMA company won the title of the world's largest inverter company, but faced great market competition. China's inverter giant Sungrow followed closely behind, and also ranked first in sales and shipments of photovoltaic inverters in China. Data shows that in 2014, the shipment of photovoltaic inverters in the Chinese market increased by 18% year-on-year. And Sungrow's success is commensurate with the size of China's solar energy market. This also shows that after experiencing fierce competition, Chinese inverter companies have shown stronger adaptability than foreign manufacturers. Under the general trend of the National Energy Administration's successive "big moves" to boost the upgrading of the photovoltaic industry, Chinese companies have successfully taken the lead.

Chinese inverters catch up

At present, countries around the world are accelerating the realization of "zero carbon emissions" and vigorously developing renewable energy power generation. Among all renewable energy sources, photovoltaic power generation is the most important development direction.

Ten years ago, China's photovoltaic manufacturing industry began to rise rapidly, but the country lagged behind foreign countries in large-scale photovoltaic applications. Since 2013, under the pressure of the Sino-European and Sino-US photovoltaic trade disputes, more and more people of insight have tried to find markets in China, thus opening a new door to the Chinese solar energy market. The concept of clean energy has been constantly hyped, and the huge profit prospects have attracted one company after another to enter the new energy industry. In terms of policy, government departments have also given great support. This has led to a huge explosion in China's domestic solar energy market, and China's photovoltaic installed capacity has remained the world's first in 2013-2014.

As the core part of photovoltaic power station grid connection, inverters naturally rise with the wind. Driven by the shift in market focus, inverter giants SMA and ABB continue to maintain their leading position, but international inverter manufacturers have begun to be affected to varying degrees, with their rankings falling and several being squeezed out of the rankings. A number of competitive inverter manufacturers have emerged rapidly in China and Japan. Take Sungrow as an example. In 2011, Sungrow began to appear in the global TOP5 rankings, becoming the world's fifth largest inverter supplier, and its ranking has risen year by year in the following years.

Compared with the international market, domestic photovoltaic power generation is currently dominated by large ground power stations, and the Chinese market needs high-power inverter products. Sungrow's products meet the needs of the market, and this has become its main battlefield. According to data, Sungrow's solar products cover grid-connected photovoltaic inverters, off-grid photovoltaic controls, inverter equipment, grid-connected photovoltaic system monitoring, power distribution and convergence, and other products, which can meet the requirements of various types of photovoltaic modules, photovoltaic applications, and grid connection. The home advantage + market fit has allowed Sungrow to move faster than other inverter companies, and it can even be said that it has taken this path to the extreme.

In view of the market characteristics, some institutions have analyzed the development of Sungrow and believe that in the Chinese market, Sungrow's existing product types, sales channels, technical levels, and production capacity are difficult for other companies to surpass in the short term. The "2015 Photovoltaic Inverter China Market Report" shows that Sungrow's sales and shipments of photovoltaic inverters in 2014 both ranked first in the country. The expansion of the market has led to the catch-up of enterprises, and it is inevitable that Chinese inverters will catch up.

Technological upgrades calm the restless heart

The overall trend is that the cost of photovoltaic power generation is falling. In 2014, the shipment of photovoltaic inverters in the Chinese market increased by nearly 18%, but due to the sharp decline in prices, the total market sales volume declined, down about 6% from the previous year. More and more evidence shows that low-price competition is no longer the mainstream. The consistent image of Asian inverter companies is precisely low-price competition.

Bloomberg recently published an article predicting the role of inverters in driving the three major trends in the solar market in 2015, and believed that Asian inverter manufacturers will continue to rely on low-cost competition to gain a continuous increase in market share. This misleading prediction actually appears in some institutional research reports every year. What is the real situation?

At the end of 2014, Huawei’s performance report caused a stir in the inverter industry. Huawei said that in 2014, its shipments of smart photovoltaic power station solutions reached 4GW, and its orders reached 5.5GW, catching up with the industry leader Sungrow. In its 2015 New Year’s speech, Huawei once again stated that its smart shipments exceeded 4GW, and that shipments would double to 8GW in the new year. Huawei’s killer weapon in entering the photovoltaic market is its inverter business, or more precisely, its smart power station solution business.

However, a controversial focus is whether Huawei has made a great leap forward in performance by relying on the "smart power station" business. According to data provided by IHS, in the Chinese market, Sungrow has become the largest inverter supplier with a slight advantage, and Huawei, a telecom giant that only entered the inverter market in 2013, is closing in. In 2014, these two companies accounted for 48% of China's total inverter revenue and were both among the top ten suppliers in the world - this is the first time that Chinese companies have entered the list. From this point of view, the "smart power station" strategy is undoubtedly successful. It should be noted here that it is not just Huawei, Sungrow is also a leader in the industry in power station intelligence. Thanks to nearly 20 years of experience in inverter technology innovation and industrial development, Sungrow has a market share of more than 30% in the Chinese market and has accumulated more than 12GW of applications worldwide.

In May this year, a photovoltaic media initiated and hosted the "2015 China Photovoltaic Power Station Industry Top 20 Ranking Conference". The organizer said that "performance proves strength" and took corporate performance as an important basis, and finally ranked according to the 2014 data released by the companies to the industry and the outside world. However, the shipment volume of inverters made industry insiders call it "fake", and there was a joke about "inverters sold to Mars". "Group deception" also became a hot word in the evaluation of the inverter industry.

This shows that it is very important for companies to maintain a calm mind while innovating in technology and leaping into the market.