Huawei, Sungrow, Sineng and others are marching into the distributed domestic photovoltaic inverter market. Is the fourth reshuffle about to begin?

"At present, a standardized business model for distributed photovoltaics has not yet been formed, and the market is in chaos. However, once the business model is solidified and more companies enter the distributed market, the price of small inverters will drop rapidly, which also means that the fourth reshuffle of the photovoltaic inverter market is about to begin."

Wang Yuelin, general manager of Sineng Electric's product department and a photovoltaic veteran who has worked in the inverter business for nearly 10 years, made such a prediction about the current inverter market.

When is the reshuffle expected to begin? Wang Yuelin said it will probably happen in the next one or two years. When talking about the fourth reshuffle in the inverter market, we have to start from the first one.

The first reshuffle: domestic companies "flocked in", and some foreign brands withdrew from the Chinese market

Around 2009, benefiting from the promotion of the domestic Golden Sun Demonstration Project and franchise projects, my country's photovoltaic applications gradually entered the stage of large-scale market application. At this time, photovoltaic inverters were basically imported, except for a few domestic companies such as Kono Weiye, Guanya, and Sungrow Power Supply. In a short period of time, a large number of foreign brands such as Emerson, SMA, Carraro, AE, Saikang, Siemens, Schneider, ABB, and POWER-ONE flooded into the domestic photovoltaic market.

At the same time, the 200%-300% profit of inverters has stimulated domestic power electronics manufacturers. Many manufacturers of power electronics products such as inverters, UPS, communication power supplies, and power supplies have also begun to develop photovoltaic inverter sub-businesses or directly transform into photovoltaic inverters. "From a technical point of view, it is very easy for these companies to switch to inverters. Therefore, the number of domestic inverter manufacturers has risen rapidly," said Wang Yuelin. According to statistics, the number of domestic inverter manufacturers in 2011-2012 was as high as more than 140.

When the domestic inverter production capacity was gradually released, the market began to oversupply, and the price of inverters also fell rapidly. According to reports, after a round of "fierce competition", the price of photovoltaic inverters dropped from 2 yuan/watt to 0.7~0.8 yuan/watt. Many domestic companies went bankrupt or closed down due to the drag of price wars, and some foreign brands gradually withdrew from the Chinese market due to sharp declines in profits or their own problems, including Emerson's photovoltaic business, which once ranked second in China's market share, was eventually acquired by Sineng Electric.

"Brands like Carraro and Saikon are rarely heard in the market now," Wang Yuelin told reporters.

The second reshuffle: domestic enterprises price war, large machine oligopoly wins

Between 2012 and 2013, when most foreign companies were eliminated by domestic companies, domestic companies began to compete with each other. What remains unchanged is that this reshuffle is still dominated by price wars.

Since the photovoltaic market at that time was still dominated by ground-based power stations, the so-called large-machine market, companies such as Sungrow Power Supply and Sineng Electric, which had technology and manufacturing capabilities in large-machine manufacturing, led the industry reshuffle.

Wang Yuelin introduced, "After this round of reshuffle, the two large enterprises, Sungrow Power Supply and Sineng Electric, gradually occupied 50% of the ground power station market share. Taking 2013 as an example, Sineng Electric's market share reached 15%, and Sungrow's reached 35%. In addition, Sineng Electric has always ranked first in the market share among the 'five large and four small' power generation groups due to its reliable product quality."

During this period, as the domestic distributed photovoltaic market had not yet opened up, small machine companies such as Growatt, GoodWe, and Sanjing Electric mainly focused on foreign markets. For example, Sanjing Electric has gained a considerable market share in the Belgian and Brazilian household photovoltaic markets.

The third reshuffle: Huawei enters the market, and foreign trade companies return to domestic distributed

In 2014, Huawei’s strong entry and changes in foreign markets prompted the third reshuffle of the inverter market.

Huawei chose the string technology route in the inverter field, and quickly rose up under the banner of smart photovoltaics, which further improved the market concentration and triggered changes in the market structure. In the end, Sungrow, Huawei, and Sineng accounted for more than 80% of the market share of ground-mounted power stations.

Around 2014, the overseas photovoltaic market changed, and companies such as Growatt, Samil, GoodWe, Omnik, and SAJ began to gradually return to China, but the domestic distributed market was still not optimistic. Wang Yuelin explained, "The country gave 8GW of distributed power quotas that year, but only less than 2GW was completed. In fact, most of these distributed power stations were ground-based power stations."

In 2015, the domestic distributed photovoltaic market started to take off gradually in Jiangsu and Zhejiang. Wang Yuelin believes that "the explosion of domestic distributed photovoltaic has put some enterprises on the fast track of development." This is indeed the case. In 2015, the domestic market revenue of small machine companies such as Growatt, Sanjing Electric, and GoodWe gradually exceeded the revenue of foreign markets. In particular, in 2016, the sales growth rate of these companies in the domestic market exceeded 100%.

The fourth reshuffle: "Ground oligopoly" enters the distributed market, or leads to a new round of industry reshuffle

In 2016, the distributed market has become very popular. The inverter oligarchs who have been "dominant" in the ground market have also begun to layout the distributed market. Around 2017, "ground oligarchs" such as Sungrow, Huawei, and Sineng all launched their own small inverters.

Take the above energy as an example. At the 2017 Shanghai Photovoltaic Exhibition, it exhibited household 3kW and 5kW inverters for home photovoltaic power generation, low-voltage grid-connected 20kW/40kW inverters for low-voltage grid-connected occasions such as village-level poverty alleviation power stations, commercial buildings, and small industrial plants, and medium-voltage grid-connected 50kW inverters for large industrial plants, agricultural greenhouses, small and complex mountain power stations and other occasions with a grid connection of 10kV or above.

At the same time, around 2017, first-tier photovoltaic component companies such as Trina Solar, GCL Solar, JinkoSolar, and Suntech began to vigorously promote their own brands of distributed original systems. According to Polaris Solar Photovoltaic Network, when choosing inverter manufacturers, these brands of household original systems will also choose inverter brands with guaranteed quality, safety and reliability as their first choice.

Wang Yuelin believes that "at present, the standardized business model of distributed photovoltaics has not yet been formed, and the market is in chaos. However, once the business model is solidified and more companies enter the distributed market, the price of small inverters will drop rapidly, which also means that the fourth reshuffle of the inverter market is about to begin."

At present, inverter companies are showing a clear differentiation between the ground market and the distributed market. One category is the oligopolistic companies in the ground market, such as Huawei, Sungrow, Sineng and TBEA, while the other category is Growatt, GoodWe, Ginlong and SAJ Electric, which have a large share in the distributed market.

In the upcoming fourth "war", whether the latecomers can break through, we will wait and see!