The photovoltaic inverter update wave is approaching and the market share will increase

The life of a photovoltaic inverter is generally around 10-15 years, which is shorter than the life of a photovoltaic module of 20-25 years. According to a report recently released by several market research institutions, the photovoltaic inverter update wave will come earlier than the module update wave. Founder Securities estimates that the global photovoltaic inverter replacement scale in 2020 will be about 7 GW, and it is expected to grow rapidly to about 37 GW by 2025. At the same time, as the global photovoltaic annual new installation scale continues to increase, the photovoltaic inverter industry will usher in a new round of development opportunities.

Still to come: replacement demand is relatively small at this stage

According to a report by Founder Securities, based on the average value of new demand 10-15 years ago, the global demand for photovoltaic inverter replacement will reach 13.2 GW, 18.4 GW, 24.7 GW, 30.8 GW and 37.3 GW in 2021-2025, respectively, and the market demand will steadily expand.

Guosen Securities calculated the replacement cycle based on a 10-year period and estimated that the annual demand for photovoltaic inverter replacement will remain at around 30 GW in the next five years, with the annual replacement demand value approaching 1 billion yuan.

Will the rapidly growing photovoltaic inverter replacement market have an impact on the industry?

Analysts at EnergyTrend, a new energy research center under TrendForce Consulting, told reporters that since the early installation of global photovoltaics was concentrated in Europe, the current demand for traditional inverter replacement is also mainly in the European market. At present, the photovoltaic inverter replacement market is relatively small compared to the entire inverter market demand.

"As early installed capacity projects gradually enter a new round of inverter replacement period, global inverter replacement demand will enter a stage of rapid growth, and inverter replacement demand in Asia, such as China and Japan, as well as the American markets will accelerate," said the above analyst.

Prepare early: Enterprises accelerate production expansion

Although the PV inverter replacement market has not yet entered an explosive development stage, if the global new demand for PV inverters is added, the total demand in the next five years will still be very considerable. According to Founder Securities' estimates, the global new demand for PV inverters will be 161 GW, 186 GW, 211 GW, 235 GW and 266 GW from 2021 to 2025 respectively.

EnergyTrend stated that as the domestic photovoltaic supply chain entered an expansion cycle, some domestic inverter companies have made early preparations for the inverter replacement market. Leading inverter companies including Sungrow Power Supply, Sineng Electric, Ginlong Technology, and GoodWe are all preparing to expand their inverter production lines.

In early February, Sungrow Power Supply Co., Ltd. released a plan for a private placement, intending to issue shares publicly to raise a total amount of no more than 4.156 billion yuan, which will be used for projects such as a 100-gigawatt annual new energy power generation equipment manufacturing base, including an additional 70 gigawatts of photovoltaic inverter equipment, 15 gigawatts of wind power converters, and 15 gigawatts of energy storage converters.

Sungrow believes that as the application scope of inverters continues to expand, the company's current insufficient production capacity may be further aggravated. The implementation of this fundraising project will effectively alleviate this situation and meet the rapidly growing market demand.

Potential is expected: market share will increase

In recent years, domestic enterprises have been increasing their efforts to explore overseas PV inverter markets. Against the backdrop of continued growth in replacement and new demand for PV inverters, this will bring a new round of opportunities for domestic enterprises and help them further increase their global market share.

EnergyTrend pointed out that due to the influence of macroeconomic environment, overseas policies, enterprise layout and other factors, the market share of Chinese enterprises has slowed down compared with the previous period. Compared with other links in the photovoltaic supply chain such as silicon materials and silicon wafers, the current concentration of the photovoltaic inverter market is relatively low. As of the end of 2020, domestic enterprises accounted for more than 60% of the global market.

Overall, the technical level of domestic photovoltaic inverters is rapidly improving. Coupled with the lower cost advantage, the market share of domestic enterprises in the global photovoltaic inverter market will continue to grow steadily in the future. "After ABB, Schneider and other old European and American inverter companies have successively withdrawn from the photovoltaic inverter business, some European and American inverter manufacturers still have a certain market share by relying on their corporate brand channels, regional protection policies and other advantages. With the construction of overseas market channels by domestic enterprises, the potential of inverter enterprises to expand overseas markets in the future is still promising." said the above analyst.

EnergyTrend also reminds that at present, domestic inverter companies still have the problem of relying on imports of core components such as IGBT, and the localization of core components needs to be continuously promoted.