An integral component of solar installations is a solar inverter. Often termed as the brain of the solar system, an inverter plays the integral role of converting direct current to alternate current to make it utilisable in varied applications such as industrial and residential. Direct current is not usable in consumer application, as a result, a solar inverter is an extremely crucial component of a solar system. In addition to the conversion of the solar energy captured and harvested by solar panels, solar inverters are also responsible for the supply of energy to the grid as well to off-grid connections in households.  Moreover, solar inverters play a key role in ensuring the safety of a solar energy system as the inverters automatically shut down during burnouts and severe fluctuations, thereby, preventing damage from fires, and possible electrocution.

The global solar inverter market is set to grow over the coming years owing to the massive deployments expected for utility-scale solar power consumption as well as solar deployments in residences, commercial establishments, industries, and institutions. The solar inverter industry is likely to be largely driven by technological improvements, increasing demand for solar power and cost reduction in components.

This article presents a market overview of the solar inverter segment, the key regions and players, challenges and way forward…

Market Trends and Technologies

The global solar inverter market has been estimated to create a market opportunity of roughly $18.97 billion by 2029, with the total market opportunity being $12.1 billion in 2021, according to a recent report by Maximize Market Research. The compound annual growth rate for the global solar inverter market between 2022-2029 is expected to be 5.78 per cent.

The solar inverter industry can be categorised into a multitude of segments based on the type of product, connection type, application and phases. By product type, the market is primarily segmented into string inverters, central inverters and micro inverters.

For string inverters, the main working principle is that they are directly connected with the strings in the solar panels. A string inverter then receives direct current (DC) power directly from the main source, the solar panel. This power is converted in AC, thereby, making it utilisable in varied applications. The principle working model of a central inverter is based on a centralised approach where in it combines all the direct current received from the solar panel and converts it into alternate current. Microinverters, on the other hand, work on the same principle as strong inverters. However, they differ in size, being much smaller, yet their capacity if often greater than standard string inverters. New battery-based and hybrid solar inverters have also come up in the recent times. These inverters have been created as an advanced and better form of the existing battery and string inverters.

By system/connection, the industry is segmented into on-grid and off-grid inverters. According to Allied Market Research’s Solar PV Inverter Market Outlook 2030, on-grid segment holds the largest share of the total revenue at present due to a significant rise in investments for direct supply of electricity rather than electricity that demands battery storage. On-grid solar inverters also provide a cost advantage as compared to off-grid inverters, are easier to install, provide easy energy feeding and better load management during periods of high electricity demand. Given these advantages, the sub segment is expected to hold its leading position over the coming years.

Key regions and players

Over the past few years, the solar inverter market has been dominated by Asia Pacific, both in terms of demand and supply, with countries like India and China rapidly greening their power grids as well as large industries. The region not only provides a solid consumer base for solar inverters but is also a hub of solar inverter manufacturers. Statistics by Maximize Market Research suggest that the Asia Pacific region will continue to dominate the solar inverter market growth between 2022 and 2029, establishing a hold over 43 per cent of the total market share by end of this forecasted period. This will be largely owed to the rising power demand, the increasing push for clean energy by national governments, upcoming and undergoing large infrastructure projects and the increasing size and capacity of renewable energy projects in the region. Within the Asia Pacific, China is the leading global market and is expected to grow further over the coming years. China’s significant growth has been attributed to the country’s strong hold in manufacturing supported by the increasing demand for solar power in countries across the globe which China can cater to. An overall rise in solar installations over the coming years will, thus, also complement the solar inverter industry.

The global solar inverter market includes several players, many of whom are now adopting technological advancements and innovations to keep pace with the growing demand in the market. Various strategy routes in terms of partnerships, mergers and acquisitions, new and improved business models, and rapid research in cost cutting technologies are being adopted to improve one’s competitiveness in the market. The major play­­ers in the global market include Huawei Technologies Co., Sun­gr­ow Power Supply Co., Goodwe, Cana­di­an Solar, SMA Solar Te­chnology AG, Solar­Edge Technologies, Si­emens AG, Delta Electronics, Inc., Fimer S.p.A., Fronius International GmbH, Ginl­ong Technolo­gies, Sunpower Corporation, Sineng Electric Co.

Among central inverters, Sineng held the largest share in FY 2022 with a total market share of 38.4 per cent. This was followed by Sungrow at the second position with 20 per cent and Fimer at the third position with 19 per cent market share.

Challenges and way forward

Increasing inclination of governments, industries and public towards greening power supply will play a leading role in enhancing the scope of growth in the solar inverter market. The ongoing oil and energy crisis in Europe has also instigated a need for self-sufficiency and energy security. Renewable energy, primarily solar power, will play a significant role in this endeavour. Yet, the sector is not free of challenges. An abundance of alternative clean sources of power have now entered the market, thereby, increasing the competition for solar manufacturers and developers. Moreover, the design of solar inverters is often complex and improvements in the same would require tremendous investment in terms of both, time and money. High cost of installation of inverters is also prevalent in many regions. Additionally, large solar inverters entail the challenge of high heat loss and inadequate panel level monitoring.

However, new and improved inverters have been introduced in the market which provide real time data transfer for increased performance efficiency and greater safety of the solar system. Going forward, product differentiation will play a key role in improving the competitiveness of the players in the solar inverter market. For this purpose, strategic investment intro research and development can be expected to rise among solar inverter manufacturers. Moreover, greater collaborations and partnerships can also foster greater innovation in the sector. Thus, the sector can envisage a positive growth trajectory until the end of this decade.