The U.S. and European solar photovoltaic module market is dominated by Chinese solar panels from vendors such as Yingli, Suntech, and Trina Solar. Tariffs imposed and trade issues aside, China has won this market with low-cost, high-quality, crystalline silicon solar panels. Almost 50 percent of the solar modules deployed in the U.S. in 2011 were manufactured in China, according to GTM Research.
But when it comes to the other vital piece of solar system hardware, the inverter, “market share of Chinese inverter companies in the U.S. is virtually zero,” according to GTM Research solar analyst MJ Shiao. (That excludes made-in-China inverters by Advanced Energy, Satcon, et al.) The inverter market is dominated by Germany’s SMA and other European and American vendors such as Fronius, Advanced Energy, Kaco, and Satcon.
Every grid-tied solar system requires an inverter to transform electricity from DC to AC. But Chinese inverters haven’t come to dominate in the U.S. or EU for a number of reasons:
- Since the PV inverter represents only about 7 percent of the total cost of the solar system, a cheaper inverter doesn’t have that strong an impact on system price. There’s a relatively smaller cost advantage to be gained by moving to a cheaper, less reputable Chinese inverter.
- Just as many installers didn’t use Chinese modules because of quality, bankability, and reliability concerns, installers are reluctant to go with Chinese inverters. As MJ Shiao comments, “The issue is exacerbated with inverters for two reasons: 1) you can’t discount the quality perception hurdle as easily because there’s not as much cost to discount, and 2) inverters are the single largest culprit of system failure in most PV systems, which means there’s a much higher reliability standard by developers and third-party engineers.”
- European manufacturers had a tough time entering the U.S. market because of the difficulty getting UL1741 certification (it’s taken some suppliers up to two years to get UL certification). Many Chinese manufacturers have been going through the process, but it’s going to take a while for the bulk of them to obtain certification, according to Shiao.
One Chinese company, Chint, aims to be the first Chinese inverter firm to surmount these barriers. The Chint executives I spoke with last week called Chint “the General Electric of China” and suggested that if you haven’t yet heard of the $4 billion annual revenue firm, you soon will.