Soaring oil prices and growing environmental concerns intensified the focus on alternate energy in recent times. The photovoltaic industry is a major benefactor of this growing interest, with large scale solar parks mushrooming in advanced and developing countries alike, propelled by favorable regulatory environment, Government subsidies, falling PV module prices, and the growing pressure on buyer rates. In particular, the feed-in-tariff (FIT) and micro-FIT programs in several countries, particularly Europe, reaped rich dividends in the form of increased solar installations. As a result, PV system installations grew at a healthy rate of over 30% over the last decade and are expected to continue at a robust pace through the year 2020, fostering a similar increase in demand for PV system components such as inverters.
While Europe remained the major growth driver for the global photovoltaic industry for most of the previous decade, the announcements of roll-backs in FIT subsidies created shockwaves that rippled throughout the worldwide supply chain. The Spanish Government triggered the trend in 2008, announcing deadlines for cut-backs in FIT incentives. With other Governments following suit, the unprecedented surge in demand drove a short term spurt in prices in 2010. The Eurozone crisis is expected to stifle regional Government support for solar installations in the near term, weighing heavily on the global market. At the same time, US Government is showing renewed interest in solar photovoltaic power, as part of its ‘green economy’ drive. The recent nuclear incident at the Fukushima plant prompted the Japanese Government to revisit its alternate energy infrastructure.
Photovoltaic Inverters are transforming from simple energy conversion devices into ‘Smart’ PV inverters with capabilities of intelligent energy storage and grid interaction, and reactive power that are fast becoming a core part of the fast expanding smart grid infrastructure. Due to issues related to grid imbalances factors such as increasing deployment of grid-tied PV inverters, the need for intelligent energy storage and disbursal systems and integration of solar power into the utility grid are driving demand for ‘smart’ PV inverters. Moreover, regulators are tightening inverter specifications and demanding that PV inverters play a greater role in grid stabilization, thereby improving the scenario for smart PV inverters in developed markets. Germany set the example for other European countries, by issuing the Low and Medium Voltage Directives for integrating solar power into the utility grid. The implementation of this directive is expected to propel the market share of smart and semi-smart PV inverters. In the medium-term, energy inverters are expected to constitute about half of the total of PV Inverter shipments, driven by Government subsidies and the development of cost-effective alternatives for the expensive lithium ion batteries in widespread use at present.
PV inverter manufacturers are displaying increasing propensity for disruptive technologies, as is evident from the huge growth in shipment volumes of microinverters and power optimizers in 2010. DC-to-DC power optimizers and solar microinverters are expected to cross the $1.0 billion mark in terms of revenues over the next few years, with shipments also projected to double over the period. These technologies offer enhanced power harvest besides enabling easier installation, improved monitoring and safety. Microinverters offer benefits for PV systems that are prone to shading and require constant re-orientation, as well as overcoming the single-point failure of central inverters. While solar microinverters are anticipated to find application in residential and commercial applications, power optimizers would be employed in large scale commercial projects that involve the deployment of central inverters. Despite this, the segment accounts for a fraction of the total PV inverter market, with penetration limited to less than 10% of the total market. The substantially high prices and technological immaturity of microinverters are the greatest barriers to their adoption, particularly in commercial applications. However, prices of the disruptive technologies are sliding downwards, as scales of economies are being realized through OEM contract agreements.
Europe dominates the worldwide PV Inverters market, as stated by the new market research report. The European market, led by Germany, France, Italy, Spain, Belgium, Greece and the Czech Republic, also accounts for the majority of the global installations. However, in light of the economic recession and subsequent Eurozone financial crisis, several Governments rolled back PV subsidies and incentives as part of their austerity measures, thereby culling demand in the region. In the near term, China and India are forecast to emerge as major centers of growth in the Asia-Pacific region, with China evolving into a major PV inverter manufacturing hub for the region. Government authorities in emerging Asia economies are also promoting PV system installation, driving the domestic demand for solar inverters. As a result, the market is expected to register healthy CAGR of over 25% through 2018.
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