November 01, 2017

Solar Energy - SMA Increasingly Challenged by Chinese Competitors, SolarEdge

ABB, S92 GR, SEDG
By Sylvain Gavard
The global solar inverter market is expected to grow yy in 2017, but market leader SMA is facing increasing challenges globally in the string inverter market from Chinese competitors, while SolarEdge is gaining share with its micro-inverter and optimizer solutions in developed PV markets.

SMA, ABB Losing Share Globally on String Inverter Pricing
The global inverter market is expected to grow in 2017 yy, led by higher yy solar installations in China (43-44 GW expected in 2017 versus 34.6 GW in 2016) and Europe (7-8 GW expected in 2017 versus 6.8 GW in 2016), while installations in the United States, Japan and India are expected to be mostly stable yy. SMA Solar Technology AG is the world’s top manufacturer of string inverters, which still get the lion's share of the inverter market for overall solar installations, but five of six sources said SMA lost share during 3Q17, while one source each in Europe and India said ABB Ltd. lost share. Seven of eight sources said Sungrow Power Supply Co. Ltd. (300274 CH) gained share during 3Q17 (in line with OTR Global’s April findings), and five said Huawei Technologies Co. Ltd. gained share. Sources said SMA and ABB lost share because they could not decrease prices as much as Sungrow and Huawei in 3Q17, and ABB also suffered from quality concerns. All Chinese sources expect string inverter prices to remain stable in 4Q17 qq, but two sources, one each in Europe and Japan, expect them to decrease qq because of strong competition.

Quotes:
“Huawei and Sungrow are the top two players in China. I saw SMA in the bidding documents for many projects, but since the price of SMA is much higher than that of the Chinese players, while the quality from the Chinese players improves, SMA loses share and will continue to lose share.” China

“SMA is almost out of the market.” India

“ABB has a bad name in Europe because of the quality issues they have had.” Europe

“Sungrow is doing well with our large-size projects in Europe.” Europe

“String inverter prices maintain a downward trend. But since prices are already pretty low, I don't think there is much room left for decreases.” China

“There is lot of competition and supply. So even if the global solar market is healthy, there is not much possibility to increase prices.” Europe

SolarEdge’s Micro-Inverters, Optimizers Further Gain Share in Mature Markets
European sources, as well as a large Japanese source, said module-level power electronics (micro-inverters and power optimizers) were further gaining share against string inverters in the distributed generation (DG) segment, including midsize commercial projects. This is because mature solar markets need more efficient inverter solutions for difficult solar installations, and the DG segment is developing faster in mature solar markets than in developing solar markets. European and Japanese sources remained particularly upbeat about SolarEdge Technologies Inc.’s optimizers because of the brand’s perceived superior technology, despite its high cost. One European source said SMA also offered MLPE solutions because of its stake in Tigo Energy Inc. (SMA acquired a 27% stake in Tigo on April 8, 2016) but again said its technology was less attractive than SolarEdge’s, adding the brand’s sales were limited by supply constraints in 3Q17.

Quotes:
“SolarEdge is very clearly gaining share. We sell a lot of their micro-inverters and optimizers for residential and midsize commercial projects -- although they are about 30% more expensive than normal string inverters. The trend toward module-level power electronics might also benefit SMA, because it bought [a stake in] Tigo, which offers the same technology; but they are not as efficient as SolarEdge, and I heard they suffered from some component shortages.” Europe

“SolarEdge is doing well, as far as I've heard. But for our usual large-size utility projects that start at several hundred kWhs, the cost is too high. The additional investment wouldn't pay off, so we use normal string inverters for those projects." Europe

Background: 
A solar PV installation consists of four key components: solar modules, inverters, racking/mounting systems and performance-monitoring systems. Inverters convert the direct-current electricity (DC) generated by solar modules into alternating-current electricity (AC) so it can power domestic appliances or be injected to a utility grid. There are three different inverter technologies: string inverters, micro-inverters, and power optimizers. String inverters convert electricity from several modules. Micro-inverters convert electricity from each individual module. And power optimizers offer an intermediary option. String inverters are the most commonly used worldwide because they are the oldest and cheapest. Micro-inverter installations can outperform conventional string inverter installations by up to 20% by mitigating the negative effects of partial or complete shading and can monitor the performance of individual solar modules. Power optimizers, instead of converting the DC electricity to AC electricity, "condition" the DC electricity from each module before sending it to a central inverter; this results in higher overall efficiency levels than with a conventional string inverter and at a lower cost than micro-inverters. Micro-inverters and power optimizers are collectively referred to as module-level power electronics (MLPE), while string inverters are also called “centralized inverters.”

Contributors: Sun Jina, Miriam Leunissen-Weikl, David Ren and Usha Somayaji

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