PV inverter market: second-quarter earnings still fall

With the sharp fall in prices, the revenue of PV inverter suppliers decreased by 1.3% in the second quarter of 2011 compared with the same period of last year. However, in the second quarter, it was not all bad news. In fact, the inverter shipments increased by more than 40%. The market conditions in the first quarter showed that excessive inventory will no longer damage the development of the industry. In the second half of 2011, Downstream demand will be stronger.

According to IMS Research, the inverter market recovered strongly in the second quarter of 2011, bringing inverter shipments to nearly 10 GW in the first half of the year. However, the ex-factory price dropped by more than 20%, which led to a drop in industry revenue. Earlier this year, IMS Research had predicted that inverter shipments will again exceed 20 GW this year, but the rapid decline in prices will lead to a drop in revenue, which is lower than the historical record set in 2010.

IMS Research's PV inverter supply and demand quarterly report collected more than 90% of corporate earnings and shipment data in the industry. The report shows that in the second quarter, price is the most critical factor, and it is expected that prices will fall further in the second half of the year. AshSharma, senior research director of photovoltaics at IMS Research, said: "In the first quarter and the second quarter, the average inverter price dropped rapidly to below 0.20 euros/watt. Although it is not as fast as the price of PV modules, it is comparable to a year ago. In comparison, the drop has reached 20%, which also explains the change in product structure."

There are several factors that contribute to price declines, but average prices may also pick up in the next few quarters. AshSharma said: "In contrast to PV modules, there are many reasons for the decline in inverter prices. Of course, customers will ask suppliers to lower prices, but there are more important factors, such as the transfer of markets to lower prices, in addition, product structure. There has also been a change from a higher-priced string inverter to a lower-cost three-phase inverter product, which has also caused a drop in revenue.”

The geographical changes in demand for photovoltaic inverters have a double impact on the price of the industry. First, some low-cost markets, such as India and China, occupy global market share, causing prices to fall. Second, many large suppliers continue to shift their attention from stagnant German markets to smaller emerging markets. AshSharma said: "Suppliers are striving to seize market share in emerging markets, hoping to have long-term development there, but this will lead to extremely low quotations, is a short-sighted behavior." Interview with major integrators showed that in order to hit Withdrawing from rivals, some of the leading suppliers of inverters have cut prices by more than 45% in emerging small European markets.

Due to weak demand, inverter suppliers have to expand their bases to win customers. This will inevitably lead to falling prices and continue to put pressure on suppliers to reduce costs and prices in order to compete. AshSharma said: "This year's decline in inverter prices is partly due to market geographical shifts and changes in product mix. But in fact, prices in all regions fell in the second quarter, while in mature markets such as Germany and Italy. Due to the drop in demand but the increase in supply, prices have fallen rapidly."

In spite of the increasing number of inverter suppliers, market leader SMASolar recaptured some market share in the second quarter, the share increased by 8%, and the overall market control again exceeded 30%. AshSharma said: "Although SMA's competitiveness has always been reflected in technology, brands and value-added products, but the second quarter also shows that they can compete with their opponents in the price. However, the price of SMA can be reduced to how low. It remains to be seen."