According to the new market research report "Micro-inverter Market with COVID-19 Impact by Offering, Communication Technology, Type, Power Rating, Connection Type, Sales Channel, Application (Residential, Commercial, and PV Power Plant), and Geography - Global Forecast to 2025", the global micro-inverter market size was valued at USD 2.5 billion in 2020 and is projected to reach USD 6.5 billion by 2025; it is expected to grow at a CAGR of 20.8% from 2020 to 2025. The key factors fueling the growth of this market include increasing demand for micro-inverter solutions in residential applications, growing visibility regarding the inherent benefits offered by them, such as remote monitoring capabilities, upsurge in renewable energy investment, and government initiatives encouraging the adoption of renewable energy.
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COVID-19 impact on the micro-inverter market
COVID-19 is an infectious disease caused by the novel coronavirus. Largely unknown before this outbreak across the world, COVID-19 has moved from a regional crisis to a global pandemic in just a matter of a few weeks. The World Health Organization (WHO) declared COVID-19 as a pandemic on March 11, 2020.
COVID-19 has not only affected the commercial sector but has also impacted the global economy. With an increasing number of countries imposing and extending lockdowns, economic activities are likely to further drop, which will, in turn, impact the global economy. Furthermore, the market is expected to be adversely impacted by COVID-19 owing to the decrease in demand for power from commercial applications. Power generation in countries affected by COVID-19 has reduced due to lockdowns. This is because the demand for power from commercial end users has gone down in these countries. Though the domestic power demand has increased due to lockdowns, commercial and industrial end users still contribute the larger share in the consumption of power. The ongoing pandemic has ceased energy production at several solar plants in these countries, which is expected to reduce the demand for micro-inverters in the next few years.
Market Dynamics
Driver: Technical advantages of micro-inverters over conventional solar inverters
Micro-inverters have several technical advantages over other conventional string and central solar inverters. Unlike conventional inverters, which are placed at a distance from the solar array and can operate and monitor a number of solar panels at a time, micro-inverters are placed beneath every solar panel and convert direct current (DC) electricity produced by a single solar panel. This enables them to operate individually. Micro-inverter delivers a maximum potential output of the photovoltaic (PV) system. The main advantage of micro-inverters is their ability to maintain a robust and consistent flow of power despite shading of one or more of its panels; this has increased the popularity of micro-inverters among end users. Hence, micro-inverters are largely deployed with solar panels.
Restraint: Higher installation and maintenance costs of micro-inverters
Though micro-inverters have several advantages over conventional central and string inverter systems, one of the major factors restraining the market is the cost incurred during installation and maintenance. Micro-inverters are premium products and available at a high-end price. A micro-inverter system basically includes one micro-inverter per module, communication gateway, expensive AC trunk cables, and custom tools. The limited current of an AC trunk cable limits the number of inverters that can be connected to the same cable trunk. Moreover, a micro-inverter system costs ~USD 100, and as these inverters are well known for operating individual panels and are installed one panel each, it involves more number of micro-inverter installations and a higher expense than that incurred for a string inverter on a standard solar installation. In other words, higher the number of solar panels, higher the number of micro-inverters to be installed, thereby resulting in increased cost. Also, in the event of a problem, a technician needs to get on the roof and remove entire solar panels to access the unit. These are among the factors restraining end users from adopting the technology.
Opportunity: Increase in number of solar PV installations owing to incentive schemes by governments of different countries
Rapid developments in the solar energy sector in terms of power generation and utilization are contributing to the increase in the number of solar PV installations for various applications across the world. According to the Global Market Outlook for Solar Power/2020–2024—a report published by SolarPower Europe—a total of 16 countries installed over 1 GW of solar panels in 2019—i.e., 5 more than the 11-GW-scale solar panel installations in 2018. Countries such as China, the US, Germany, and Japan are major markets to have witnessed an increased number of new solar installations in 2019. Inverters have a higher penetration potential in new solar installations than the existing ones or the installations underway. Therefore, flourishing solar energy markets that include India, Brazil, and France create significant growth opportunities for solar inverter systems. Moreover, an increased number of global PV power plant installations also act as potential growth opportunities for solar micro-inverter systems.
Challenge: Pricing pressure on manufacturers of micro-inverters
Solar PV systems are witnessing increased global demand as they are used to generate green power to reduce dependence on grid power. With decreasing prices of solar modules, micro-inverters account for a large share of the overall installation costs of these modules. This results in downward price pressure on manufacturers of micro-inverters. As the overall costs of residential, commercial, industrial, and utility-based solar systems are reducing, inverter companies are bound to reduce the prices of their products. Manufacturers of solar modules are enduring more pressure than the manufacturers of micro-inverters in terms of reduction in the costs of their products. Manufacturers of micro-inverters are finding it difficult to accommodate this change and allow price drops in their inverters. These price drops can be primarily attributed to the development of low-cost equipment and compressed profit margins, which are indicators of the overall price decline in micro-inverters in the near future.
The key players operating in the micro-inverter market include Enphase Energy (US), Altenergy Power System (US), Darfon Electronics (Taiwan), ReneSola (China), AEconversion (Germany), and Chilicon Power (US) among others.
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