IHS: Solar inverter shipments up 7% in 2013 but revenues to fall 9%

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Market research firm, IHS, has lowered its revenue forecast for solar inverters in 2013, due to higher than expected pressure on unit prices.

The global market revenue for inverters is expected to decline by 9% to US$6.4 billion, down from US$7.1 billion in 2012. IHS previously forecasted revenue would decline by 5%.

“During the past few years, solar module makers have endured much more price pressure than the inverter suppliers have,” said Cormac Gilligan, senior PV market analyst at IHS. “However, module prices now have reached an inflection point and have begun to rise. This is having major ramifications for inverter suppliers, with price pressure having shifted to their segment of the business.”

Competition in mature but declining markets such as Germany and Italy are contributing to the pricing pressure as well as price declines for central inverters used in PV power plants, which have the highest price tags.

IHS said that combined inverter shipments to Germany and Italy are expected to decline more than 50% in 2013, equivalent to 5.7GW, compared to 11.5GW in 2012.

“Total PV inverter revenue throughout Europe in 2013 will be down by 50% compared to 2011,” Gilligan noted. “However, the number of inverter suppliers in Europe is largely unchanged. This will result in fierce competition and will prompt inverter suppliers to aggressively enter new emerging markets, such as South Africa and Thailand, in order to find new growth opportunities.”

According to IHS, overall inverter ASPs are set to decrease to US$0.18 per watt in 2013, down from US$0.22 per watt in 2012.

Prices of inverters in the 20 to 35kW range for the European market are expected to decline by 20% in 2013, reaching US$0.14 per watt.

Central inverter pricing dynamics

The market research firm noted that global utility-scale PV power plant installations are expected to account for one-third of demand in 2013, compared to 29% in 2012, yet competition and a shift to project tendering has led to the prices for central inverters to fall by 16% to US$0.12 per watt this year.

IHS said that in China, India and Thailand, central inverter prices have fallen to a low as US$0.06 per watt.

“Tender and bid mechanisms place a stronger emphasis on upfront inverter prices, which are being lowered in order to win large PV projects, particularly in today’s highly competitive market environment,” Gilligan said.

“In tandem with the very low prices for central inverters in Asia and smaller emerging markets, prices have decreased faster than predicted in European utility-scale projects as subsidies have been reduced and competition has increased. Even markets that attract relatively higher prices, such as the United States, are forecast to experience intense price pressure as new suppliers, mainly from Europe, enter the market.”
 

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