The U.S. market for photovoltaic (PV) inverters turned highly competitive in 2013 as the three biggest suppliers headquartered in the country lost share in the wake of a European-led influx of new players, according to new analysis from IHS Technology (NYSE: IHS).
With many European players looking for new opportunities in the United States to counteract their ailing business in Europe, the number of suppliers holding a significant share of the U.S. market increased during the year. That, in turn, led to a decline in market share of the three largest PV inverter suppliers based in the States.
Moreover, the U.S. trailed Japan and China in growth last year. Although it remained among the three largest growth markets for PV inverters in 2013, the U.S. increase in revenue of 10 percent was far behind Japan’s blistering expansion of 140 percent and China’s equally impressive rate of 100 percent, as shown in the attached table.
Together the three countries generated a total of $1.7 billion more in revenue for 2013 than in the previous year, despite global revenue declining by $60 million. PV inverter revenue in 2013 from the U.S., China and Japan amounted to $4.1 billion last year, compared to $2.4 billion in 2012.
US market fragments
Inverters play an essential role in PV installations, converting the direct current (DC) electricity produced by solar panels into alternating current (AC).
Largely as a result of declining demand in their home countries, European suppliers began to aggressively target the U.S. PV inverter market in 2013. This, in turn, has caused an increasingly fragmented supplier base in the United States.
“The number of suppliers competing for market share in the United States increased significantly in 2013,” said Sam Wilkinson, solar research manager at IHS. “European suppliers, as well as a number of low-cost Asian manufacturers, have made the United States a focus as they try to expand outside of their domestic markets. In contrast to China and Japan, only three domestic companies appear in the top 10 suppliers in the United States, and 12 companies now hold a market share of more than 2 percent, compared to nine last year.”
The three largest suppliers in the U.S. remained unchanged in 2013, with Germany’s SMA in the lead, followed by American makers Advanced Energy and Enphase holding the second and third spots. However, their combined market share declined from 64 to 53 percent, as an increasing number of competitors emerged.
The increasingly competitive environment in the U.S. market has also resulted in rapid price erosion, with average prices declining nearly 20 percent in the United States in 2013.
Japan, China and US growth counters EMEA’s decline
In contrast to the United States where foreign players have gained a foothold, local manufacturers remained dominant in Japan and China, with the top 10 suppliers in each of these markets made up entirely of domestic companies. A strong preference for local brands and high market-entry barriers, such as tough certification requirements in Japan and fiercely low pricing in China, have prevented international suppliers from seeing the same success that they have enjoyed in the United States.
Meanwhile, the PV inverter market in the collective Europe-Middle East-Africa (EMEA) region declined for a third consecutive year, shedding nearly $2 billion in revenue compared to 2012.
“The growth of China, Japan and the United States was a stark contrast to the declines recorded elsewhere in the world, where reduced and cancelled subsidy schemes have significantly curtailed demand, particularly in Europe,” Wilkinson noted. “The combined markets of the U.S., Japan and China grew by an incredible 74 percent in 2013, but this was not quite sufficient to prevent the global market from declining overall.”
Global PV inverter revenue shrank by slightly less than 1 percent in 2013, IHS figures show.