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Global demand for replacement PV inverters to account for 7 percent of total global installations in 2020
03 March 2020IHS Markit Energy Expert
IHS Markit forecasts that global demand for replacement
inverters will grow by almost 40% to reach 8.7 GW in 2020. A large
and growing installed base of aging PV installations is driving
demand for replacement PV inverters. Demand for replacement PV
inverters comes from customers who own old inverters which are
beginning to underperform or fail or can no longer easily be
serviced with replacement models or spare parts. Demand is also
coming from customers who own relatively young PV inverters that
are underperforming due to either poor installation, system design,
or quality issues.
Figure 1: Global demand for replacement PV inverters by
region
EMEA is expected to remain the largest region for
replacement inverter demand but Asia is gaining
EMEA has been the largest region for replacement PV inverter
demand historically as the region experienced an early boom in
solar in core markets such as Germany, Italy, Spain, Czech Republic
and Bulgaria and now has the largest installed base of PV systems
older than 5 years. Replacement demand in the EMEA region reached
3.4 GW in 2019, driven largely by aging installations between 10.1
kW and 5 MW in size according to IHS Markit's recent report "PV
Inverter Replacement Demand Report - 2020". The largest markets are
Germany, Italy and Spain, which together accounted for over 70% of
replacement demand in the EMEA region.
Asia is the second largest region for replacement inverters due
to large PV installations in China historically and continued
massive recent growth in China which will continue to fuel demand
in the region. Demand for replacement PV inverters is expected to
come primarily from utility-scale (>5 MW) installations. Demand
will also be driven by residential and commercial installations in
Japan which had early growth in solar and now has the largest
installed base of residential installations over 5 years old in the
world.
Demand for replacement PV inverters in the Americas region is
expected to grow rapidly, driven primarily by the United States,
its largest market. Replacement demand in the Americas region is
forecast to grow at a CAGR (18-23) of 130% and account for 12% of
global replacement demand in 2023. The United States has proven to
be volatile market for the competitive landscape, with many
suppliers having entered and exited the market. Certain suppliers
such as Satcon and Advanced Energy who had a large market share but
are no longer active in the market have created an opportunity for
existing suppliers to provide replacement inverters. Furthermore,
evolving technical regulations and import tariffs continue to make
the United States a challenging environment for suppliers to keep
investing in next generation product and hence, may also cause
suppliers to exit the market. However. despite some of these
challenges, it remains a highly lucrative market as suppliers fight
to capture growing new installations and as customers seek ways to
replace a growing installed base of aging systems, particularly in
the utility-scale sector.
Developers, EPC's, O&M providers, and PV inverter
suppliers are working together to address the market for
replacement PV inverters
Developers, EPC's, O&M providers, and PV inverter suppliers
are seeking new ways to maximize the value from investing in
replacement PV inverter projects. Straight one-to-one replacement
of old inverters is the most common route that customers take. For
example, an old 1 MW central inverter is replaced with a new,
modern 1 MW central inverter. However, as inverter technology
develops, new inverter types are being used to replace
old-generation inverters with the aim of maximizing yield,
simplifying O&M, and reducing LCOE. Customers are increasingly
considering changing the overall system architecture, for example,
by replacing an old central inverter with string inverters or by
introducing string level power optimizers. Overall, modern
inverters are being designed with a plethora of advanced features
such as higher voltage of 1500V, artificial intelligence,
monitoring, and autonomous control functionality. Advanced software
capabilities allow customers to upgrade their existing systems by
replacing inverters.
O&M providers have stepped up to offer services to ensure
that customers reduce downtime and maximize yield and revenue from
their PV systems by helping to meet the challenges that come with a
growing installed base of aging PV inverters. Firstly, real time
monitoring can allow O&M providers to spot potential issues
with inverters deployed within a system. On top of that, predictive
analytics are starting to help O&M providers and customers get
ahead of potential issues. New methods including thermography and
aerial photography are also providing new data streams for O&M
providers to study for potential inverter issues.
Regardless of these advanced methods of monitoring, O&M
providers face a significant challenge regarding sourcing
replacement inverters and spare parts. Replacement inverters of old
generation inverters may simply not be available anymore. Spare
parts may be difficult to source and may require O&M providers
and customers to get creative with harvesting spare parts from
decommissioned inverters or even other types of power electronics
equipment. O&M providers have begun to develop in-house
expertise dedicated to inverter repair which involves hiring
experienced engineers, seeking advanced training sometimes directly
from PV inverter suppliers, and warehousing their own inventory of
spare parts and spare inverters.
For their part, inverter suppliers have also begun to invest in
their own departments dedicated to addressing the market for
replacement PV inverters. For example, SMA has established its own
replacement/repowering department which is focused on consulting
and selling kits specifically for replacement projects. However,
IHS Markit notes that the market is still in its infancy and
inverter suppliers that invest time and resources into helping
serve this market can capture significant opportunity for
themselves in the next five years as the market grows rapidly.
