PV INVERTER MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Challenges And Opportunities

PV Inverter Market Restraints

• Intermittency in solar power generation: Intermittency in solar power generation poses a major challenge for the widespread adoption of photovoltaic (PV) inverters. Solar power is dependent on the sunlight, which varies during different times of the day and weather conditions. When there is a lack of sunlight, such as during the night or on cloudy days, solar panels are unable to generate any electricity. This intermittent electricity generation creates instability in power supply and mismatches the demand and supply of power. Managing this intermittency requires large scale electricity storage solutions or balancing the grid using other renewable sources to maintain grid stability. However, energy storage technologies are still evolving and expensive for mass deployment. Balancing the grid also requires advanced forecasting tools to predict solar generation and demand. All these solutions increase the overall cost of solar projects and make solar less competitive compared to conventional power sources. This policy uncertainty and the high costs associated with intermittency have slowed down investments in utility scale solar projects in many countries. For instance, according to the International Renewable Energy Agency (IRENA), "Utility-scale solar PV deployment reached 211 gigawatts globally last year, but only 13.1GW of the total utility-scale storage capacity was paired with solar plants, representing just 6% of total solar PV capacity.
• Lack of proper regulatory policies: Lack of proper regulatory policies is significantly restraining the growth of PV inverter market. Without appropriate regulations and guidelines, the installation and usage of solar PV inverters are not streamlined. This creates uncertainty among both manufacturers and consumers. Manufacturers do not have clarity on the technical standards and testing protocols they need to comply with to ensure safety and grid stability. They end up investing more time and resources in multiple design iterations to conform to changes in norms. This pushes up their costs and makes the inverters expensive for customers. On the consumer side, the absence of strong policies on subsidies, net metering or roof ownership rights discourages many from adopting rooftop solar systems. Many countries are still in the process of developing cohesive regulatory frameworks for micro-grid connectivity and virtual net metering. Without set rules for data sharing, safety shutdowns, and energy accounting, widespread integration of decentralized solar and storage is difficult. This constitutes a large untapped market for PV inverters. Moreover, where regulations do exist, the lack of stringent enforcement and monitoring hampers the evolution of quality standards. Sub-standard or non-compliant inverters can cause grid instabilities and safety hazards over time. This erodes customer confidence in the technology.
• Counterbalance- Subsidies, tax rebates, and feed-in tariffs (FITs) provided by various governments to promote renewable energy use stimulate the market for PV inverters.

PV Inverter Market Drivers:

• Growing demand for renewable energy solutions: The world is witnessing a growing demand for renewable sources of energy owing to rising concerns over environmental pollution and fossil fuel depletion. Solar energy, being abundant and clean, has emerged as one of the most viable renewable energy solutions. However, widespread adoption of solar energy is being hampered by the intermittent nature of sunlight. Photovoltaic inverters play a crucial role in overcoming this limitation by converting the direct current produced by solar PV modules into alternative current that can be fed into the electrical grid or used by residential or commercial buildings. As solar power installations continue to increase globally, driven by favorable government policies and initiatives as well as falling module prices, the demand for PV inverters is expected to grow substantially. Countries around the world are formulating ambitious targets and incentives to increase the share of solar and renewables in their overall energy mix. For example, China and India have set aggressive solar capacity addition targets over the next decade to reduce pollution levels and dependence on imports. This growing emphasis on developing domestic solar capabilities is likely to create a sizable market for PV inverters to support large utility-scale as well as rooftop solar projects.
• Stringent efficiency standards: Government agencies and regulators across different regions have been implementing stringent efficiency standards and mandates for PV inverters in recent times. It aims to maximize the energy production of solar power plants and minimize power losses during conversion from DC to AC. Inverters that meet the latest standards increasingly use advanced power electronics and newer high-frequency switching technologies to achieve higher conversion efficiencies. While more efficient inverters are typically more expensive to produce, they help accelerate the return on investment for solar projects by boosting overall system performance. In addition, next-generation inverters with integrated energy storage and backup power capabilities are being developed to provide enhanced grid support. The tighter efficiency norms being notified by organizations like the California Energy Commission and Europe’s European Code of Conduct are compelling manufacturers to incorporate the latest technological improvements in their products. This is positively impacting the market dynamics by driving replacement demand and faster uptake of more advanced inverter solutions.

PV Inverter Market Opportunities

• Emerging residential PV market: The emerging residential photovoltaic (PV) market offers tremendous potential for expansion in the PV Inverter Market. As concerns over climate change grow and renewable energy solutions become more affordable and accessible, homeowners around the world are increasingly adopting rooftop solar to reduce their carbon footprint and lower electricity costs. This represents an important, untapped segment of the power generation market that PV inverters are well-suited to address. Residential PV installations allow households to turn their roofs into productive energy generators. By converting the direct current (DC) electricity generated by solar panels into the alternating current (AC) needed to power appliances and feed into the larger grid network, PV inverters are a crucial linking component. Their role in maximizing the usability and return on investment of residential solar systems creates a growing demand as more homeowners invest in independent renewable energy production. International bodies like International Renewable Energy Agency (IRENA) estimate the global rooftop PV capacity added annually could triple by 2023 compared to recent installation levels over the past decade, indicating huge potential growth for associated inverter sales.
• Increased global PV demand: The increased global demand for photovoltaic (PV) systems presents a massive opportunity for the PV inverter market to grow substantially in the coming years. More and more countries and communities are installing rooftop and large-scale solar power installations as the world moves towards reducing carbon emissions and dependence on fossil fuels. For instance, according to data from the International Renewable Energy Agency (IRENA), the global installed solar PV capacity increased by over 150GW in 2021 alone, crossing the 800GW mark globally. IRENA also estimates that solar PV will account for nearly 30% of electricity generation by 2030 and 49% by 2050 under their 1.5 degree scenario.