Abstract:Photovoltaic inverter is a power electronic device connecting solar panels and the power grid, which belongs to the core equipment of photovoltaic power generation system. With the continuous growth of global photovoltaic installed capacity, the demand for inverter replacement of existing photovoltaic installed capacity has been released, and the inverter market demand is broad.
InverterIndustry Overview
Photovoltaic inverter is a power electronic device that connects solar panels and the power grid, and belongs to the core equipment of photovoltaic power generation system. The direct current generated by the solar panels can be converted into alternating current that can be used by the grid, which can improve the power generation efficiency and stability of the system, which is the key to ensuring the long-term reliable operation of the photovoltaic power station and the improvement of the return on investment of the project, accounting for about 10% of the cost of the photovoltaic system. According to CPIA data, the global PV inverter market is dominated by string inverters, accounting for about 70%, and centralized inverters accounting for about 27%. String inverters are commonly used in solar power plants and offer high power efficiency, flexibility and ease of maintenance. Centralized inverters are suitable for large ground-mounted power plant projects with higher power and lower initial cost, but the failure of one component can affect the output of the entire system.
Inverters occupy a downstream position in the PV industry chain. The photovoltaic industry chain can be divided into five links: silicon materials, silicon wafers, photovoltaic cells, photovoltaic modules, and photovoltaic systems. The upstream includes the production of raw materials for high-purity polysilicon, the manufacture of monocrystalline silicon and polysilicon, and the production of silicon wafers. The midstream includes photovoltaic cells, photovoltaic modules (glass, brackets, etc.) and other links. Downstream is the application end of photovoltaic power generation, the inverter industry is closely related to the development of the downstream industry, the photovoltaic inverter can convert the variable DC voltage generated by the photovoltaic solar panel into the mains frequency alternating current, which can be fed back to the commercial transmission system, or for the off-grid power grid, the downstream industry has a greater traction and driving role in the development of the inverter industry.
The cost of inverters accounts for about 3%-5% of PV systems. According to the statistics of the China Photovoltaic Industry Association, in 2021, the average ** of centralized inverters and string inverters in China will drop to 0$11 w and 017 yuan, while the initial investment cost of large-scale ground-mounted photovoltaic system and industrial and commercial rooftop distributed system is 4$15 w and 372 yuan w, the initial investment cost of string inverter and centralized inverter accounted for % of the photovoltaic system, respectively.
In our view, the industry barriers are reflected in:
1) Technical barriers: Long-term accumulated know-how is crucial to improve product efficiency. Although the topology of the inverter is open and the function is easy to implement, its efficiency, stability, and integration with other components require in-depth accumulation to achieve. The slight difference in efficiency at the inverter end has a great impact on the whole system, so the technical level is the core competitiveness of the company.
2) The first chain barrier, the core components of IGBT business concentration is high, strong bargaining power, so with a leading industry position, large procurement scale manufacturers can enter the first-class list of the first business, get the priority. In the current situation of IGBT tension, a stable chain has become an important barrier.
3) Cost advantage: The asset-light nature of the inverter industry determines that it is easy to expand production, so it needs to maintain the company's competitiveness with lower cost superimposed technical advantages. The low cost mainly depends on optimizing the circuit and reducing the amount of IC, IGBT and other modules; Improve channel efficiency, reduce sales costs, etc.
The global demand for PV installed capacity continues to rise, driving the rapid growth of inverter shipments
According to SolarPower Europe, 362GW of new renewable energy capacity was added globally in 2022, an increase of 18% year-on-year. Among them, the new installed capacity of solar power generation accounted for 66%, and solar energy is becoming increasingly prominent in the global energy transition. According to the IEA**, renewable energy will become the dominant form of energy by 2025 due to the energy crisis in Europe, the US Inflation Reduction Act and the continued strong expansion of new energy capacity in China, with solar power accounting for more than 60% of new renewable energy capacity by 2023.
In 2023H1, both global and domestic new PV installations maintained a rapid growth trend, with new PV installations increasing by 61% and 154% year-on-year, respectively. In the context of the transition of the global energy structure to low-carbon, the photovoltaic installed capacity market is expected to continue to grow due to the abundant available resources of photovoltaics, the economy has gradually emerged in recent years, and the co-drive of renewable energy policies has been superimposed. In 2022, the global installed capacity of PV increased from 106GW in 2018 to 230GW, a year-on-year increase of 35%.3%。According to the CPIA, the global new installed capacity of photovoltaics is expected to further accelerate in 2023, and the new installed capacity will reach 330GW, a year-on-year increase of 435%。
In terms of inverters, the rapid increase in global PV installations and the replacement demand for existing projects will drive the continuous growth of the inverter industry. In 2022, global PV inverter shipments increased from 81 in 20163GWh has risen rapidly to 284GWh and is expected to increase to 579 in 20263GW with a 5-year CAGR of 225%。With the gradual reduction of the cost of polysilicon, the cost advantage of photovoltaic power generation will be further highlighted. On the other hand, because the service life of photovoltaic inverters is about 10-12 years, it accounts for about half of the whole life cycle of photovoltaic power generation systems in the past 25 years. We expect that in the next five years, the demand for PV inverter replacement will grow rapidly, which will drive the continuous growth of inverter shipments.
In terms of categories, we expect distributed growth to be faster than centralized growth, and industry and commerce are expected to become new growth points. We expect global distributed and centralized PV inverter shipments to increase from 1007GW and 1084GW to 325 by 20266GW and 2514GW, CAGR was 265% and 183%。Due to the characteristics of dispersed and low energy density, solar energy resources have the natural advantages of distributed power generation, and based on the low investment threshold of distributed photovoltaics, the willingness of high-priced users such as parks, large industries, industry and commerce for distributed generation applications is constantly strengthening, and the growth of household scale will be faster than that of centralized ones. According to Frost & Sullivan**, residential and commercial shipments will reach 157 by 20264GW and 1683GW, 5-year CAGR of 235% and 296%, distributed inverters are expected to support the sustainable growth of the industry in the future.
3.The competition pattern of the industry is relatively concentrated
In terms of competitive landscape, the industry concentration of global photovoltaic inverters continues to increase, and leading companies have a dominant advantage. From 2017 to 2022, Huawei and Sungrow have always belonged to the first echelon. According to Wood Mackenzie statistics, the top five PV inverter manufacturers accounted for 71% in 2022, a year-on-year increase of 8%, of which Sungrow accounted for 21%, and the company has a solid leading position in the global inverter industry.
4.Photovoltaic inverter investment logic and ** combing
The rapid growth of domestic inverter manufacturers has high certainty. On the one hand, with the deterministic growth of global photovoltaic installed capacity, the demand for replacement of existing photovoltaic installed inverters has been released, and the inverter market demand is broad. The energy storage market has opened, and the energy storage inverter business has become a new growth pole for inverter manufacturers; On the other hand, the market share of domestic enterprises in overseas markets continues to rise, and overseas markets bring high profit margins. It is recommended to pay attention to: Sungrow, GoodWe, Jinlang Technology, Sineng Electric, Hoymiles, Deye Shares.
Reference Material**:
1.2023-6-1Zhongtai ** - the leader of inverters, the optical storage track is working hard.
2.2023-9-28Haitong** - The global leader in inverters, the ground channel has blossomed, and the energy storage business has entered an explosive period.
3.2023-11-15Huaan** - Multi-dimensional competition for new energy track, and make efforts to integrate energy management.
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