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U.S., Japan to Account for Half of Global PV Inverter Revenue

17 February 2015

The United States and Japan will remain the only two PV inverter markets with annual revenues exceeding $1 billion in 2015 and 2016. IHS predicts that global PV inverter revenue for 2015 and 2016 combined will reach $13.2 billion, and that Japan and the U.S. will account for 25 percent and 21 percent, respectively, of this.

The global PV inverter supplier base has been placed under pressure in recent years by intense price pressure caused by slowing demand, over-capacity and a plethora of new entrants. As a result, global suppliers are highly focused on building a strong position in these two key markets to capitalize on revenue opportunities. Despite China being the largest market in terms of shipment volume, low prices and extremely challenging business conditions have made it a lower focus for global suppliers, with this market accounting for just 14 percent of 2015 and 2016 global revenues in comparison.

Japan became the largest PV inverter market by revenue in 2013, and is predicted to remain so until at least 2018. The market grew by over 140 percent in 2013 as an attractive feed-in tariff resulted in a huge acceleration of the residential market and the dawning of a GW-scale market for commercial and utility-scale systems.

Although the enormous demand that Japan has seen and high prices that it commands have made it extremely attractive for international suppliers to enter, it has remained dominated by domestic suppliers due to a strong preference for local products and complex certification requirements. The combined shipments of the three largest suppliers, Omron, Tabuchi and TMEIC increased by 60 percent during the first 3 quarters of 2014, versus the same period of 2013, and accounted for over half of total shipments to Japan.

However, some Western suppliers such as Schneider Electric and ABB are starting to reap the rewards of their investment in the market and their position as major global companies, as their shipments to Japan have grown significantly throughout 2014. To date, they have mainly been focused on shipping large central inverters for the booming utility-scale market.

The United States, which was the only market to exceed $1 billion in annual revenue each year for the last three years, has also attached the focus of most suppliers and proved far more accessible than Japan. A robust utility-scale pipeline, and strong incentives and financing models in the residential and commercial sector have resulted in USA delivering robust year-on-year growth whilst many other markets proved to be extremely volatile.

The large number of European and Asian suppliers that have made establishing themselves in the United States a priority has led to the supplier base continuously evolving. Notably, two Japanese suppliers appeared amongst the 10 largest suppliers to the United States, based on revenues for the first nine months of 2014, TMEIC and Yaskawa (via its acquisition of Solectria). Israel-based Solaredge has also made a significant improvement in its position and was the fifth largest supplier in that period, largely helped by its supply agreement with SolarCity.

Whilst these two markets present the largest opportunity for PV inverter suppliers over the next two years, IHS also highlights that both markets are predicted to decline in size in the future. Japan is predicted to decline in 2016 as feed-in tariff reductions and grid-connection delays for utility-scale systems cool the market.

A decline is also predicted for the United States in 2017, due to the scheduled expiration of the federal Investment Tax Credit (ITC). Whilst there is currently speculation that the ITC could be extended, most large projects are aiming to complete before end of 2016, which will cause a slowdown in 2017.

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