Ash Sharma, Director, IHS Solar and IHS IMS Research
2012 was tough for most suppliers of solar PV products. Despite growing market volumes, a sharp demand slowdown led to oversupply and price competition. Many companies with weak financial positions failed, whilst others exited the market before conditions worsened furtherÃ¢â¬"a contrast to 2011 when the $100 billion industry was growing at a triple-digit rate.
IMS Research forecasts 2013 to be another challenging year for PV component suppliers. Whilst panel suppliers have taken the brunt of the price erosion, now inverter manufacturers face flat revenue growth globally and a shift away from traditional markets leading to a reshaping of the supplier base. Top-ten inverter manufacturers are likely to suffer because of falling inverter prices. Markets such as Japan, China, India, and the U.S. will also be difficult to penetrate and may not compensate for decreases in their core markets, Germany and Italy. Recent profit warnings, and Chapter-11 filings by SMA and Satcon, highlight the challenging conditions all PV inverter manufacturers face, which may not improve until 2014.
IMS Research forecasts double-digit growth of PV installations with 35 GW predicted to install in 2013. However, inverter revenues will remain flat as prices decline in a competitive market as manufacturers attempt to break into new geographies and gain share. A major geographic demand shift, coupled with price pressure will challenge leading PV inverter suppliers in 2013.
Although the U.S. and key Asian countries will make up for the shortfall left by shrinking markets in Italy and Germany, these markets may not be easily accessible to many leading inverter suppliers and market penetration will be challenging. Some challenges that inverter manufacturers will face in 2013 will be certification standards, lower cost bases, local-manufacturing requirements, and competition from local suppliers. As some of the Asian countries have lower price points, one hurdle for inverter makers in 2013 is that they wonÃ¢â¬â¢t be able to subsidize Asia operations by their profitable European business.
As FiT cuts have occurred in mature markets such as Germany and Italy, manufacturers are increasingly looking to the growth markets of U.S. and Asia. Manufacturers that can penetrate these markets will reap future benefits as the market develops. Longer-term horizons and sound strategic decisions will be needed in future years as the market fragments due to its diverse geography, as more PV markets develop, including South Africa and South America.
For manufacturers that withstand the challenges of 2013 and penetrate the emerging markets, future years should return to double digit growth as the PV market matures. Key inverter markets, however, wonÃ¢â¬â¢t be centered in Europe but spread over several continents. IMS Research forecasts that Europe accounted 54% of global shipments in 2012, but this will fall to 40% by 2014. As a result, IMS Research predicts that the top-ten manufacturers in 2014 will be different to those of today, with many more Chinese and Japanese companies.