The global PV inverter market size was valued at USD 9,708 million in 2021. It is expected to reach a value of USD 16,194 million by 2030, growing at a CAGR of 5.85% during the forecast period (2022–2030). The energy sector has evolved significantly due to technological innovations, with companies worldwide striving to introduce sustainable, secure, and affordable energy systems. The clean energy options available today are cost-competitive. Technological innovation needs to be accelerated over the next few years to meet the requirements of the growing population. Solar PV power generation systems, being eco-friendly and renewable, have proved to be a lucrative option for power generation across the European Union, the Americas, and Asia-Pacific. The various advantages of solar PV, including a contribution to sustainability, reduction of the carbon footprint, and low-cost energy generation, are expected to propel technology demand in coming years. Increasing demand for renewable energy due to high power consumption and a reduction in renewable power generation costs is expected to drive market growth in the coming years.
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According to the United Nations, in 2020, the global population was 7.8 billion, of which approximately 1 billion people were deprived of electricity. The world population will reach 8.6 billion by 2030, driving the energy requirement even further. The power industry has shifted its focus toward large-scale electricity generation through renewable energy to meet the demand for electricity due to increasing awareness regarding sustainable energy sources.
Renewable power generation has witnessed a growth of an unprecedented pace over the past decade. It has also continually surpassed expectations, with new records being set annually and more companies committing to their respective energy transitions. The changing consumer preference for a sustainable environment, ambitious targets by the government, and adequate planning and policies have led to much advancement in considering renewable energy.
Asia-Pacific is a major electricity consumer and plays a vital role in the global energy market. Various governments in the Asia-Pacific region have recently adopted targets to develop their renewable energy sources contribution to their energy mix. Pacific is likely to promote the renewable energy sector by providing preferable tariffs and tax benefits. These factors are expected to drive the market for PV inverters during the forecast period.
The declining cost of solar equipment has been a primary reason for the growth of solar and related industries globally. Though the initial installation costs appear high, many utility companies offer incentives or even fund up to 50% of the system costs. Prices of the solar panel that used to cost between USD 7–9 per watt have declined to USD 3 per watt-hour, which would total up to USD 25,000–30,000 per watt for a system on an average basis.
Solar loans and government subsidies have resulted from a decline in prices and have contributed to a further decrease in the last five years. Solar credits will be the number one consumer finance solution for the residential sector in 2018. Solar lending comes at the expense of the cash markets and TPO (Third-Party Owned), involving both personal and home equity lending.
The global electricity demand is anticipated to witness an increase of nearly two-thirds of the current demand over the forecast period. A growing focus on distributed power and utility projects is expected to bolster the market growth over the next eight years. The availability of natural gas in large quantities coupled with its relatively lower prices, especially in North America, China, and Thailand, has led to an increase in power generation using natural gas. Increasing focus on generating electricity through cleaner sources and the degradation of coal reserves are anticipated to increase the share of gas-fired power generation in the global energy mix, thereby restraining the growth of the PV inverter market.
The industrial lockdown followed by the COVID-19 pandemic brought manufacturing activity to a grinding halt in most industries worldwide, leading to a significant drop in the demand for oil and gas. For instance, as per the US Energy Information Administration, the average consumption of petroleum and liquid fuels globally was reported at 94.1 million barrels per day during the Q1 period of 2020, a decline by around 5.8 million barrels per day from the same period observed in 2019. In addition, power demand from industrial and commercial end-users also saw a significant dip due to lockdown being imposed in most countries around the globe.
COVID-19 has hindered the market for PV inverters globally due to disruption in the supply chain, resulting in delays for existing projects. Further, demand for PV inverters has reduced from residential and commercial end-users due to limited new construction activities and the diversion of available funds by residential and commercial end-users to sustain themselves during the pandemic.
Nonetheless, the governments in major countries such as the US, Germany, and India have taken steps to extend the deadline for new and under construction solar power projects to be eligible for incentives and tax credits. These factors have mitigated the impact of COVID-19 in the PV inverter market.
The global PV inverter market share has been classified into product type, end-user, and region.
Based on product, the PV inverter market has been categorized into central PV inverters, string PV inverters, micro-PV inverters, and others.
String PV inverter accounted for the largest market share in 2021 and is projected to grow at the highest CAGR of 6.05% to reach USD 8,814 million during the forecast period. In the case of a string PV inverter, solar panels are installed in rows, each on a “string.” Each string carries the DC power the solar panels produce to the string inverter, where it’s converted into usable AC power consumed as electricity. String inverters are economical and durable compared to other types of inverters. They are also easy to maintain as they are in an easy-to-access location. These factors are accredited to the high demand for string PV inverters.
Based on end-user, the global PV inverter market has been segmented into residential, commercial and industrial, and utility.
The utility segment of the solar PV inverters accounted for the largest market share in 2021 and is expected to reach USD 7,716 million by 2030 at a CAGR of 5.95%. Utility-scale solar projects require reliable, robust, and scalable infrastructure. The most widely used PV Inverter in the utility sector is the central and string inverter. Increased renewable energy demand, declining cost of solar power and equipment, and government subsidies are the primary reasons for the growth of the utility sector. Many key players provide consumers with industry-leading utility-scale solutions to achieve higher efficiency and reduced balance-of-system costs with their pre-integrated power stations.
Based on regions, the global PV inverter market share has been segmented into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.
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Asia-Pacific holds the most commanding position in the regional market. It is expected to reach USD 8,986 million at a CAGR of 8.02% during the forecast period. China is a major contributor to Asia-Pacific’s rapid growth in the PV inverter market. A growing number of solar installations in the region’s developing nations have also significantly contributed to the development of the Asia-Pacific solar PV inverter market.
China accounted for the largest market share in 2021 in the Asia-Pacific region and is projected to register significant growth during the forecast period. The Chinese government has been actively investing in power generation through renewable sources. They have also opened channels for foreign investment in the country, which is expected to propel the PV inverter market in the region.
North America accounts for the second-largest position in the regional market, with the US being the major revenue-generator. North America is expected to reach USD 3,862 million at a CAGR of 5.25% during the forecast period. The North American PV inverter market is dominated by the US and Canada, which account for the maximum shares in the region. The presence of favorable policies and regulations in the region, coupled with government initiatives to boost renewable energy generation in the US and Canada has driven the North American market. Further, initiatives taken by the Mexican government to enhance the use of clean energy technologies have driven the PV inverter market in the country.
Furthermore, the presence of major vendors of PV inverters in the region and the availability of support for research and development activities by the research organizations and manufacturers has enhanced the adoption level of solar energy generation in the energy mix, thus driving the demand for PV inverters. All these factors are expected to boost the growth of the PV inverter market in the forecast period.