Prices of photovoltaic (PV) solar panels plunged nearly 51% last year. The downward spiral in panel costs have made solar the fastest growing energy segment in the United States.
As installations have risen, there has been increasing pressure on inverter manufacturers to build more powerful, efficient and standardized products. Those three areas of solar inverter development are where manufacturers are focusing their energies. The inverter industry is changing rapidly, and industry experts predict the companies that don’t adapt will wash out.
“We’re in the infancy of the inverter industry,” says Steve Levy, vice president of sales for Bend, Ore.-based Advanced Energy. “It’s an exciting time to be investing in this space.”

With too many suppliers and not enough projects, experts predict the solar inverter industry will see consolidations in the next few years.
Higher Power
The first thing John Skibinski, vice president of new markets development at Houston-based AETI, wants people to know about the inverter market is that the focus is changing to utility-scale projects.
“When we first came into the market, we produced 500-KW power modules,” Skibinski says. “Then we multiplied up over the years to produce an inverter that could handle 2.5-MW systems. Now they’re getting larger.”
Skibinski says AETI doesn’t play in the commercial and residential-scale markets — they are strictly utility-scale players.
“All utilities are looking for 1000-V inverters,” Skibinski says. “People have been hesitant to build so large because the National Electric Code (NEC) doesn’t mandate them to be that big. So why fight the NEC?”
Such inverters, however, are standard in Europe, and will eventually become standard in the United States, he says.
Alan Beale, director of sales-and-marketing for San Jose-based REFUsol USA, says there are even companies that are putting 1500-V inverter pilot projects in the ground.
“There’s a handful of companies doing 1500-V inverters and 1500-V panels,” Beale says. “In another two years, that’s where the entire industry will be.”
Control Freaks
Beale says the focus on the technological side of the inverter market has been increasing efficiencies.
“If you’re not at 98% or higher these days, you’re not competitive,” Beale says. “That’s becoming increasingly important to engineering, procurement and construction firms (EPCs) as they’re looking to price projects.”
Efficiencies are improving for two main reasons, says Chris Thompson, solar business unit manager for Cleveland-based Eaton Corp. The power semiconductor components and the topologies of inverter have gotten better, leading to overall improvements in inverter technology.
“The industry has evolved from small businesses to one where global manufacturers are delivering innovations and establishing a new standard of reliability,” Thompson says. “As the industry overall scales up, the focus on process controls tightens, and expectations of equipment reliability increase.”
Since the efficiencies are becoming increasingly standardized, a differentiation point for many companies is the control software that comes with the systems.
“The demand in this market is for increasingly sophisticated control systems,” says Phil Vyhanek, president of Lawrence, Mass.-based Solectria Renewables. “Three or four years ago, people would largely trust that the system was working. Now I’m seeing far more emphasis on monitoring systems to make sure they do.”
Vyhanek says EPCs and other customers, particularly for any decently sized system, are requiring real-time information on consistency of performance.
“It used to be that the scrutiny stopped at the panels,” Vyhanek says. “Now there’s a lot more scrutiny placed on the inverter companies. People look at your experience, history and the quality of systems.”
Thompson concurs.
“Organizations are expecting inverters to last 10 to 20 years,” he says. “They’re asking who’s going to be there if equipment needs to be serviced 10 or 15 years from now. It’s no longer sufficient to lean on past experience. In general, organizations are looking for long-term performance and support for decades to come.”
Advanced Energy’s Levy says investors and customers are looking for companies to provide systems that can sustain efficiency, landed costs and energy harvest over time.
“We have customers ask us all the time: ‘What’s the predictability of your systems?’” Levy says. “They’re taking all that into account as they do their risk-mitigation assessments. They want to make sure the inverters are going to deliver the energy as promised.”
If the inverter industry does this right, inverters are going to create much more stability in the grid, which will take solar adoption to heights unseen today, Levy says. “That’s where we — and the rest of the industry — want to go,” he adds.
Standard Operating Procedures
Solectria’s Vyhanek says there are at least three separate standards inverter companies have to manufacture to:
* Underwriter Laboratories (UL)
* IEEE
* The SunSpec Alliance
“The key to knowing what you have to produce is constant communication with the governing bodies,” Vyhanek says. “You have to realize that the United States is made up of hundreds of different utilities that have slightly different standards. On top of that, you’re dealing with European listings. Bottom line? You have to customize inverter units to each job.”
AETI’s Skibinski says the utilities are much more strict about what tests they’ll accept.
“Most of our utility partners are insisting on third-party testing,” Skibinski says. “Otherwise, they won’t be approved by the utility.”
Other testing standards out there, such as the California Energy Commission (CEC) and CSA International will test products and give companies ratings, REFUsol’s Beale says — but those ratings don’t mean anything for manufacturers doing business overseas.
“Right now, those ratings apply to North America only,” Beale says. “We wish there were more international standards. Maybe we’ll get there someday.”
Future Trends

The rising rate of solar installations has put pressure on inverter manufacturers. They are focusing on building more powerful, efficient and standardized products.
According to Skibinski, the inverter industry is headed toward consolidation.
“There’s going to be a lot of shakeout,” Skibinski says. “There are too many suppliers and not enough projects. If you’re not a diversified company, you’re going to have sustainability problems. I expect significant consolidation to happen within five years.”
Advanced Energy’s Levy says his company is including operations and maintenance (O&M) into their business model to ensure its customers have end-to-end lifecycle support for their power generation needs.
“You have to think big picture,” Levy says. “We believe this is the next frontier that inverter companies will have to conquer, and we want to be on the frontline of those developments.”
Solectria’s Vyhanek says he believes the future for the inverter industry is bright in 2012 — and beyond.
“There’s a lot more scrutiny placed on inverter companies today than in the past,” Vyhanek says. “The industry is maturing and getting more sophisticated. Inverter manufacturers are going to have to rise to that challenge — and that means improving our products to meet those higher expectations — and we’re in the process of doing so.” SPW
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