TODAY’S STUDY: SUN’S HARDWARE BUSINESS

To the chagrin of its detractors and those who would like to see this nation remain hooked on coal-generated electricity, solar energy is becoming increasingly cost competitive.

Where there is a lot of sun, putting solar energy-generated electricity on the grid during periods of peak demand is cheaper than drawing from traditional fossil sources. Key to this success has been the scaling up of the solar industry’s supply chain, which has brought system costs down.

Every solar system requires an inverter to convert its variable direct current (DC) to a solidly flowing alternating current (AC) compatible with the grid and standard home electrical circuits. Inverters may not sound especially sexy, or maybe they sound just a little perverse, but they are an expensive part of each installation. As shown in the report highlighted below, the inverter industry has consistently brought its costs down and its reliability up, making solar energy systems a more appealing value proposition to both residential and utility customers.

Advocates for the coal and nuclear industries have long condescended to solar as a noble concept that is just too expensive. With the recent coal mine cave-in and Japanese meltdown, the public is wondering exactly how expensive the traditional energy sources are. That true cost of the Old Energies is what big investors asked about throughout the past decade. The answer they got back was that nuclear and coal are too expensive to invest in, which is why investors disdained to put their money where those coal and nuclear advocates’ mouths were.

Meanwhile, investment in solar and the other New Energies has risen steadily. It was a quarter of a trillion dollar sector in 2010. While no new coal or nuclear capacity was added, wind growth was steady and solar became one of the fastest growing industries in the world.

Dedicated attention to the less-than-sexy aspects of the New Energy industries like inverters and wind turbine gearboxes and geothermal drill rigs and wave energy seafloor cabling will be necessary to make the transition to a New Energy economy a reality. Aggravating the purveyors of dirty energy may not be adequate motivation so it is probably some comfort that the effort's winners will likely become richer that the 1990s tech rush winners.

If that is not motivation enough, some may find satisfaction in freeing the world from the oppression of bullies with oil, rejuvenating domestic economies around the globe and saving this good earth from out-of-control climate weirding.

Think of the New Energy industries as an inverter for the world's energy practices.

The Global PV Inverter Landscape: Technology and Market Trends, 2010 – 2015
M. J. Shiao, April 29, 2011 (Greentech Media Research)

Introduction

The global inverter market is assuming a greater profile along the solar PV supply chain with advances in inverter technology promising more sophisticated grid support and system optimization for residential installations up to utility-scale, multi-MW projects. Inverter technology development is attracting and will continue to attract greater attention as gains in long-term project generation and reliability become crucial to achieve project bankability given forecasted cuts in global solar incentives (i.e., FiTs) and competitive PPA modeling.

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Along with the industry’s increasing technology and bankability requirements, leading EU-based inverter suppliers are seeing global demand shift away from their domestic markets toward major PV growth markets in North America and Asia. In the coming year, this expansion of global demand will lead to increased competition and slower growth for inverter incumbents who do not diversify from their domestic base while providing new supply opportunities to US- and Asia-based inverter manufacturers and to global energy conglomerates leveraging parallel power inversion competencies. This expansion of global demand has led to increased competition and stagnant growth for inverter incumbents while providing new supply opportunities to US- and Asia-based inverter manufacturers as well as to global energy conglomerates leveraging parallel power inversion competencies…

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Global Inverter Shipments by Top Manufacturers, 2011

SMA will continue to dominate the overall market, but we again see manufacturers outside of the top 10 growing slightly from a combined 19% market share in 2010 to 20% in 2011. SMA’s global market share will drop slightly to 31%, as over 60% of SMA’s revenues depend on a receding German market.

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Cost Structure of Utility Inverter

An inverter is an enclosed package of assembled circuit boards and other electronic and electrical devices that ultimately serve the primary function of converting DC electricity from the PV array to AC electricity. Inverter packages are typically divided into three physical stages: the DC input filter and protection, the control boards and inversion stage, and the AC output filter and protection. There is also a communications and monitoring area.

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Effect of Inverter Cost and Performance on LCOE for 1 MW PV System

The initial cost of the inverter has little effect on the overall LCO E. A $0.05/W discount in upfront inverter pricing only results in roughly 1% discount in the LCO E. This is the equivalent of a 1% improvement in performance factor. Thus, every nominal 1% improvement in uptime, efficiency, or system performance is roughly the equivalent to $0.05/W discount in upfront inverter pricing. Based on our forecasts, central inverters and combiner level optimization options will be the eventual low cost options by 2015, but micro-inverters and distributed optimization will be close behind.

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Micro-Inverter and Distributed Optimi zation Taxonomy

One of the most widely watched topics in PV system design is the recent emergence of module level solar electronics. This distributed power optimization technology includes both DC/DC optimizers and micro-inverters, as well as a host of new optimization technology on the horizon. Whereas new commercialized technologies in the terrestrial PV market have only incrementally increased efficiency, distributed optimization technologies enable disruptive gains in total system conversion efficiencies.