US inverter supplier Advanced Energy yesterday announced it would
wind down its solar inverter business having failed to attract a buyer
for this part of its business. This follows intense competition and
price pressure due to a surge in new entrants in its domestic market,
the United States, the world's third largest solar market in 2015.
Six months ago, Advanced Energy (AE) announced that it was attempting
to sell its solar inverter business or look at other alternatives
including joint venture, partnership, spin-off, licensing and other
options. Following this it would focus on its power precision business. According to IHS estimates, AE was the 11th largest inverter supplier
globally and the fifth largest supplier in the United States in 2014.
It once held the top spot in the U.S. back in 2010 but was subsequently
supplanted by SMA.
Historically, Advanced Energy had been focused on selling three-phase
central inverters and is estimated to have been the 2nd largest
supplier in the Americas region for the last five years. It acquired two competitors in the last five years - US inverter supplier PV Powered in Q1'10 in order to expand its inverter business in the residential and commercial segments in the U.S.; then German inverter supplier RefuSol in Q2'13
in order to expand it presence internationally in key markets such as
Germany, United Kingdom and India. It also broadened its portfolio
especially in the three-phase string inverter market where it had had
limited offering previously.
In April 2015, it announced it was awarded a major contract to supply
325 MW of central inverters in the U.S. and in June it signed a
contract to provide 50 MW of three-phase string inverters in Turkey.
IHS Analysis of the Inverter Market
Advanced Energy is one of the leading inverter suppliers globally and
in 2013, it was ranked the 3rd largest supplier globally with a 4
percent market share. However in 2014, it dropped outside of the top ten rankings following
substantial loss of market share in three-phase high power (>99kW)
inverters in its domestic market of the U.S. and also rapid price
reductions in the U.S. market compared to the rest of the World.
One of the key strengths of Advanced Energy in the past had been to
use the profit generated from its other businesses such as semiconductor
equipment to acquire competitors. However, following the acquisition of
RefuSol in 2013, demand for inverters transitioned quickly from Europe
to Asia and at the same time inverter prices decreased rapidly which
heavily impacted AE's revenues. Also, due to the collapse of the
European market and the difficulties in penetrating key Asian markets
such as Japan and China, many suppliers targeted the U.S. market causing
prices to decrease rapidly, further exacerbating the difficulties that
AE was already experiencing.
Due to the intense price competition and shrinking market share in
its domestic market of the United States, Advanced Energy tried to
expand its presence in other high growth markets such as the UK and
India to promote its string inverter technology via the RefuSol
acquisition. However, most of these markets were extremely competitive,
difficult to enter and harder still to establish partnerships in them.
As a result, Advanced Energy had been unable to compensate for lost
market share in the U.S. with growth in new international markets.
Given its huge after-sales service network, large installed base of
central inverters, leading brand awareness amongst EPCs and its early
presence in the operations and maintenance (O&M) business — which is
a high growth area presently — it is surprising that the business will
be wound down, rather than acquired. While its market share in
utility-scale may have diminished due to competitors offering newer
products or more competitive prices, it is a rare occurrence that a
supplier exits a booming market when there still is a huge opportunity.
IHS forecasts that 12 GW of inverters will be shipped in 2015 and 2016
in the United States and this represents a huge opportunity.
With its exit from the market, AE leaves a void in the commercial and
utility-scale inverter market in the U.S. This represents a huge
opportunity for leading suppliers such as ABB and Schneider Electric or
for recent market entrants such as TMEIC or Power Electronics to grow
their presence. Equally, Chinese inverters suppliers such as Sungrow, TBEA and Huawei
may recognize this as their opportunity to build their presence in the
market and persuade EPCs of their capabilities.
http://www.renewableenergyworld.com/articles/2015/06/advanced-energy-retreats-from-solar-inverter-market.html