Asia gaining ground
Europe/middle East/Africa (EMEA) has been the largest region for replacement PV inverter dem historically, as the region experienced an early boom in solar in core markets such as Germany, Italy, Spain, Czech Republic, Bulgaria, now has the largest installed base of PV systems older than five years. Replacement dem in the EMEA region reached 3.4 GW in 2019, driven largely by aging installations between 10 kW 5 MW in size. The largest markets are Germany, Italy Spain, which together accounted for more than 70% of replacement dem in the EMEA region.
Asia is the second-largest region for replacement inverters due to older large PV installations in China more-recent massive growth, which will continue to fuel dem across the region. Dem for replacement PV inverters is expected to come primarily from utility-scale (>5 MW) installations. In Japan, dem will also be driven by residential commercial installations, as the country experienced early growth in solar now has the largest installed base of residential installations over five years old in the world.
Dem for replacement PV inverters in the Americas region is expected to grow rapidly, driven primarily by the United States, its largest market. Replacement dem in the Americas region is forecast to grow at a CAGR (2018–23) of 130% account for 12% of global replacement dem in 2023. The United States has proven to be a volatile competitive lscape for inverter suppliers, with many having entered exited the market. Certain suppliers such as Satcon Advanced Energy that had a large market share but are no longer active in the market have created an opportunity for existing suppliers to provide replacement inverters.
Furthermore, evolving technical regulations import tariffs continue to make the United States a challenging environment for suppliers to keep investing in next-generation product hence, may also cause suppliers to exit the market. However, despite some of these challenges, it remains a highly lucrative market as suppliers fight to capture an increasing number of new installations, as customers seek ways to replace a growing installed base of aging systems, particularly in the utility-scale segment.
Working together
Developers, EPCs, O&M providers, PV inverter suppliers are all seeking new ways to maximize the value from investments in replacement PV inverters. Straight one-to-one replacement of old inverters is currently the most common route that customers take. For example, an older 1 MW central inverter model is replaced with a new, modern 1 MW central inverter.
However, as inverter technology develops, new inverter types are being used to replace older-generation inverters with the aim of maximizing yield, simplifying O&M, reducing the levelized cost of energy. Customers are increasingly considering changing the overall system architecture, for example, by replacing an old central inverter with string inverters or by introducing string-level power optimizers. Overall, modern inverters are being designed with a plethora of advanced features such as artificial intelligence, monitoring, autonomous control functionality. Advanced software capabilities allow customers to upgrade their existing systems by replacing inverters.
O&M service providers have stepped up to offer services to ensure that customers reduce downtime maximize yield revenue from their PV systems by helping to meet the challenges that come with a growing installed base of aging PV inverters. Firstly, real-time monitoring can allow O&M providers to spot potential issues with inverters deployed within a system. On top of that, predictive analytics is starting to help O&M providers customers to get ahead of potential issues. New methods including thermography aerial photography are also providing new data streams for O&M providers to study for potential inverter issues.
Regardless of these advanced methods of monitoring, O&M service providers face a significant challenge regarding the sourcing of replacement inverters spare parts. Replacement inverters for older-generation models may simply not be available anymore. Spare parts may be difficult to source may require O&M service providers customers to be creative about harvesting spare parts from decommissioned inverters or even other types of power electronics equipment. O&M service providers have started to develop in-house expertise dedicated to inverter repair, which involves hiring experienced engineers seeking advanced training, sometimes directly from PV inverter suppliers, in addition to warehousing their own inventories of spare parts spare inverters.
For their part, inverter suppliers have also begun to invest in their own departments dedicated to addressing the market for replacement PV inverters. For example, SMA has established its own replacement/repowering department, which is focused on consulting selling kits specifically for replacement projects. However, IHS Markit notes that this market is still in its infancy inverter suppliers that invest time resources into helping to serve this market can capture significant opportunity for themselves in the next five years, as the market segment is set to
grow rapidly.