Booming demand in distributed PV (DPV) roof-top systems, greater energy yield, module level monitoring and enhanced safety and rapid shut down requirements are all expected to act as tailwinds for increased adoption of microinverter and power optimizers or collectively termed module level power electronics (MLPE) in the coming years. IHS Markit forecasts that over 70GW will be shipped in the next five years globally with leading suppliers continuing to expand beyond the key market of the United States and increasingly penetrate new system types such as larger PV systems along with increasing adoption in energy storage systems. Even with this fast growth, microinverters and power optimizers will only account for 6.5 percent of global solar installations in 2025. The global market for microinverters and power optimizers is expected to grow 33 percent year-on-year (Y-o-Y) to reach just under $2 billion in 2021.

Figure 1: Global revenue for microinverters and power optimizers

The MLPE market continues to be dominated by two suppliers, Enphase who accounted for 78 percent of microinverter shipments in 2020 and SolarEdge who accounted for 88 percent of power optimizer shipments in 2020. While both suppliers continue to perform strongly and expand their product portfolio and enter into new markets such as larger solar systems and markets that were restricted due to grid requirements, the competitive landscape continues to evolve. Other microinverter challengers such as APsystems and Hoymiles have secured approval to have an initial public offering (IPO) and intend to list on the Shanghai Stock Exchange's Science and Technology Innovation Board (STAR market). Furthermore, NEP is continuing to expand into the US solar microinverter market. Numerous power optimizer suppliers continue to release new products. Tigo who is active in US roof-top solar market continues to build partnerships with multiple inverter suppliers globally and is expanding into the residential energy storage inverter market. Huawei has its own power optimizer for use with its own residential inverter and string level optimizer suppliers such as Ampt and Alencon are active in US ground-mount solar and increasingly providing DC-coupled energy storage solutions for front-of-the-meter energy storage projects.

Traditionally, microinverters and power optimizers have been successful in small scale roof-top installations such as residential and commercial installations due to their ability to generate extra energy yields by minimizing impact of multi-pitch roofs, soiled or mis-performing modules and shading mismatch. In the last year, the increasing use of higher power modules (300 W+) in residential installations has helped with improving the cost competitiveness of MLPE solutions. Also, module level rapid shutdown requirements which initially were required in certain states in the United States are now being considered in other geographies such as China (mainland), Southeast Asian and Latin American markets as local utilities and authorities having jurisdiction (AHJ) require increased safety protocols for roof-top solar systems. Microinverter suppliers are gradually expanding into larger commercial roof-top systems and power optimizers are increasing their penetration levels not only for large commercial roof-top but also large ground-mount systems.

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Posted 10 December 2021 by Cormac Gilligan, Associate Director, Clean Energy Technology, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.