Global Non-Chinese Inverter Firms Seek Protection Against Chinese Dominance

China’s solar demand doubled in 2023, driving significant growth in PV inverter supply. Similar to the solar PV sector, Chinese inverter manufacturers are emerging as the dominant force in the global inverter market, accounting for over half of global shipments. Since 2022, the top 5 ranks in the global inverter shipments have also been taken up by Chinese majors. Consequently, non-Chinese inverter companies in the West are advocating for a protectionist stance by their governments, much like the measures taken in the solar PV sector.

The global photovoltaic inverter market reached 536 gigawatts of alternating current (GWac) capacity in 2023, marking an impressive 56 percent growth, according to Wood Mackenzie’s report, Global Solar Inverter and Module-Level Power Electronics Market Share 2024. Chinese firms are now leading the industry, with Huawei and Sungrow retaining their top positions. Together, they accounted for more than 50 percent of the market, primarily due to their popular utility-scale inverters.

The increasing dominance of Chinese solar inverters raises a critical question: Could the solar inverter market become the next competitive battleground following the PV panel industry?

Global Inverter Market

There is a growing reliance on electronic devices and equipment across various sectors, such as telecommunication, healthcare, and automotive. These critical applications require a constant and reliable power supply to ensure uninterrupted operations. Thus, during grid outages or heavy fluctuations these power inverters come into play.

The Inverter market is projected to reach USD 39.6 billion by 2028 from USD 18.9 billion in 2023, at a CAGR of 16.0% during the forecast period, according to a research report “Inverter Market by Type (Solar Inverters, Vehicle Inverter), Output Power Rating (up to 10 kW, 10-50 kW, 51-100 kW, above 100 kW), End User (PV Plants, Residential, Automotive), Connection, Voltage, Sales Channel & Region – Global Forecast to 2028” published by MarketsandMarkets. 

The Asia-Pacific region plays a significant role in power inverter production and demand, driven by the growing adoption of electric vehicles, solar energy, and other technologies. China-based Huawei Technologies stands out as a key market leader, alongside other prominent Chinese firms such as Sungrow, Solis, GoodWe and others.

European companies like SMA Solar Technology AG (Germany), SolarEdge, Enphase Energy (California), and Fimer Group (Italy) are prominent contributors to the inverter market. However, these firms face increasing competition from Chinese inverter manufacturers, prompting discussions about adopting protectionist measures similar to those applied to solar PV panels.

Woes of Non-Chinese Inverter Manufacturers

Many major non-Chinese players in the residential and small-scale solar inverter market have reported losses or even ceased operations in recent times.

One notable example is SolarEdge. In August, its CEO stepped down to support the company’s recovery after consecutive declines in quarterly revenues and shipments. The NASDAQ-listed solar PV and energy management solutions provider recently shut down its utility-scale battery storage division, leading to layoffs of around 12 percent of its workforce. SolarEdge is not alone; other Western inverter manufacturers, such as SMA Solar and Enphase Energy, are also experiencing tough times.

German manufacturer SMA Solar has announced job cuts and organisational restructuring in response to a prolonged market slowdown in residential and commercial & industrial (C&I) solar installations. As part of its Q1-3 2024 financial updates, the company revealed plans to reduce up to 1,100 jobs and cut costs by €150–€200 million (USD 158–210 million) by the end of 2025. Once the leading inverter manufacturer by revenue in 2016, with a 20 percent global market share, SMA has now fallen to sixth place globally, overtaken by Chinese firms Huawei and Sungrow.

Similarly, Enphase Energy, a US-based microinverter supplier, announced a reduction of nearly 17 percent of its global workforce—around 500 employees. This follows an earlier restructuring plan in December 2023, which included a 10 percent workforce reduction. In its Q3 2024 financial results, the company reported that its total microinverter shipments in the first nine months of 2024 were lower than those shipped in Q1 2023 alone, indicating ongoing challenges.

Calling Out for Protection

The growing dominance of Chinese manufacturers has prompted SolarPower Europe, the leading association for the European Solar PV sector, to call for greater support for European inverter makers, who are facing mounting pressure from strong Chinese competition.

The association urged European policymakers to craft an action plan for the EU inverter industry, considering measures such as enforcing stringent standards on cybersecurity and energy security, providing direct financial support to boost global competitiveness, and ensuring a fair marketplace for all players.

Additionally, SolarPower Europe proposed that policymakers in Brussels and EU Member States explore the creation of a dedicated Important Project of Common European Interest (IPCEI) focused on smart and secure electrification. This initiative would aim to better utilise public funding and solidify the EU’s leadership in critical communication technologies for future energy systems, including solar inverters.

Is Inverter Business the Next Battleground?

The challenges faced by non-Chinese inverter manufacturers and the growing dominance of Chinese counterparts suggest the emergence of a new trade conflict, particularly in the West, where the inverter industry is well-established. This situation mirrors the ongoing solar PV trade disputes between global leaders and China’s rising influence.

The market remains highly concentrated, with the top 10 global PV inverter vendors accounting for 81 percent of total shipments, according to Wood Mackenzie. Notably, nine of these top 10 vendors in 2023 were based in China, leveraging extensive national investments in solar energy to cater to both domestic and international markets. In contrast, while North America and Europe recorded double-digit growth in the PV inverter market, the expansion was primarily driven by utility-scale projects. Residential inverter manufacturers in these regions faced slower demand growth and grappled with excess inventory resulting from oversupply since 2022.

What makes this battle tougher is the fact that the premium for a non-Chinese  inverter in most cases is even higher than for solar panels, going upto 2.5 to even 3X of quoted costs. Inverters, which typically have a share of 6-8% of project costs, could thus become a major battleground between manufacturers and developers, should protectionist steps be taken. In India too, most of the so called domestic brands are nothing but white label Chinese imports or assembled units, that hope to add the promise of a service network to wean off customers. Actual manufacturing is years away as India seeks to build a base for power electronics.