Europe’s annual inverter production capacity exceeds 82 GW, but due to a lack of domestic support policies and fierce competition from Asia, especially China, the market share of EU inverter companies on the continent is declining, reaching only 21% as of 2023. Trade organization SolarPower Europe.
SolarPower Europe, in its report “Inverters 2.0: Strengthening the European Inverter Industry,” stated that European inverter production capacity will grow from 72 GW in 2022 to 82 GW in 2023, an increase of 14%. Last year, global inverter production capacity reached 559 GW AC, with Asian countries accounting for 76.9% of capacity, while European inverter manufacturers will produce only 21% of the world’s inverters by 2023.
SolarPower Europe said that despite this share, the EU still has significant manufacturing capacity for power modules and microcontrollers. Solar inverter manufacturers can now also source these components directly from the EU.
However, Europe’s production capacity is no longer fully utilized and companies’ investment decisions are increasingly directed outside Europe. SolarPower Europe said an increasing number of non-EU product manufacturers are entering the European market.
“While this has contributed to the growth of the EU inverter market, it is now resulting in a significant withdrawal of inverters manufactured in Western countries from the EU market,” the trade body said.
Competition from Chinese inverter manufacturers has intensified in recent years. In the “boom phase” from 2021 to 2023, European inverter production capacity cannot be fully utilized due to serious problems with component supplies in Asia. In contrast, Chinese inverter manufacturers suffered much less. Combined with the relatively low cost per watt, Chinese inverter manufacturers have captured a large market share in Europe.
SolarPower Europe said these Chinese companies offer “extremely low-cost products” in Europe.
“Reasons for lower production costs and product prices for non-EU manufacturers include ease of production outside Europe, greater economies of scale, lower labor and energy costs than in Europe, and an industrial strategy to support domestic manufacturers,” it explains.
With product price remaining a major deciding factor for buyers, European inverter manufacturers are struggling to compete with their Chinese counterparts despite improving the data security, durability, sustainability and service quality of their products.
SolarPower Europe said the risk of deindustrialization of inverters in the EU in the future is increasing, with capacity utilization levels of some EU manufacturers reaching 50% or even lower.
Some inverters are leaving Europe. For example, US microinverter supplier Enphase Energy announced last year that it would cut about 10% of its workforce worldwide and cease operations at its contract plant in Timisoara, Romania. The company will focus on microinverter manufacturing in the United States, with two existing contract manufacturing partners located in South Carolina and Texas.
SolarPower Europe proposes five measures to support European inverter production. First, it is necessary to ensure appropriate conditions for European inverter manufacturers. The measures include establishing a reliable and cost-effective supply chain for key materials needed by inverter manufacturers, especially electronics-related components such as semiconductors and controllers.
Secondly, SolarPower Europe proposes to create an Important European Project of Common Interest (IPCEI) for inverters, focusing on the development of solar inverter technologies, such as solar inverter transistor scalability, efficiency of key components, grid formation capabilities and cybersecurity. IPCEI can ensure that the European solar inverter industry continues to have an innovative and competitive advantage.
Thirdly, inverter production in the EU must be carried out on a level playing field, as production outside the EU may have minimal environmental and sustainability requirements. For example, the Photovoltaic Ecodesign Regulations for Inverters set minimum environmental and environmental performance standards for products entering the EU market.
The rules will also include minimum requirements for performance, reliability and maintainability. SolarPower Europe said the requirements would support industrial recycling efforts. It will also lay the foundation for creating a circular approach to the recovery and use of raw materials in EU production processes.
In addition to these recommendations, the European Parliament has approved the Net Zero Industry Act (NZIA), which sets a target for 40% of annual deployment needs to be met by net zero technologies by 2030. The bill also sets a goal of achieving at least 30 GW of operating solar PV system capacity by 2030, as well as manufacturing capacity across the entire PV value chain, including inverters.
SolarPower Europe therefore calls on EU Member States to act quickly to reduce dependence on a single source of supply.
Finally, the EU also needs to increase the supply of skilled labor. One of the measures is the creation of a special workflow within the new Solar Academy.
Post time: Jul-04-2024