IHS Answers Key Questions
Why has SunPower acquired a microinverter supplier?
Sunpower positions itself as a provider of premium PV modules to the residential market in the USA. Therefore an AC-PV module fits well into its product portfolio. An ‘AC-PV module' is a module with a microinverter embedded into the module's junction box before it is shipped, with no DC connections.
Micronverters have rapidly emerged in the US residential PV market, and are predicted to account for over 40 percent of the inverter shipped to this segment in 2014. They are predicted to slowly continue gaining share, and the total market for residential PV installations is predicted to grow by 16 percent per year on average over the next five years.
The challenge for SunPower in benefitting from this trend is that the high power of its modules means that most standard microinverters are not suitable for it. Acquiring microinverter technology will enable it to optimize a product for use with its modules and streamline the process of integrating it. The inverter can be adjusted and optimized for its high efficiency modules and it will take control over the complete process.
IHS estimates that Solarbridge was the third largest microinverter supplier to the United States in revenue terms in 2013. It had expanded outside the United States into international markets since early 2013, with some success in Australia. These are both key target markets for SunPower's residential business.
Solarbridge has aggressively promoted the AC module approach. The main benefits of this approach (compared to a standalone microinverter) is that on-site installation time is greatly reduced as the microinverter and module are installed as one piece. IHS forecasts that AC modules will be the fastest growing microinverter type, growing over 100% per year to reach over 800MW in global shipments in 2018, as they significantly reduce ‘soft costs' such as labour which is currently makes up a significant proportion of total system costs in the United States. With the Solarbridge inverter now very likely to be optimized to be paired just with SunPower's technology, embedding the microinverter at the factory to create an AC module is likely to be its preferred form for the product.
SunPower and Solarbridge already have some history. Several of Solarbridge's senior leaders had spent time significant amounts of time at SunPower in the past, and SunPower had made some investments in the company in the past.
What is the impact on other inverter suppliers?
SunPower has accounted for an estimated 3% of global PV module shipments in the first 9 months of 2014. Therefore there is no significant impact on the market opportunity for other microinverter suppliers, such as Enphase.
The backing of a ‘PV giant', such as SunPower, which is 66 percent owned by Total (a major European oil company), could in fact be seen as a major endorsement for microinverters and help accelerate their adoption. It may also help to ignite further competition in a market which is currently dominated by one supplier, helping to drive innovation and cost reduction.
Currently, SMA Solar Technology supplies inverters to SunPower for use in its residential PV ‘kits'. SunPower's acquisition of microinverter technology could result in reduced demand for SMA's products in the coming years.
Is this a trend that is likely to continue?
Numerous examples of vertical integration in the US residential market between large residential installers/EPCs and BOS suppliers, such as Solarcity's acquisition of Zep Solar, have occurred in the last year. These have largely focused around reducing installation costs. IHS predicts that this trend will further continue in 2015, as suppliers continue to look to develop and optimize a complete system offering, and streamline their route to market.