Leading solar inverter suppliers SMA and SolarEdge recently reported strong profits in their latest earning calls, but the United States remains their key market and key source of recent financial success.
SMA and SolarEdge both reported strong revenue and profit growth in their recent earnings calls, on the back of significant success in the Unites States PV market. While both suppliers noted that they have diversified PV inverter portfolios and broad geographical presences, in reality they are quite dependent on the United States to increase growth in the next two to three years. While the United States is likely to continue to be a strong source of revenue this year, there are some strong headwinds for the these suppliers -- and the industry as a whole -- after 2016.
The success of these two companies comes despite intense price competition in the global PV inverter market, which will remain an omnipresent medium-term threat to the global industry, according to the IHS PV Inverter Intelligence Service. Despite record shipment forecasts of 65GWAC in 2016, average global prices will decrease 10% in 2016; this price pressure will remain a medium-term threat to the global industry, heavily affecting revenue growth in the total market.
Following the extension of the investment tax credit (ITC) in December 2015, IHS has significantly raised the long-term forecast for the United States: shipments in 2016 are now expected to reach more than 13 GWAC. While this situation is a huge benefit to SMA and SolarEdge, new and existing suppliers will also see the increased importance of the U.S. market as justification to further invest in entering the United States and attempt to gain market share. European suppliers will compete more aggressively in the United States in order to grow their businesses, especially because the European PV market is currently sluggish. Asian suppliers - especially in China and Japan -- will expand further in the United States, in order to broaden their geographical presences and reduce over dependence on their domestic markets. This expansion will lead to further price pressure for PV inverters across all system types in the United States through 2019.