Solar on the Rise – with Germany, Italy, and the US Taking Lead

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On a global basis, Europe has taken the lead as the most advanced market for solar energy generation, with Germany holding the title for having the largest installed energy capacity followed by Italy, the US, Spain and China, who produces 2/3 of the global supply of photovoltaic (PV) cells, or solar panels. As of 2015, there are approximately 240 electrical solar power generation facilities in the U.S. Currently solar energy provides less than 1% of the entire energy consumed. The U.S. market is highly concentrated, with the top 10 utility companies accounting for approximately 80% of the total solar generating capacity. Current forecasts call for solar generated electricity consumption to grow at an annual compound rate of 9% from 2015-2018.   Large scale solar installations are responsible for the majority of industry growth.  According to the Federal Energy Regulatory Commission (FERC), in 2013 the industry grew by 43%, adding 2.9 GW of solar energy to the grid.

Industry drivers, or those that materially affect supply and demand for solar inverters and the market as a whole, include energy prices and government policies.  As crude oil and related traditional energy prices rise, consumers and businesses will look to alternative forms of energy in order to lower costs, which should benefit the solar market.  The solar market is also highly dependent on government policies, including both regulations and incentives.  Consumers and businesses often receive tax benefits for utilizing solar power and if those benefits were to expire or disappear it would have a significant negative impact within the industry.

The solar inverter market, an input in the overall solar industry, has become increasingly competitive and, as a consequence, profit margins have fallen and larger companies are acquiring smaller rivals.  Solar inverter manufactures are optimizing their competitiveness by improving technology as opposed to cutting costs.  This includes DC/AC ratio optimization, increased voltages and neutral point clamped topology (NPC).  These help to lower production costs and improve inverter efficiency.  Current voltage standards have been moving from the traditional 600V of direct current to 1000V of direct current facilities, thereby allowing for the installation of larger solar projects producing more energy at less cost and improved efficiency.  Current trends for solar inverter technology include moving to a transformer-less system by improving the internal components of the inverter, which allows them to operate independently as well as increasing voltage and throughput capacity.

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