Demand for replacement PV inverters comes from customers that own old inverters that are beginning to underperform or fail, or can no longer easily be serviced with replacement models or spare parts. Demand also comes from customers that own relatively young PV inverters that are underperforming due to either poor installation, system design, or quality issues.
Asia gaining ground
Europe/Middle East/Africa (EMEA) has been the largest region for replacement PV inverter demand historically, as the region experienced an early boom in solar in core markets such as Germany, Italy, Spain, Czech Republic, and Bulgaria, and now has the largest installed base of PV systems older than five years. Replacement demand in the EMEA region reached 3.4 GW in 2019, driven largely by aging installations between 10 kW and 5 MW in size. The largest markets are Germany, Italy and Spain, which together accounted for more than 70% of replacement demand in the EMEA region.
Asia is the second-largest region for replacement inverters due to older large PV installations in China and more-recent massive growth, which will continue to fuel demand across the region. Demand for replacement PV inverters is expected to come primarily from utility-scale (>5 MW) installations. In Japan, demand will also be driven by residential and commercial installations, as the country experienced early growth in solar and now has the largest installed base of residential installations over five years old in the world.
Demand for replacement PV inverters in the Americas region is expected to grow rapidly, driven primarily by the United States, its largest market. Replacement demand in the Americas region is forecast to grow at a CAGR (2018–23) of 130% and account for 12% of global replacement demand in 2023. The United States has proven to be a volatile competitive landscape for inverter suppliers, with many having entered and exited the market. Certain suppliers such as Satcon and Advanced Energy that had a large market share but are no longer active in the market have created an opportunity for existing suppliers to provide replacement inverters.
Furthermore, evolving technical regulations and import tariffs continue to make the United States a challenging environment for suppliers to keep investing in next-generation product and hence, may also cause suppliers to exit the market. However, despite some of these challenges, it remains a highly lucrative market as suppliers fight to capture an increasing number of new installations, and as customers seek ways to replace a growing installed base of aging systems, particularly in the utility-scale segment.