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E L E CT R I C AL CONNE CT I ON
AUTUMN 2 01 5
SOLAR BUSINESS
The rise of the microinverter
S
omeone asked me a great question
recently: “Nige, I know you’re a fan of
microinverters. How big do you really
think their share of the market will be?”
It’s a great question because those of us
who have been around for a while have
seen plenty of excellent products never
really take off because they don’t have the
engineering, sales and marketing mix right.
The most fabulously engineered product
will fail to sell if it’s marketed poorly. The
cheapest product will fail to gain sales
momentum if it isn’t supported or fails the
test of time. A great all round product offer
will fail if the timing or feature set isn’t what
the market wants.
Microinverters aren’t miracle devices,
but I have sense that the sales success
they are achieving around some parts of
the world is because some manufacturers
have landed on the right mix and that’s
where it starts to get exciting. I would
argue that Australia has a unique set of
circumstances and that the recent growth
in micro inverter sales is proof that the mix
is particularly right for our market.
“They’re too expensive,” I hear you say.
“Australia is a price driven market”.
Really? I wrote a story about market
prices recently, diving into this issue and I
think that “big fat worm” of low price has
turned. Sure, there will always be a market
for the cheapest gear and you have to be
competitive but there are several major
reasons why I believe lowest cost models
will continue to lose market share. Firstly
because consumers are learning that to a
large degree you get what you pay for.
The data shows that Tier 1 inverters and
Tier 1 modules are gaining share rapidly,
despite the price premium. Secondly,
consumers are also increasingly aware
that if you don’t buy from a reputable
company who is making a profit you are
unlikely to get support when it matters.
I’ve personally spoken to crying customers
who ring me for help when things go
wrong. They are busy telling their friends
how wonderful solar is and why they
should learn from their mistakes and
not buy the cheapest systems they can
find. Thirdly, price data from several
sources shows that despite the super low
advertised prices, a large majority actually
buy systems at a higher price than we
often see promoted.
So, the data suggests that more people
are willing to pay a premium if they can be
convinced that there is real value in it.
This in itself tells us there is an
increasing opportunity for companies
to sell systems with microinverters. But
more importantly, when you crunch the
numbers and compare apples to apples,
the gap between microinverters and string
inverters is not as big as it first appears. In
fact, one installer I spoke to today quoted
me his numbers and demonstrated
that from where he sits, microinverter
systems are cheaper when you factor in
warranty periods, ease of design, speed of
installation and the simplicity of ordering
and stock holding.
Even if this isn’t the case in every
situation, it certainly demonstrates that
taking a second look at the real gap is
probably worthwhile.
The second element of this equation is
the solar retailer.
What many solar retailers also tell me
that they need to increase sales and/or
to cut costs. At the beginning of last year
you could sell at perhaps $2.10/W net and
today you have to sell at around $1.60/W
net. That’s a drop of almost 25% in revenue
and margin dollars for the exact same work
load. It’s a hamster wheel that you have to
get off.
Operational efficiency is one way to help
cut costs that our industry simply has to
tackle head on. Finding ways to get the
Solar microinverters convert
DC to AC. SolarBusinessServices
director
Nigel Morris
explains
how the technology is changing
solar business models.
The market... string inverters versus microinverters.
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
0
Revenue
Gross profit
500 x Tier 3
string system
500 x Tier 1
string system
500 x Tier 1
Micro system
290 x Tier 1
Micro system