Market Insight

Energy storage inverter (PCS) market competitive landscape heats-up following surge in strategic investments and acquisitions

January 22, 2019

Cormac Gilligan Cormac Gilligan Research & Analysis Manager, Solar & Energy Storage
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Summary:

A flurry of activity occurred in Q4'18 with notable acquisitions including Kaco's acquisition of Energy Depot and LSIS's acquisition of Parker Hannifin's Grid-Tie Division while Socomec acquired a strategic stake in EPC Power.

While the global grid-connected energy storage inverter (PCS) market is estimated to have reached just over $300 million in 2017, it is forecast to double reaching $600 million in 2022. With this robust growth, many suppliers are rushing to gain a market presence in new market segments or gain a foothold in new markets as quickly as possible. 

Key points:

  • German solar and energy storage inverter supplier Kaco New Energy acquired Energy Depot GmbH in October 2018 which expands Kaco's portfolio to now include a 10 kW hybrid energy storage inverter for behind-the-meter (BTM) market.
  • French industrial supplier Socomec who is an active player in the commercial BTM energy storage market acquired a strategic stake in US power conversion supplier EPC Power in November 2018 which allows it to expand rapidly into the US energy storage market as well as to access to an enhanced energy storage inverter portfolio.
  • South Korean supplier LSIS, a leading PCS and EPC player, has acquired US headquartered Parker Hannifin Grid-Tie Division a leading energy storage inverter supplier active in the commercial BTM and front-of-the-meter market (FTM) which fast-tracks LSIS entry into the US market.

IHS Markit Analysis:

While the global grid-connected energy storage inverter (PCS) market continues to grow year-on-year in shipment terms, the level of competition continues to increase. New players are entering the market, as they diversify out of solar markets and/or their industrial businesses. In parallel, lead-times and market development in some energy storage markets can be lengthy and as a result, challenge suppliers scaling in a timely manner. Faced with these market dynamics, some suppliers are favouring acquisitions and strategic investments as a method of accelerating market entry and expansion into new segments.

Competition continues to intensify

Parker Hannifin was the number one global supplier for grid-connected energy storage inverter shipments as recently as 2016. However, due to the quick influx of PCS suppliers, rapid decrease in PCS prices and the unpredictability of market development in key markets, it dropped out of the top-ten rankings in 2017. The pace of change in the competitive landscape has been rapid in recent years as many solar inverter suppliers have entered the PCS market such as WS Tech, GE, Sungrow and Power Electronics, while some notable battery manufacturers such as Tesla now offer their own in-house PCS solution.

Other suppliers such as Dynapower are using partnerships with other PCS suppliers such as SMA to sell and re-brand some its products such as its DC-coupled energy storage inverter. While for other suppliers, the pace of change and the slower than anticipated market development have caused market exits such as Ideal Power in January 2019.

Suppliers seek to expand geographical presence and product segment

Both Socomec and LSIS via their recent investments have expanded their presence in the high-growth US market. For foreign players, the investment or acquisition of a local player is meant to be the fastest route to market and a way for suppliers to diversify their geographical presence.

In other cases, such as Kaco, it has accelerated its entry into the residential BTM market in Germany and international markets and immediately expanded its portfolio to include residential and commercial BTM markets. Additionally, such acquisitions allow PCS suppliers to move into the system integration market reducing overall system cost and increasing margins.

Pace of innovation and scale continue to be important supplier criteria

In many of the recent investments, a key benefit will be the fresh injection of cash to aid research and development activities. The ability to utilise local teams to fine tune product development for the applicable markets of Germany in Kaco’s situation and the United States in the case of LSIS and Socomec, will further strengthen their competitive position. Many of the local teams also have good relationships with energy storage developers and supply chain partners. Furthermore, the investment from large companies will boost the bankability of the acquired or invested company and will be a major advantage in winning customers.

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Power & Energy Technology
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