On the heels of German module manufacturers, German producers of solar photovoltaic (PV) inverters are now coming under pressure from Asian competitors. Though six out of 10 inverters sold worldwide are currently produced in Germany, the country’s leading position is endangered due to excessively high costs for components, indicates research by PHOTON International – The Solar Power Magazine. Market leader SMA Solar Technology AG due to PHOTON pays about twice as much for its components as lesser-known Korean manufacturer Dasstech Co. Ltd. The Korean company doesn’t keep production costs low by copying available inverter concepts, but rather by investing heavily in R&D efforts, Photon reports in a press release.

Material costs cut in half

The experts at PHOTON Laboratory have calculated the costs for all 338 components used in a Dasstech solar inverter (the Soleaf DSP-123KH), using list prices for small quantities. The result was a total component cost of €172 for a device with a nominal power of 3.3 kW – that is equal to 5.2 euro cents per W. That’s less than half the figure that worldwide market leader SMA reported as its average material costs for the first half of 2010.

PHOTON publisher Philippe Welter: A huge strategic challenge for manufacturers such as SMA

Typical sales prices for inverters with around 3 kW of power range from 25 to 40 euro cents per W - so five to eight times more than Dasstech’s material costs. And Dasstech’s average costs are actually even lower, assuming the purchase of components in large quantities at a discount. "In light of such differences in material costs, manufacturers such as SMA are faced with a huge strategic challenge", says Philippe Welter, publisher at the PHOTON Group. "They have to trim their inverter designs to reduce costs as quickly as possible. Otherwise established players will surely lose the coming price wars. And then Asian companies will divide the market up among themselves." Asian cell and module manufacturers managed to take the lead in just a few years with their superior cost structures, leaving German manufacturers lagging behind. "German inverter manufacturers could also be overrun by effective competition from the Far East", warns Welter.

Significant investment in development may pay off in mass production

The quality of the components used in Dasstech’s products doesn’t differ from that of products used by other manufacturers. Rather, the Soleaf inverters benefit from the company’s significant investment in development. Dasstech has developed a proprietary solution for its circuitry, only using the components it really needs. This strategy requires greater R&D effort, but it pays off in mass production. Other inverter manufacturers tend to rely on suppliers and purchase prefabricated electronic components, which are then frequently over-dimensioned for the task required, consisting of several sub-components, and are therefore often quite expensive.

Although Dasstech’s inverters performed much worse in PHOTON Laboratory’s inverter test when compared with most SMA devices that PHOTON tested so far, the disappointing results were primarily related to an immature control software. Such issues could be remedied quickly, as was proven by other manufacturers - at least more quickly than it would take to adapt resource- and cost-intensive device designs to a cheaper concept.

Further information on component analysis can be found at www.photon.info ->research

2010-09-03| Courtesy: PHOTON International | solarserver.com © Heindl Server GmbH

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