German conglomerate Siemens acquired the solar string inverter business of KACO new energy GmbH, which specializes in the field of independent and decentralized energy supply. This acquisition will strengthen the decentralized energy systems portfolio of Siemens, which will get a fresh lease of life, through this acquisition.
MarketsandMarkets™ View Point:
Prateek Vajpayee – Sr. Research Associate : Energy and Power, at MarketsandMarkets™, shares his Point of View as mentioned below:
String Inverter Market — Benefits in balancing power generation and demand:
The string inverter market is witnessing considerable growth because of the benefits offered by string inverters, such as the decreased DC balance of system (BOS) cost, remote system monitoring capabilities, easy installation and customization, and attractive prices in key PV markets. Government incentive schemes create the opportunity for string inverters to lead the PV inverter market compared to micro and central PV inverters.
The global string inverter market is projected to reach USD 3,886.5 Million by 2021 at a CAGR of 8.3% during the forecast period from 2016-2021.
The residential segment is expected to grow at the highest CAGR during the forecast period. Residential solar PV systems are mostly rooftop installations, which offer benefits such as feed-in tarrifs and net metering. New tender schemes around the globe are contributing heavily to the increasing demand for ground-mounted solar system installations above 1 MW.
Impact of the Acquisition:
In 2013, Siemens decided to scale back their Sinvert solar inverter range because of the lack of demand for photovoltaic components. However, this acquisition is an indication of the impact that renewable generation sector has had in the recent years on power generation. It also reflects Siemens’ decision to compete again in the solar component market with KACO new energy’s string inverters.
The acquisition of KACO new energy’s solar string inverter business presents a strong opportunity for Siemens to emerge as a strong player in a fast-growing technology that is impacting the energy and mobility sector. With this acquisition, Siemens will not only target to increase it’s presence in the renewable decentralized energy systems market, but at the same time widen their product portfolio in the areas of decentralized energy, renewables, storage, and electric vehicle charging infrastructure. KACO new energy, on the other hand, can benefit from the plethora of financial and R&D resources that Siemens has to offer. These resources will abet KACO new energy to consolidate and at the same time, make inroads in new segments.
Impact of this acquisition on Top Competitors:
The acquisition marks Siemens’ entry into the Commercial & Industrial and the Residential segments of the global string inverter market. It has also reduced the competition in these segments.
Schneider Electric Solar, ABB, and SMA Solar Technology AG are Siemens’ major competitors in the global string inverter market. In February 2019, Schneider Electric Solar announced that it would be focusing more on the Commercial & Industrial and the Residential sectors to fully utilize the potential of its Ecostruxxure portfolio. These developments signify that the growth potential for string inverters lies with the Commercial & Industrial (C&I) and the residential segments,with a lion’s share of close to 60%, while the rest is accounted for by the utilities segment.
In June 2018, the Chinese government announced to halt the developments of new utility scale and distributed solar projects in the country and also cut off the incentives and subsidies for solar. This policy change resulted in the restriction of the solar generation market as China accounts for nearly 50% of the total PV installations globally. This development has forced the global market players to expand their presence in markets other than China.
The acquisition of KACO new energy’s string inverter business will help Siemens to strategically increase its presence in the regions apart from China, such as the Americas and Middle East & Africa (MEA), where the solar string market is expected to grow at a CAGR of 14% and 12.6%, respectively.
The increasing use of string inverters is expected to provide a number of value propositions to both commercial and industrial customers in the future, such as higher grid independence and increased on-site consumption. Sharp decline in the prices of PV components will drive the inverter and solar generation market, which will, in turn, create a competitive market for solar components, including string inverters.
In 2017, Siemens launched its range of SINACON PV Inverters for utility-scale applications. This new acquisition will usher Siemens’ 360-degree presence in the solar PV inverters market for other end-user applications, such as the commercial & industrial and the residential consumers, as well.
With increasing solar installations, the scope for growth in the string inverter market is immense, and Siemens has definitely taken steps in the right direction. It could be a matter of time, that the industry in all likelihood sees such kind of inorganic routes in the renewable energy space, on a large scale with higher value realizations.