Renewable energy sources, namely photovoltaics and wind, offer big and sustainable opportunities for power electronics companies and battery makers.
The renewable energy business is a globally sustainable market
The massive deployment of renewable electricity sources is generating new business opportunities. The demand for PV and wind inverters will remain at high levels. According to Yole Développement’s estimates the annual market for PV, wind and tidal inverters will exceed 152 GW by 2021.
When considering the sustainable development of new electricity generation capacity and the advantages and drawbacks of different renewable electricity sources, photovoltaics (PV) and wind energy are today viewed as the most promising choice for the foreseeable future. Marine energies such as tidal turbines, today at the nascent stage, might represent a promising alternative in the longer term. The opportunities for power electronic players in renewable energy sources are represented by power converters/inverters used in PV systems, wind turbines and tidal turbines. However, as shown in the report, the opportunities for power electronics are not limited to power conversion devices. Power electronic companies can also grow their business by providing additional components needed for PV and wind systems. These include protection devices, busbars and connectors, and components and systems used in associated markets, for example electricity transmission and distribution (T&D), DC microgrids and battery inverters for energy storage solutions.
PV and wind are relatively mature technologies, with a large existing market, both in terms of annual installations as well as in total installed capacity. New PV and wind installations will continue to be driven mainly by individual countries’ objectives to reduce CO2 emissions from electricity generation power plants, for example to reduce air pollution. The record levels for LCOE (Levelized Cost of Electricity) from PV installations, such as the electricity price of $58.5/MWh announced recently for a 200 MW PV power plant to be built in Dubai, clearly show that electricity generated by large PV power plants in some regions can compete with conventional fossil-energy power plants. The economic competitiveness of PV and onshore wind opens the door to a future sustainable market without subsidies.
Technology and cost challenges result in business opportunities for innovative technology solutions
Although photovoltaics and wind are already quite mature technologies, there is still a large untapped potential to increase their performance, reliability and lifetime and decrease the costs of their power electronic components. Photovoltaic and wind companies experience a strong price-pressure environment, making the introduction of an innovation into commercial production challenging if associated with higher costs. A technology innovation must often demonstrate an economic advantage at device level, at system level or at operations and maintenance level. For example, reliable devices not only reduce operation and maintenance costs, but also help to improve the confidence of investors and so lower the cost of project financing.
In some cases policies must be changed first, in order to allow use of new technology, for example 1,500V DC in photovoltaic installations, semiconductor-based circuit breakers used in protection devices and DC microgrids. The changing and country-dependent differences in policy makes the development of global solutions complicated, but can also provide advantage to local players.
Technological innovations are also needed to unlock still untapped market potential, such as that represented by offshore wind. Offshore wind turbines and converters need to reach greater levels of maturity, improve reliability under harsh marine conditions and lower its electricity generation costs, which are significantly higher than in the case of installations onshore.
As shown in the report, innovative technology solutions are actively being researched. These include cooling solutions, protection devices for DC circuits, devices for PV systems based on 1,500V DC, power electronic components and systems that are more reliable in harsh marine environments for offshore wind turbines and tidal turbines.
Synergies in power modules exist: battery electricity storage is coming as an additional opportunity
The decrease in financial state support for PV and wind in most geographical markets combined with growing competition within the industry results in strong economic pressure on power device manufacturers. Indeed, despite a very high volume of components and devices sold the margins are often tight. Various strategies have therefore been developed by power electronic manufacturers. As shown in the report, new technology solutions can be offered, based on the synergies between different applications, especially those based on DC current. These include PV and battery electricity storage, PV and electric and plug-in hybrid electric vehicles charging. New technology solutions are sought to differentiate companies from their competitors by improving performance, cost, lifetime and reliability. Companies like ABB, GE and Ingeteam have also identified the synergy between different renewable electricity sources, and also with battery storage systems, to enlarge their activities into new related markets. Battery electricity storage systems could solve the intermittency issues related to the electricity generated by a large number of PV and wind systems.
The offering of the same and similar products in different markets helps to reduce the cost of development and cost of commercialization for new technology solutions. For example the use of “power electronic bricks” such as power stacks helps to easily build complete systems according to different regional specifications, system sizes or customer demands. The development of tidal turbines is another example of how experience gained from installations at sea and from offshore wind turbines can help to develop new products.
Companies like Ingeteam have understood the importance of rapidly increasing their presence in new markets. Therefore they have opened manufacturing facilities in countries with a high potential for renewable energy installations. New opportunities have also arisen for system integrators and companies developing complete solutions for system control and energy flow management.
Objectives of the Report
This report’s objectives are to:
- To demonstrate the sustainability of renewable energy markets, namely those associated with photovoltaics and wind, and related business opportunities for power electronics companies.
- To identify the opportunities for power electronics companies in renewable energy and evaluate the market for PV and wind inverters.
- To point out the synergies between different related markets including PV, wind, energy, tidal energy, battery electricity storage, transmission and distribution of electricity, and resulting common opportunities.
- To provide the overview of the key players and partnerships within the marketplace.