What's Happening?
China's solar inverter market is projected to experience a decline in 2025, marking the first downturn since 2019. According to Wood Mackenzie, the market is expected to reach 304 gigawatts AC this year,
but will face challenges due to market uncertainties between China's 14th and 15th five-year plans. Despite this, China is anticipated to maintain its dominance with over 2.9 terawatts AC of cumulative inverter demand through 2034. The Asia Pacific region, excluding China, is expected to grow to 89 GWac in 2025, driven by investments in domestic manufacturing and emerging rooftop photovoltaic segments in India and Southeast Asia. Globally, the solar inverter market is predicted to contract for two consecutive years, with a 2% decline to 577 GWac in 2025 and a further 9% drop to 523 GWac in 2026. This downturn follows record shipments in 2024 and reflects market uncertainty across major regions, including China, Europe, and the US.
Why It's Important?
The projected decline in China's solar inverter market is significant as it highlights the challenges faced by the renewable energy sector amid shifting global economic conditions. The contraction in the solar inverter market could impact global supply chains and pricing structures, particularly as China is a major player in this industry. The anticipated downturn may lead to increased competition among manufacturers, driving innovation in hybrid solar-plus-storage systems, retrofits, and cybersecurity features. This situation underscores the need for companies to adapt to new demand drivers to remain competitive. The decline also reflects broader market uncertainties that could affect investment decisions and policy-making in the renewable energy sector, potentially influencing the pace of global energy transitions.
What's Next?
Following the current downturn, the solar inverter market is expected to recover and surpass the 2024 market size by the early 2030s. Factors such as electrification, AI demand growth, and a cyclical repowering market are anticipated to provide a solid foundation for inverter demand over the next decade. Companies that successfully navigate the current challenges and invest in next-generation technologies are likely to emerge stronger when the market recovers in the late 2020s. This recovery will be crucial for sustaining the momentum of renewable energy adoption and achieving long-term sustainability goals.
