Navigant Research Blog

As Giants Arrive, Inverter Landscape Shifts

— August 2, 2012

It’s been said that inverters, despite representing only 8% of the cost of installing a solar PV system, are the source of 80% of the problems when things go wrong.  Fulfilling the primary role of converting DC power to AC power that is compatible with the electric grid and our homes, inverters are increasingly the focus of investment from major corporate players and investors alike.

For the past few years the top four inverter manufacturers – SMA, Power-One, KACO New Energy, and Fronius – have accounted for approximately 60% of global PV inverter shipments.  A new Pike Research report, Inverters for Renewable Energy Applications, concludes that the inverter landscape will look very different by 2017, with a number of new corporate entrants, including the likes of GE, Eaton, ABB, and Siemens, that are expected to leverage their global reach and expertise across many different energy and power electronic applications.

Meanwhile, module level panel management start-ups and early stage companies such as SolarBridge, Enphase, Tigo, Enecsys, and eiQ are raising money and rapidly gaining market share in key markets, giving the market a Wild West feel, particularly in the residential and small commercial segments.  Our new report describes how the following key trends will reshape the inverter market during the next 5 years:

  • In order to retain market share, incumbent inverter manufacturers will have to expand to new markets.
  • Low-cost Asian manufacturers are likely to gain market share, but nowhere near the degree that was witnessed with solar PV modules – at least not within the next 5 years.
  • The growth of the overall solar PV market has greatly increased competition among inverter manufacturers, resulting in companies greatly diversifying product offerings from central and string inverters to microinverters and fully integrated AC panels.
  • The introduction of microinverters to the market has been highly disruptive, and AC modules architecture has the same disruptive potential.
  • The emergence of the domestic Chinese solar PV market will create a major opportunity for Chinese inverter manufacturers to grow market share, as Western companies are expected to have difficulty penetrating that market.
  • The growth of utility scale PV projects will benefit incumbent inverter manufacturers that have seen their market shares shrink in the residential and small commercial sectors.

Based on these key trends, our report concludes the renewable energy inverter market will more than double during the next five years, growing from $7.2 billion in 2011 to $19 billion in 2017.


Leading Again, California Pushes a Low Carbon Fuel Standard

— August 1, 2012

Often at the forefront of progressive vehicle emissions and air quality policy development, California is once again leading the charge to push the federal government to adopt new vehicle efficiency standards.  In mid-July, the UC-Davis Institute of Transportation Studies, along with five other leading research institutions, released a study proposing a national low carbon fuel standard (LCFS) to replace or revise the current national renewable fuel standard (RFS).  Recently the RFS has come under heavy scrutiny from politicians from both parties, the environmental community, the auto industry, and the food industry, for the standard’s focus on ethanol.

The LCFS program originated in California and is modeled after the California Zero Emissions Vehicle (ZEV) program (see earlier post) whereby vehicle producers are mandated to produce certain amounts of ZEVs, or partial ZEVs, in order to avoid financial penalties.  The ZEV program is governed by credits which are bestowed on vehicle suppliers for how many ZEVs they supply to the state.  The credits can be traded between the suppliers and, therefore, can act as an additional small revenue stream for smaller vehicle suppliers like Tesla Motors.  The ZEV program has run successfully now for some time and has helped advance fuel efficiency in vehicle technologies.

Observing the success of the program on vehicles, the California state legislature decided to look at the other piece of the equation: fuel.  The first program was proposed in 2007, and by 2009 the California Air Resources Board (CARB) had begun implementation.  In the LCFS scheme, instead of associating credits to fuel efficient or zero emissions vehicles, credits are awarded for the supply of alternative fuels like hydrogen, bio-diesel, electricity, natural gas, and certain types of ethanol, based on a calculation that measures the “seed to wheels” carbon intensity of each fuel.  The less carbon intense the fuel and its pathway to consumption are, the more credit the supplier receives.

From the “seed to wheels” calculation emerged some less than beneficial market effects, e.g., the decreased demand for U.S. domestic ethanol consumption in favor of imported Brazilian sugarcane ethanol.  Despite these objections, the LCFS has pushed development of biofuel refineries and alternative fuel infrastructure for hydrogen, natural gas, and electricity in California.  It has also been adopted by British Columbia and the European Union, and is being seriously considered by Washington and Oregon.

The national RFS mandate has been mostly fulfilled by corn-based ethanol.  It also has mandates for other non-bio alternative fuels, but many argue that it does little for hydrogen, natural gas, electricity, and other alternative fuel development.  This fact seems rather out of place when so much interest from both public and private sectors is moving to the non-ethanol fuels.  National LCFS promoters hope future congressional debates will focus on bipartisan pieces of the policy, like its agnostic approach to technology.  However, in this congress, hope for bipartisanship is a tall order.


In the U.K., EV Technology Flourishes

— August 1, 2012

While the United States remains the epicenter of venture capital, and China continues to show a huge appetite for the latest technology, many smaller firms are finding the United Kingdom fertile ground in which to start and grow a business in emerging technologies such as electric vehicles.  This is where the small size of the country works to the advantage of networking entrepreneurs: it’s relatively easy to find out who is doing what and where the interesting challenges are.

One example is Delta Motorsport Ltd., which has its development headquarters next to the Silverstone motor racing circuit.  Founded as an engineering consultancy, the company has produced some interesting prototype vehicles that could help major OEMs develop new concepts.

In 2011, Delta Motorsport manufactured five EVs to demonstrate their capability as well as their technology.  Known as the Delta E-4 Coupe, the four-seat sports car features an all-carbon fiber body structure and in-board electric motors driving individual wheels.  Finding a suitable motor with the right output and physical size proved to be a challenge, so Delta turned to another recent start-up, Yasa Motors, and the companies jointly developed a new motor with very high power and torque density.  To avoid the cost of multiple step-down gearboxes, the motors had to be able to deliver the torque required via direct drive.

Most EVs on the road today are built with conventional automotive manufacturing technology, using carry-over architecture, with the internal combustion engine replaced by a single large electric motor and the fuel tank replaced by a large battery.  The mass of such a vehicle requires a lot of energy to move, and the high cost of batteries is proving to be a major hurdle to wide acceptance by the car-buying public.  A lightweight body, along with the elimination of the gearbox, differential, and driveline, enables the Delta E-4 to travel further than the competition for a given amount of stored energy.

One alternative for electric drive is the in-wheel motor, which is actively being promoted by Protean Electric, another company that developed its technology in the U.K.  Some automotive engineers say there are issues to deal with because of the larger unsprung wheel mass, a claim that Protean says is no longer valid, but that objection is removed by mounting the motors in-board on the vehicle structure.  Delta Motorsport is now fine-tuning its torque vectoring software that controls the drive to each individual wheel.  This concept makes it straightforward to develop front-, rear-, and all-wheel-drive, because all the torque distribution is dealt with in the software, and complex gearboxes and transfer cases are eliminated.

Careful development and calibration of the control systems will also deliver some of the handling and advanced safety features that use anti-lock braking to slow individual wheels.  Improved traction and stability under a variety of conditions can be built in, and as new benefits are perfected they can be introduced to existing vehicles via a simple software upgrade.

The Delta E-4 Coupe has been included in Qualcomm’s WECV (wireless electric vehicle charging) technology pilot, which is scheduled to get underway in London in November 2012.  More on that in a future blog.


Senate Bill Threatens Combustible Biofuel Market

— August 1, 2012

The integration of biofuels into the mainstream fuel supply may have taken a step backward. On May 24, a bill passed the Senate Armed Services Committee detailing the stipulations on biofuel use by defense vehicles.  If this bill passes the full Senate, the Department of Defense could be prevented from pursuing its initiative to develop commercially-available biofuels.  In addition, the $642 billion defense authorization bill repeals Section 526 of the 2007 energy bill, which specifies that alternative fuels purchased by the DOD cannot emit more carbon than conventional fuels.  This bill was passed by the House of Representatives in mid-May.

Support of this bill is spotty in Congress. Repealing Section 526 and dismantling the biofuel initiative are independent, as some senators support the initiative but want to repeal Section 526. Support for either seems dependent on the amount of coal and oil production in the senator’s home state.

Should this bill go into law it would be a major hit to the biofuel market in North America.  Currently, the Department of Defense is a key stakeholder in the biofuels industry.  From Pike Research’s 2011 report, Biofuels Markets & Technologies, the following chart breaks down the production of biofuels by geographic region.

Biofuels Production by Region, World Markets: 2011-2021

(Source: Pike Research)

The amount of biofuels produced in North American markets could shrink significantly should this bill pass.  What’s more, a decline in the use of biofuel would inevitably signal an increase in the use of petroleum-based fuels for defense applications.  This could mean an increase in imports of foreign oil, or a heavier dependence on domestic natural gas.  As demonstrated in a recent blog by Mackinnon Lawrence, the prices of these two commodities fluctuate wildly depending upon their domestic use.  However, the military use of petroleum-based fuels is small relative to light-duty vehicle use (2.4% of the total, versus 61% by light-duty vehicles)(NGV-10).  Thus, regulation of military biofuel use makes little difference in the total amount used.  The funding and research into biofuels provided by the Department of Defense, though, represents a major impact to the overall market.  While the overall demand for biofuels in the United States would not be greatly affected, the impact on the entire sector would be dramatic.

Recent innovations in cellulosic biofuel production that have created hope for a stable domestic supply of energy could be undermined by a cut in funding from the Department of Defense.  That’s the last thing this fledgling market needs.


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