Micro-inverter·Depth 2 | Why does the micro-inverter permeability increase? What are the barriers to competition?


This report mainly answers two questions that the market is concerned about:

Penetration rate and market space calculation of micro-inverse

Differences and industry barriers among micro-reverse enterprises

Core conclusion: The microinverter industry benefits from the three major advantages of safety, economy, and component-level operation and maintenance, and is in a high-growth stage (CAGR is expected to be 44%+ from 2020 to 2025), while domestic enterprises can rely on one-stop growth in the short term. The fourth-class products have misaligned competition to expand the market, and long-term optimization of one-to-one products directly competes with American companies. At the same time, domestic companies have already taken advantage in Latin America and other regions. In the future, domestic leading micro-inverter companies may enjoy high growth in the micro-inverter track. Growth rate + own market share increase.

2. Company comparison & industry barriers

(1) Company comparison:

① Market share: Over 70% of one company abroad, 4, 4, and 1% domestically respectively, with huge room for improvement;

② Products: Foreign countries have optimized one-to-one products for many years. Domestic companies first expand the market with one-to-four and other products through misaligned competition, and then gradually optimize one-to-one products;

③Profit: Domestic supply chain system + lower labor costs make domestic enterprises’ net profit margin significantly ahead of foreign countries;

④Channels: Foreign channels are rich in type and quantity, and each company has its own core customers; domestic sales areas are scattered, and foreign markets are concentrated in the United States and Brazil respectively, focusing on large customers such as dealers and installers.

(2) Industry barriers:

① Capability: The entry threshold of microinverters is higher than that of strings (the topology is more complex and different than that of strings + the warranty period starts at 10 years & the high-end market is as long as 25 years + only replacement but not repair customers are scattered, so after-sales costs are high );

② Willingness: String companies are not very willing to seize micro-inverter shares (they can be shutdown devices, optimizers, pure increments);

③Time: Even if other companies develop micro-inverse products, the impact will not be felt until many years (≥3).

 Why is the microreverse osmosis rate on the rise? How do you foresee the future growth prospects?

(1) Product features: Geared towards maximizing power generation, it belongs to the MLPE series with additional functionalities beyond shutdown and optimization. 

(2) Increasing penetration rate:

① Safety: Low-voltage rapid shutdown requirements are already implemented in Europe and the United States, with China gradually following suit. This emphasizes a commitment to safety. 

② Cost-effectiveness: The initial investment cost for capacities below 20kW is lower compared to string + optimization, and below 3kW is lower compared to string + shutdown. Microinverters outperform strings in terms of internal rate of return (IRR) if they achieve a power generation gain of 10% or 15% within the below 10 or 20kW range. This highlights their financial viability. 

③ Simplified operation and maintenance: Microinverters enable single-person operation and convenient maintenance for household systems, while bringing a 1% increase in IRR for industrial and commercial applications. This emphasizes user-friendliness and efficiency. 

(3) Market space: Projections indicate that the microinverse industry will reach a market size of 45.2 billion yuan in 2025, with a five-year compound annual growth rate (CAGR) of 44% (compared to the industry's installed capacity CAGR of 33% from 2020 to 2025). In terms of market share in 2025, the United States is expected to account for 40%, Europe for 29%, China for 14%, Brazil for 6%, and Australia for 4%

1.1Product - Comparison with centralized and string type: The initial development aim is to boost individual component power output.

Microinverters were created to address the low power generation efficiency of string inverters by matching the inverter to the output of a single component. In contrast to centralized or string inverters, microinverters have the key feature of individual control for each component. Microinverters typically have lower power capacities (0.25-2kW), emphasizing power generation efficiency and enhanced security. ⚡️🔒

1.1 Product - Comparison with shutdown and optimizer: Expanding on the functionality of microinverters compared to shutdown and optimizer products at the component level.

Similar to microinverters, both shutdown and optimizer are representative products in component-level power electronic control. Here's how they differ:

(1) Shutdown devices facilitate rapid shutdown at the component level, addressing safety concerns. The typical ratio is 1:1 or 1:2 in terms of device per component.

(2) Optimizers enable maximum power point tracking, component-level rapid shutdown, and operation and maintenance capabilities. The typical ratio is 1:1 in terms of optimizer per component.

In contrast to the mentioned products, microinverters are connected in parallel with the system, resulting in a DC voltage of approximately 60V—eliminating the risk of fire caused by high-voltage DC arcing. Additionally, each component is equipped with independent maximum power point tracking (MPPT), enabling individual control. This not only enhances power generation per module but also provides module-level shutdown and operation and maintenance functions.

1.2. Penetration rate-increased reason 1: Improved safety requirements-Europe and the United States already have low-voltage rapid shutdown requirements, and China is gradually transforming

Since the price of micro-inverters is generally higher than that of traditional string modules, the current penetration rate of micro-inverters is not high (estimated to be only about 10%). Looking to the future, we believe that three major reasons will drive the increase in micro-inverse penetration rates: Distributed security Improved performance requirements, improved economics of using micro-inverters in power stations, and increased demand for component-level operation and maintenance in the context of distributed outbreaks.

The first is safety. According to the US NEC2017 policy requirements, all household installations must be equipped with component-level shutdown devices to ensure that the DC terminal voltage can be reduced to below 80V after an accident and avoid the risk of rescue in the event of a fire. Canada, Europe, Thailand and other places also have similar requirements. At the same time, the standards of China and Australia are also guiding in a safer direction.

1.2. Penetration rate-increased Reason 2: Economic improvement-the initial investment cost below 20kW is lower than that of string + optimization, and below 3kW is lower than that of string + shutdown

Secondly, there is the economic aspect, which is mainly reflected in the initial installation cost and IRR comparison:

Initial investment cost: As high-power components gradually become the mainstream of the distributed market (within 300W in 2018, increased to 450W in 2020, and many customers have adopted 600W in 2022, the power carried by a single microinverter has doubled, and the cost has increased significantly. reduction), and the large-scale promotion of one-to-four microinverter products, the current microinverter price has become highly competitive in the low-power segment.

Assumption: The price of one-to-four microinverter is 0.75 yuan/W, the switch is 0.15 yuan/W, and the optimizer is 0.45 yuan/W.

1. Microinverter and string + optimization: Below 20kW, the price per watt of microinverter is lower than that of string + optimization, and it is more economical; above 20kW, microinverter is more expensive.

2. Microinverter and string + shutdown: At 3kW, the price per watt of microinverter and string + shutdown is the same at 0.75 yuan/w. Therefore, below 3kW, microinverter is more economical, and above 3kW, microinverter is more economical. The inverse string + shutdown solution is more expensive.

3. Micro inverter and single string: Since the structure of micro inverter is different from that of string, the cost of micro inverter must be higher when compared individually.

If the power generation gain is 10 or 15%, the IRR of the micro-inverter is below 10 or 20 kW, which is higher than that of the string.

IRR comparison:

To calculate the 25-year IRR, it is assumed that the micro-inverter responds better to low light and generates 1% more electricity than the string in the morning and evening, and the micro-inversion and string + optimization can respectively perform in different occlusion scenarios (maybe clouds, dust or trees, etc.) Brings MPPT power generation gain of 10%, 15%, 20% (usually 5-30%).

1. 10% MPPT power generation gain: for power generation of 10kw and below, the micro-inversion IRR is higher than that of string-type solutions. When it is above 10kW, the cost performance is weak.

2. MPPT power generation gain of 15% and 20%: at 20kw and below, the micro-inversion IRR is higher than the various string-type solutions. Above 20kW, the microinverter is less cost-effective than the string + optimization solution.

1.2. Penetration rate - reason for improvement 3: Component-level operation and maintenance - household use can be operated safely and conveniently by one person, and industry and commerce can bring an IRR increase of 1pct

Finally, in terms of component-level operation and maintenance, since there is one-to-one current, voltage, and power monitoring between the microinverter and the components, not only can the power generation of each component be intuitively seen, but also the power generation can be detected in a timely manner when the power generation is damaged. Locate problems and easily achieve safe and convenient operation and maintenance by a single person.

At the same time, thanks to the precise positioning of microinverters, it can also reduce troubleshooting time and reduce power generation losses when operating and maintaining industrial and commercial power stations. The operation and maintenance costs can be reduced by about 2 minutes/W/year compared with ordinary inverters, bringing 1pct of IRR increases.

1.3. Market space - year-by-year calculation: It is conservatively expected that the micro-inverse industry will have a market size of 45.2 billion yuan in 2025, with a 5-year CAGR=44%


Assuming that global installed capacity increases from 130GW in 2020 to 550GW in 2025, the five-year CAGR = 33%. The proportion of distributed installed capacity will increase from 33% in 2020 to 47% in 2025. Considering that about 20% of the global installed capacity is projects below 20kW, the probability of switching to micro-inverter is higher for this part, and the penetration rate of micro-inverter is expected to be expected It increased from 8% to 24% (conservative), 30% (neutral), and 35% (optimistic) in 25 years.

In conclusion:

We estimate that the demand for micro-inverse in 2025 under the three expectations will be 63, 78, and 91GW respectively. If the average micro-inverse price drops to 0.7 yuan/W, it will correspond to a market space of 45.2, 55.5, and 64.7 billion yuan respectively, with a CAGR=44 ,50,55%.

1.3 Market Space - Year-by-year calculation: It is conservatively projected that the microinverter industry will reach a market size of 45.2 billion yuan in 2025, with a 5-year CAGR of 44%.


Based on an assumption that global installed capacity will increase from 130GW in 2020 to 550GW in 2025, with a 5-year CAGR of 33%, and the proportion of distributed installed capacity will rise from 33% in 2020 to 47% in 2025. Considering that approximately 20% of global installed capacity consists of projects below 20kW, this segment is more likely to adopt microinverters, leading to an expected penetration rate of 8% to 24% (conservative), 30% (neutral), and 35% (optimistic) within 25 years.

In summary:

Under the three expectations, we estimate the demand for microinverters in 2025 to be 63GW, 78GW, and 91GW, respectively. If the average microinverter price drops to 0.7 yuan/W, this corresponds to a market space of 45.2 billion yuan, 55.5 billion yuan, and 64.7 billion yuan, respectively, with CAGRs of 44%, 50%, and 55%.

1.3 Market Space - By region in 2025: The United States, Europe, China, Brazil, and Australia are expected to account for 40%, 29%, 14%, 6%, and 4% of the microinverter market, respectively.

Due to increasing importance placed on security and growing demands for component-level operations and maintenance, microinverter penetration rates are expected to rise in various regions globally:

United States: China's foreign market share in the distributed market reached 46% in 2021, with a projected microinverter penetration rate of 55% within 25 years. Since one-to-one and one-to-two configurations are primarily used, the unit price is estimated to be around 1 yuan/W in 25 years.

Europe: With limited exposure to microinverter products thus far, the penetration rate is expected to quickly increase to 40% with large-scale adoption in 2022. Both one-to-two and one-to-four configurations are utilized, with an estimated unit price of 0.7 yuan/W in 25 years.

Australia: As customer awareness of microinverters grows, the penetration rate is expected to reach 25%. Both one-to-two and one-to-four configurations are available, with an estimated unit price of around 0.6 yuan/W in 25 years.

Brazil: The penetration rate is anticipated to surpass 25% within 25 years, with the main demand being one-to-four configurations. The unit price in 25 years is projected to be around 0.6 yuan/W.

China, India, and others: These regions have a relatively high price sensitivity. The expected penetration rates within 25 years are 15%, 10%, and 10%, respectively, with the main demand being one-to-four configurations. The unit price in 25 years is estimated to be around 0.5 yuan/W.

1.3 Market Space - China BIPV: It is expected that domestic Building Integrated Photovoltaics (BIPV) installed capacity will reach 32GW in 2025, potentially generating a microinverter demand of 10GW.

The aforementioned calculations primarily consider the Chinese market, which currently lacks a mandatory policy for module-level shutdown and focuses on county-wide promoted projects. However, as BIPV demonstrates rapid growth in recent years, it will play a significant role in increasing microinverter penetration rates in the Chinese market. The calculation is as follows:

Stock: Anticipated BIPV installed capacity of 25GW within 25 years. Specific calculation: Assuming building densities of 42% for public buildings and 45% for industrial and commercial factories, with renovation proportions set at 45% and 30%, respectively, based on county-wide progress. Referring to the 8% coverage requirement for renewable energy buildings in the Carbon Peak Action Plan, the projected renovation area for public buildings and industrial and commercial factories in 2025 will be 165 million square meters and 196 million square meters, respectively. It is expected that the penetration rate of renovations for industrial and commercial and public buildings will reach 50% and 25%, respectively, within 25 years.

Increment: Expected BIPV installed capacity of 6.5GW within 25 years. Specific calculation: Using the average value of the past three years' new constructions as the new construction area in 2021, assuming a 3% annual decrease in new area. According to the 14th Five-Year Plan Carbon Peak Action Plan, the photovoltaic installation rate in new buildings will reach 50% by 2025. Considering the economic viability of BIPV for industrial, commercial, and public buildings, a penetration rate of 50% is expected in 2025.

Total: Anticipated BIPV installed capacity of 32GW within 25 years. Since BIPV requires higher security and incurs inconvenience in terms of operation and maintenance, it is estimated that 30% of customers may adopt microinverter solutions, corresponding to a demand for 10GW of microinverters.

2. Company comparison & industry barriers

(1) Company comparison:

Market share: huge room for improvement;

Products: Foreign countries optimize one-to-one products, while domestic companies first compete with one-to-four products;

Profitability: Domestic supply chain system + lower labor costs make domestic companies’ net profit margin significantly ahead of foreign countries;

Channels: Foreign channels are rich in type and quantity, and each company has its own core customers; domestically, they are concentrated in the US and Brazilian markets, focusing on large customers such as dealers and installers.

(2)Industry barriers:

Capability: The entry barrier for micro-inversion is higher than that for string type;

Willingness: String companies are not very willing to seize micro-inverse shares;

Time: Even if other companies develop micro-inverse products, the impact will not be felt until many years (≥3).

2.1. Company-market share comparison: one foreign company exceeds 70%, while domestic ones are 4%, 4%, and 1% respectively. There is huge room for improvement.

First of all, from the perspective of sales, foreign companies far exceed domestic companies. In 2021, 10.45 million microinverters were sold abroad, while domestic microinverters only sold 400,000, 420,000 and 100,000 units respectively. Even if one unit is driven by four units = 4 units are sold. After dragging and converting, the difference is 5-10 times.

Secondly, from the revenue side, according to the previous calculations, the global micro-adverse market space is expected to be 12.1 billion yuan in 2021, of which a foreign company has revenue of 8.8 billion yuan, with a market share of 70%+, while domestic revenue is 5.1, 4.5, and 1.1 respectively. billion, the market shares are only 4%, 4%, and 1% respectively, and there is a lot of room for improvement.

2.1. Company-product comparison: Foreign countries have optimized one-to-one products for many years, while domestic companies first compete with one-to-four products.

In terms of products: foreign one-to-one products are leading but the power increase is slow. Domestic companies have advantages in misaligned competition in one-to-two, one-to-four and other products.

Product Category: The richness of domestic product power segments is obviously better than that of peers, and one-to-two, one-to-four, and one-to-eight products have been launched. Since there are many low-power rooftop photovoltaic projects in the United States, and foreign countries prefer to build AC modules, the current focus is on one-to-one, with no one-to-four or one-to-six products, and the category is relatively lagging behind. In addition, in the same one-to-one manner, domestic companies have launched 400W and 500W products, while foreign countries only have 350W products, which are less competitive in regions such as Brazil.


Product parameters: The power density of many domestic products is better than that of peers. Foreign products are significantly ahead of peers in weight reduction. Domestic companies generally adapt to high-current components earlier.

(1) The higher the power density, the smaller the raw material cost of a single-watt product, and the easier it is to install and transport.

(2)The higher the conversion efficiency, the greater the power generation.

(3) Adaptability to components. After the launch of 210 high-current components, domestic companies earlier released micro-inverter products that meet high-current needs.

2.1. Company-Profit Comparison: Domestic supply chain system + lower labor costs make domestic companies’ net profit margin significantly ahead of foreign countries

In terms of profitability: domestic > foreign.

Domestic gross profit margin is ahead of the industry average and showing an upward trend, mainly due to:

1) The company can control the entire process and design, manufacture and sell by itself, eliminating part of the OEM profit.

2) The growth in business scale has brought economies of scale to the company.

3) The newly launched one-to-four products are more integrated and scarce, and their increased volume drives up gross profit margins.

Since materials account for a high proportion of micro-inverse costs and costs are greatly affected by employee salaries, the domestic imported material supply chain system naturally costs higher than domestic companies. At the same time, the labor costs of overseas employees are also higher than domestic ones. Therefore, in the past two years, the net cost with domestic companies has been higher. The gap between interest rates has widened.

2.1. Company-profit comparison: self-production + product optimization + business synergy, domestic profitability exceeds competitors

Our analysis is mainly due to the following reasons:

1) OEM: The processing fee accounts for the proportion. On the one hand, you can enjoy part of the processing profits. On the other hand, when the scale expands, you can reduce costs through scale effects, bringing higher profit margins.

2) Power density: less raw material consumption and higher gross profit margin.

3) Business synergy: There is a strong production synergy between the inverter business and electrical equipment. For example, material procurement synergy can optimize input costs, and production and manufacturing synergy can coordinate the production and installation process, thereby reducing the unit cost of the inverter.

4) Sales region: Micro-inverse sales revenue in the US market accounts for a relatively high proportion (35% in 21H1), and the gross profit margin is low.

5) Pricing: Sell micro-inverse products to local customers through subsidiaries, and include import tariffs, transportation costs and other expenses into the sales cost of the products, which lowers the gross profit margin.

2.1. Company-channel comparison: Each company has its own core customers

In terms of channels, the comparison is mainly based on region, quantity, and quality.

First of all, in terms of the type of channel providers, it covers various channels such as dealers, installers, and terminal owners. The online mall is a unique channel. It can be seen that leading companies are leading in the depth of channel layout.

Secondly, in terms of the number of channel distributors, they have been working in China for many years, far exceeding domestic enterprises, and they also have a good layout. From the perspective of core customers, we have core customer support in China.

2.2. Industry barriers: The entry threshold for microinverters is higher than that of string type. At the same time, string type companies are more likely to be shutdown and optimizers. It is not expected to have a significant impact on the industry in the short term.

Since the overall profitability of the microinverter industry is high, with light assets and low initial investment, the market is generally worried that the sustainability of revenue and profit growth of companies in the industry will be affected by other inverter companies. We believe that to enter the microinverter competition For new players, there are three dimensions to consider: ability, willingness and time. The specific analysis is as follows:

Capability: The entry barrier for micro-inversion is higher than that for string type. (1) From the perspective of product development, microinverters have different architectures from string and centralized ones, and product development requires another set of ideas; (2) From the perspective of after-sales costs, microinverters are encapsulated by glue filling. Generally, after-sales service only replaces but does not repair, while distributed installations are too scattered and the after-sales cost is high; (3) From the perspective of customer acquisition, the warranty of Weini products starts at 10 years, and the high-end market requires 25 years. The loyalty of downstream customers to the brand and product Reliability requirements are higher.

Willingness: The willingness of serial companies to seize the share of micro-industry companies is not strong. (1) Micro inverters and string inverters are in direct competition in the household market.

It is not easy for downstream customers to transform when conducting publicity and guidance. On the other hand, they will face internal conflicts within the enterprise; (2) In order to realize the component-level shutdown function, string enterprises can add shutdown devices or optimizers to implement shutdown functions. Developing a processor or optimizer can increase the value of your own product. To sum up, compared with micro-inversion, the better strategy for most companies is to use shutdown or optimizer.

Time: Referring to the fact that domestic micro-inversion technology was introduced in 2009 and the first-generation product was launched in 2011, it can be inferred that other domestic companies will also need 2 years or more to develop products. At the same time, it will also take several years to promote and gain recognition on the client side. , coupled with the fact that the product needs to undergo multiple iterations to catch up with the current level of other companies (domestic companies have not surpassed domestic companies in one-to-one products for 10 years), therefore we expect that even if other companies develop micro-inverse products, their impact will be greater. It takes many years to manifest.

Finally, even if other leaders enter the micro-adverse track, we believe that it will still be difficult to erode the share of existing leading companies in the short term, and the entry of leading companies just shows that the prospects of this track are better, which should be good for the industry from the perspective of making the pie bigger. various enterprises.


The micro-inverter industry is experiencing overall high growth rates, indicating promising prospects for the industry's development. 

4.Risk Warning

Downstream demand falls short of expectations: If the demand for installed capacity at the terminal level is lower than anticipated, it may have an impact on the industry's overall profitability. 

Changes in overseas trade policies: Photovoltaic inverters, as a crucial component of future energy infrastructure, are closely tied to the energy systems of different countries. If there are any restrictive trade policies, such as increased taxes imposed overseas in the future, it may impose limits on the expansion of domestic companies in international markets. 

The calculations are based on assumptions and should be used for reference purposes only: The calculations presented in this report are subjective and subject to existing assumptions. They should be considered as reference material rather than definitive predictions. 

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