PV Inverter Service Plans, Extended Warranties Expected To Post Major Market Growth

A new study from IMS Research has found that the multimillion-dollar market for PV inverter service plans and extended warranties is forecast to grow by over 480% between 2010 and 2014, creating huge growth opportunities for inverter suppliers.

According to the report, the market for extended warranties on string and multi-string inverters and service plans on central inverters currently was less than 10% of the inverter hardware market in 2010, but this number is expected to grow substantially to 2014, outpacing revenue growth from hardware sales.

Two of the highest attach rates for extended warranties in 2010 were in the Czech Republic and Germany, due to the high proportion of decentralized plants installed in these markets and the inverter topologies used in commercial-sized installations.

Products such as SMA's Tripower, Kaco's Powador and Sputnik's SolarMax MT series provide both three-phase grid-feeding and greater system design flexibility. In addition, the types of installations in which these inverters are typically used are more frequently backed by an investor and often require an extended warranty to minimize risk, the company says.

North America recorded the highest attach rates for service contracts for central inverters in 2010, which was largely due to the high proportion of large, megawatt-scale PV plants that were developed in Ontario and the U.S. In addition, companies such as Satcon and Advanced Energy Industries aggressively promote service plans as a key differentiator in a highly competitive market for large-scale central inverters.

Attach rates are forecast to increase over the forecast period, partly due to the tendencies of rapidly growing markets such as the U.S., China and India to favor large utility-scale installations. The increase can also be attributed to the greater emphasis now placed on reducing risk, as well as suppliers' more aggressively targeting these highly profitable service plans, IMS Research says.

‘With greater adoption of PV as a viable utility-scale power generation source, service contracts are going to become an increasingly important factor in customers' decision making when choosing an inverter supplier,’ predicts IMS Research PV Analyst and report co-author Tom Haddon. ‘When just an hour of downtime can cost investors huge amounts in lost income, the breadth and reputation of suppliers' service contracts will become a key differentiator amongst vendors.’

As it does in the inverter hardware market, SMA also dominates the service market, with an estimated market share in excess of 35% in 2010, IMS Research adds. The supplier appears to have an even stronger position in service than inverters due to its high focus on this segment via its SunnyPro club and strong brand reputation.

SOURCE: IMS Research

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