SNT: What is the climate like in the global inverter market now?
In one word: shakeout. Like the solar module market two to three years ago, over supply is leading to decreasing pricing trends, forcing many inverter manufactures out of the industry. We will continue to see mergers and bankruptcies over the next several years. However, as the PV industry in North America grows from a 1 GW market to 9-10 GW over the next ten years, the reward for those that manage downward pricing trends and increasing warranty liabilities can only grow.
SNT: What effect is the market in China having on the overall market (is it driving prices down)?
KACO started a subsidiary in China in 2009 and converted it into a standalone corporation in 2012. The Asia market including China, Japan, Korea, India and others will be the largest in the world for the foreseeable future. It is also an important manufacturing center for components and equipment like modules and inverters. This may provide the Asian market a competitive edge in terms of low cost manufacturing.
SNT: And what do the recent mergers (such as ABB/Power-One, Advanced Energy/PV Powered) in the industry mean? Do you anticipate more mergers/acquisitions among the major players? Is this a good thing for those in the business? How does it affect the supply chain?
The mergers are a strong statement that the inverter market is a good investment. It is also a clear statement that in order to succeed, companies are required to provide a complete product line across residential, commercial, and utility sectors. Mergers and acquisitions will continue until inverter topologies become more standardized. We should also expect to see additional high profile bankruptcies like Satcon. As a result, multi-year contracts, like Kaco’s 400MW Alamo project in San Antonio Texas (US), will become increasing important to supply chain management, increasing purchasing power, and managing operational expenses over the short to mid-terms.
SNT: Tell me about KACO new energy – first its move to the US. Why is the North American market important to the company?
KACO new energy has always seen North America as one of the major markets for PV. That’s why the decision was made early on to position KACO new energy in California. That future is now as we expand our operations in the US with the opening of a new manufacturing facility in San Antonio, Texas. That facility, when complete, will add 200MW annual production capacity to our global supply capabilities. The manufacturing plant will create more than 70 new jobs and will locally manufacture the XP550 central inverter and the 1.1 MW Integrated Power Station (IPS) for the Alamo project, as well as other Kaco new energy inverters.
With the rapid decline of the European solar market, North America will be the 2nd largest market in 2013 and 2014 globally. As a global leader in inverter technology, we see North America being a very important driver of new technology adoption that will spread to other markets. I refer specifically to the trend of string and module level electronics that I elaborate on later.
SNT: How rapidly has KACO new energy expanded globally in the past years?
In the last several years KACO had expanded aggressively across the globe. Since Intersolar Munich in 2012 we have established partnerships and expanded our Spanish office in order to address the growing South American market. We expect to establish regional offices there in the near future. Sub-Saharan Africa is now served by our Johannesburg, South Africa office that opened in January this year. This past February we opened a new regional office in Tokyo to support the reemerging Japanese market with our local partner Green TEC. We have recently opened a new office in Dubai to drive sales in the Middle East-North Africa region following the signing of an MOU with AEC. AEC, based in Saudi Arabia will manufacture and service Kaco equipment in that region.
Historically KACO has supported Asia from our offices in Seoul, South Korea and Beijing, China; both of these offices continue to expand with the growth of the local markets in these countries. With over 50% market share and a strong service team in South Korea we continue to earn our excellent reputation. In all we have subsidiaries operating in 15 countries all over the globe and are able to meet local content requirements where needed.
SNT: In terms of technology, are there different trends in different regions of the world? What affects these trends (grid infrastructure?)?
Clearly there are different trends – both, historically as well as looking to the future. Europe has traditionally used a distributed energy collection model with large numbers of string inverters for their solar plants. European Feed-In-Tariffs (FiTs), with their emphasis on rewarding total energy production, lead to string inverters’ rapid deployment. Technology trends in string inverters that allow for higher power to weight densities also allow for significant cost reductions in these types of inverters. The lighter weight relative to power output also means that these inverters are easily replaceable and don’t require the same after-sales support; so they are sold with shorter warranties and limited O&M contracts.
Historically, the US focused on reducing initial cost, thus driving a model using central style inverters with long warranties and high equipment support requirements. As string inverters have become more cost competitive and with the use of Power Purchase Agreements (PPAs) to fund projects, the focus has started to align with European design philosophy. String inverters are now becoming the mainstream choice even on larger scale ground mount systems. The recent merger of Advanced Energy and Refusol makes a strong statement regarding this significant market trend and further highlights this change in financial focus for project developers.
KACO new energy has long understood this and has over 750 MW of our blueplanet TL3 series deployed around the world. By introducing this family of inverters to the US, we continue to increase our presence here and take advantage of their low cost, ease of installation, and increased overall uptime. We expect this trend to continue as large central inverters are phased out of commercial projects and sting inverters are phased in. The central inverter will still have its place, but will largely be deployed only for the biggest utility scale projects.
SNT: Would you say that decentralized inverter solutions are a trend in the US? If so, why?
Decentralization of power generation within plants is a major trend in the US for many of the reasons outlined above. We believe that we are only seeing the first steps in this direction and that it will end when we reach string to module level electronics. Changes in the regulatory environment described below and the additional value integrators and engineers will find when using these string and module level solutions will help drive this trend globally.
SNT: Tell me about the TL3 inverter family. How is it different?
KACO provides a truly global platform with the introduction of the blueplanet TL3 series. We are excited to bring the blueplanet family to the USA and with over 750MW already installed across the globe, this is a mature product ready for immediate deployment in the US market. In the US, the TL3 family comprises 7 different inverters, from 10 kW to 50 kW and is available for both 600V and 1000V DC system voltages. The blueplanet series is a perfect application for commercial three-phase and utility-scale applications; from flat and multi-angle rooftop to fixed and tracking ground mount projects. Their key advantages are a best in class 97.5% CEC efficiency, transformerless design, wide input voltage range, ease of installation, and design flexibility all with globally certified power control features. In this size range we provide one of the best power densities (power to weight ratios) available and the largest operating temperature range. We have received numerous certifications for grid support functions and can meet the requirements for every utility in North America including Canada, Mexico, Puerto Rico and all 50 states.
SNT: What are the types of installations it’s targeted at?
As mentioned above, the blueplanet TL3 series features a flexible design and is a perfect application for commercial rooftop, carport, and ground mount systems. The 32, 40, and 50 kW inverters have both one and three Maximum Power Point (MPP) tracker versions available. The 3 MPP units are perfect for complex installations on commercial rooftops; the 1 MPP units are perfect for ground mounted systems where shading, inter-row spacing, and ground topology is less of an issue. The lightweight 10 kW unit with 2 MPP is perfect for smaller commercial and carport systems.
SNT: What do you see as the challenges in the commercial PV market in the US?
The biggest challenges will come from pending regulatory changes like Arc Fault Detection and Interruption (AFDI) that exists in the 2011 National Electrical Code. We are aware that additional safety requirements will be included in the 2014 Code when it is published later this year. In addition the pending update of IEEE 1547 will define required grid support functions as well as new testing and evaluation methods for equipment. KACO new energy is on track to fulfill all of these anticipated changes based on current requirements that we meet in Europe as well as work in development. As a result of these requirements, particularly AFDI and other fire safety changes, we believe that module level, or at least string level, electronics will become the de facto standard in the US. This poses a challenge for inverter design as we come to terms with how those electronics will interact with the inverter in terms of power conversion.
SNT: And where do you see this market in just a few years – what needs to change, what will be different?
In the next 3 to 5 years trends will converge to give us module- to string-level control over arrays for safety and cost reduction; for example AFDI, emergency shutoff for fire fighters, and voltage control to reduce balance-of-system cost will all be required within the next 12 to 18 months. Because of this, we believe that systems will have distributed controls in the array and in most cases DC-to-DC conversion at the modules or strings. Except in the smallest residential systems, DC-to-AC conversion will remain within larger inverters as this provides the most efficient power distribution system at any scale. We believe that this architecture will be developed and refined first in the US and then exported to other markets like Africa, Asia, and Europe once it is proven here.
SNT: What do you see as KACO new energy’s role in PV in the US in the future?
KACO new energy introduced the TL3 series to the US, providing an opportunity for North American developers to take advantage of this exciting global platform to meet the increasing demands on PV systems now and into the future. With the many and rapid changes that have shaken up the inverter landscape recently it is more important than ever to select a technology partner that will provide support throughout the project lifecycle. KACO new energy is that company now and will be into the future.