The Future of Solar Inverters: Challenges and Opportunities Ahead

How Much Longer Can Photovoltaic Inverters Thrive?

On May 28, 2025, the performance of photovoltaic inverter companies was remarkable in 2024, with most achieving profitability. Notably, Sungrow Power Supply reported a revenue increase of 7.76% and a net profit rise of 16.92% year-on-year.

However, inverter companies now face risks related to fluctuations in overseas markets, such as the imposition of tariffs by the United States and concerns in Europe regarding remote control of Chinese inverters.

In 2025, the photovoltaic market is expected to experience significant changes due to market reforms and new tariffs, likely leading to increased volatility in the inverter sector.

Additionally, due to a surge in installations, inverter companies are contending with rising costs and a slight weakening in demand, resulting in performance declines for some businesses. Conversely, emerging markets like Pakistan, India, and Brazil offer growth potential for inverter companies, although profit margins remain lower compared to mainstream markets in Europe and North America.

Over the past year and a half, the photovoltaic manufacturing sector has been impacted by overcapacity, price declines, and intense competition, leading to significant financial losses for many companies. In 2024, nearly half of the 70+ companies in the sector reported losses, yet several inverter companies stood out with impressive results, marking them as the brightest spots in the industry amidst challenges.

In 2024, among the ten publicly listed companies primarily engaged in inverter business on the Shanghai and Shenzhen stock exchanges, only GoodWe faced a loss of 62 million yuan due to challenges in the European market and excess inventory. The remaining companies reported profits. Sungrow Power Supply achieved a record revenue of 77.86 billion yuan and a net profit of 11.04 billion yuan, marking a year-on-year increase of 7.76% and 16.92%, respectively. It was the only company among the top 10 in photovoltaic manufacturing to report revenue growth.

In contrast, traditional suppliers of photovoltaic materials, such as silicon and components, experienced losses exceeding 5 billion yuan, while other firms in the sector did not surpass 3 billion yuan in net profit. This stark difference highlights Sungrow’s exceptional performance.

Following closely was Deye Technology, another inverter company, which reported annual revenue of 11.21 billion yuan, a year-on-year increase of 49.82%, and a net profit of 2.96 billion yuan, up 65.29%. The growth rates of both revenue and profit positioned it among the top 10 in the sector.

Other inverter companies, such as Ginlong Technologies and Sungrow Electric, also demonstrated commendable performance compared to other photovoltaic manufacturing sectors, with many inverter companies experiencing a peak year despite the industry’s historical challenges.

The capital market responded positively to these performances. On March 22, 2024, Sungrow Power Supply’s stock price rose, surpassing that of the previously prominent material integrator LONGi Green Energy, known as the “king of photovoltaics.” Although their market capitalizations briefly fluctuated, by the end of April 2023, following the release of annual reports that revealed significant declines in performance and quarterly losses for LONGi, Sungrow solidified its position as the leader in photovoltaic market capitalization in the A-share market.

In terms of initial public offerings (IPOs), the first photovoltaic energy storage company, Airuo Energy, went public in 2024, followed by Shouhang New Energy in 2025, both primarily focused on inverters. This occurred amid a broader cooling of IPOs in the renewable energy sector, highlighting the market’s relatively optimistic outlook for the inverter segment.

Several inverter companies and research institutions have indicated that the ongoing growth in photovoltaic installations, the expansion into overseas markets, a healthy supply-demand situation, and stable pricing trends, alongside companies’ efforts in cost control, technological advancements, and efficiency improvements, have supported the strong performance in this sector.

However, the market is expected to experience increased volatility in 2025 due to significant changes such as market reforms and new tariffs. Although prices for inverters were stable at the beginning of the year, demand expectations have noticeably declined. In a recent forum, executives from several leading photovoltaic companies, including Sungrow, predicted the first decline in annual photovoltaic installations in five years, which is likely to impact the performance of inverter companies. With previous production increases, this could lead to an imbalance in supply and demand.

On February 9, the National Development and Reform Commission and the National Energy Administration jointly released Document No. 136, aimed at accelerating the market-oriented reform of renewable energy grid connection prices to promote high-quality development. This policy triggered a “rush to install” scenario in the energy storage sector. As a result, starting in March, production and shipment volumes of photovoltaic inverters surged, leading to a price increase.

However, since the policy clarification on May 31, demand has noticeably declined from May onwards. Similarly, the prices of photovoltaic components and other primary materials, which had surged due to policy incentives, returned to a downward trend starting in April, with sharp and increasing price drops observed.

Industry analysts are expressing concerns that the production increases, price hikes, and instances of contract breaches and counterfeiting during the rush could negatively affect the future trajectory of the photovoltaic market. A potential short-term overextension of demand may lead to increased weakness, with worrying price trends anticipated. Currently, this overall shift in demand after several years is expected to impact not only primary materials but also auxiliary materials, inverters, and mounting structures, leading to anticipated market fluctuations.

Changes in overseas markets also warrant attention. In 2024, China’s total exports of inverters reached a staggering 58.8 billion yuan, with Sungrow Power Supply generating 46.62% of its total revenue from overseas markets, boasting a gross margin of 40.29%, nearly double that of its domestic operations. For many companies, the overseas market is a critical battleground, often essential for survival. However, trade barriers in Europe and North America remain a significant concern. The introduction and fluctuation of “reciprocal tariffs” by the United States present ongoing challenges in Sino-U.S. trade relations.

In early May 2023, the European Solar Manufacturing Council reported that nearly 70% of inverters installed in Europe over the past two years were sourced from Chinese suppliers, impacting the local market and raising concerns about power security due to potential remote control risks. The Council stated it would push for measures to limit the remote control capabilities of photovoltaic inverters from China. Some analysts believe the EU may be planning targeted restrictions.

On April 28, widespread power outages occurred in several European regions, particularly affecting Spain, Portugal, and southern France, with Spain experiencing outages exceeding 10 hours that disrupted critical sectors such as transportation, communication, and healthcare. Although no official cause has been determined, speculation about “remote control triggering chain outages” has circulated. On May 24, another major power outage in southern France was attributed to an inverter fire during the Cannes Film Festival, further raising concerns about power security and placing Chinese inverters in the spotlight.

According to the latest four-month export data from the General Administration of Customs, inverter exports totaled approximately 18.026 billion yuan, reflecting a 10% year-on-year increase. However, some segmented data indicate shifts in the overseas inverter market. For instance, exports to the United States, the sixth-largest destination, saw a year-on-year decline of 0.66%, with a significant drop of 17.9% in April following the announcement of reciprocal tariffs, threatening its position among the top ten markets. Future changes in tariff policies could further impact this crucial market.

In Europe, the four-month export growth was 5%, lower than the overall increase. Country-specific performance varied, with strong exports to Germany, Hungary, and some Eastern European nations, but declines were observed in core re-export destinations such as Netherlands, Spain, and Italy. Exports to Italy and France plummeted by over 50% year-on-year, and the four-month data does not yet reflect the recent power outage events and related public discourse.

Currently, emerging markets like Pakistan, India, and Brazil are providing substantial growth opportunities for inverter exports. However, despite their potential, profit margins in these markets remain significantly lower than in mainstream European and North American markets. If the U.S. and EU impose further trade barriers against inverters, this will undoubtedly impact export performance.

In the first quarter of this year, the performance of photovoltaic inverter companies showed further divergence. Leading companies like Sungrow Power Supply and Deye Technology continued to achieve year-on-year growth in revenue and net profit, while Hefei Wanbang Electric and Ginlong Technologies benefited from the installation surge, reporting significant growth. In contrast, GoodWe reported revenue growth but faced poor profitability, resulting in quarterly losses. Hema Shares transitioned from profit to loss, while Yuneng Technology experienced a 55.4% year-on-year decline in revenue and a 27.68% drop in net profit, nearing the loss threshold.

For companies under pressure, challenges in overseas markets, particularly in Europe, along with some products lacking competitiveness and rising costs due to expansion amidst weakening demand, are becoming apparent. It is likely that market fluctuations in the inverter sector will further intensify in the second half of the year.