SMA Group Exits Australia’s Solar Market Amid Chinese Competition
Jürgen Reinert, the chief executive of SMA Group, a leading global inverter manufacturer, has announced the company’s withdrawal from the Australian home and commercial inverter market. Despite Australia being one of SMA’s largest markets due to its utility-scale business, Reinert cited challenges in competing with Chinese firms on price as the primary reason for this decision.
In a recent interview on Renew Economy’s Energy Insiders podcast, Reinert shared his candid view on the competitive landscape, stating, “We cannot compete, to be honest, on any good, reasonable scale.” He elaborated that the company’s exit from various markets, including Australia, was a strategic choice given the diminishing size of the domestic market for home and business applications.
A Shift in Strategy Following Market Changes
Historically, SMA was a trailblazer in the inverter industry, holding a significant 50 per cent market share until the rise of Chinese photovoltaic (PV) manufacturers, which began to dominate both solar module and inverter production. This shift forced SMA to reevaluate its strategy, leading to tough decisions like the reduction of its engineering workforce by 40 per cent over a decade ago, following a steep 60 per cent drop in revenues.
Two years of losses have pushed SMA to refocus its efforts towards the utility-scale inverter market, which now comprises 80 per cent of the company’s overall earnings. The remaining 20 per cent comes from residential and commercial applications. The revenue distribution shows that approximately 40-45 per cent comes from the US, 35 per cent from Europe, and 15-20 per cent from Australia.
The Future of Utility-Scale Inverters in Australia
The growing utility-scale market in Australia is largely driven by the adoption of large solar-battery hybrid systems, which have gained traction among developers due to their cost-effectiveness and modularity. Additionally, the introduction of grid-forming inverters is highlighted as a crucial innovation for modern electricity grids.
Reinert remarked on the capabilities of grid-forming inverters, stating they can provide the same functionalities as conventional coal and gas generators, including frequency stabilisation. “We are very well positioned to form the grid, to stabilise frequency and provide all the functionality of a conventional power station,” he explained, emphasising the advantages of inverter-based resources.
Despite some skepticism from grid authorities regarding the reliability of these advanced inverters, particularly about fault current ride-through capabilities, Reinert asserted that inverter technology is fully capable of addressing these concerns. He argued, “Fault current ride-through is fully available in inverter-based resources. It is not correct any more to say that one cannot do that with power electronics.”
Government Protection and Future Prospects
SMA is optimistic about its opportunities in key markets as governments express the need to diversify away from reliance on Chinese inverters, amid concerns over potential remote control of critical infrastructure. In the EU, initiatives are emerging that could prevent the use of inverters sourced from China, Iran, Russia, and North Korea, with China being the most significant concern.
Reinert recalls a decade-old quip from former RWE CEO, Jürgen Großmann, who suggested that solar technology’s potential was as unlikely as growing pineapples in Alaska. Similar doubts have been echoed in Australia about battery storage, notably by former Prime Minister Scott Morrison, who made an unfavourable comparison of the Hornsdale Tesla big battery to the Big Banana in Coffs Harbour.
Nevertheless, Reinert remains hopeful about the prospects for solar energy, stating that its appeal will only continue to grow. “Prices of modules and batteries have fallen tremendously,” he noted, adding that costs are now under two cents per kilowatt-hour for PV, which remains competitive against nuclear and coal power. Reinert predicts that while the decline in prices may not be as rapid as before, the trend continues and ensures that solar’s role in the energy landscape will become clearer and increasingly vital over the years to come.
For the full insights from SMA CEO Jürgen Reinert, the complete interview is available on the Energy Insiders Podcast, titled “The grid doesn’t need rotating mass.”
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