16 December 2014



When an Inverter Manufacturer Goes Bankrupt: Facing the Impact from Different Angles



Obtaining data is not the problem

“From the perspective of data aggregation, there is no big issue when an inverter manufacturer goes bankrupt”, explains Martin Neumeyr, Head of Technical Operation Management, meteocontrol, “The submission of data is not a problem in itself.”

Hendrik Hoffmann, Director of Software Development with skytron energy, confirms this statement, pointing to the fact that that there are still other means of monitoring power plants, even if an inverter is offline. This can be done utilizing string monitoring systems, intelligent combiner boxes, and energy meters. “The real issues arise as soon as there is a failure on site”, continues Neumeyer. “Before Solarmax filed for insolvency, you could expect the company’s technical support engineers to come fix the problem. In most cases, reparation is simpler and more affordable than replacing the whole inverter.”
Worst case vs Best case scenario

In the current situation, there are several scenarios which face inverter failure. “The worst case scenario”, states Matias Gallego, Head of the Engineering Department at Vector Cuatro, “is that the SolarMax inverter breaks and is significantly under warranty. Since new inverters are not produced, nor are service and repairs being supported, there is a problem. If we cannot repair it, the costs get much higher, and depending on the country where the plant is located, the permit process/permission from administration can take much longer in the cases where the inverter needs to be completely replaced. The best case scenario, on the other hand, is that you are lucky to quickly find another company with the same or very similar services to those of SolarMax, and they have the competence, equipment and spare parts to quickly repair the inverter”.


Financial impact

Using the example of the SolarMax 30 kVa inverters, not replacing the inverter could easily cost €7.5k a year (assuming 1000 kwh/kwp and an ‘old’ plant with a €0,25 FiT). On the other hand, replacing the old inverter for a new inverter of a different brand could easily cost €5-7k as well. Including labor costs and the potential costs of having to adjust plant infrastructure to the new inverter, this could come close the same costs as waiting a year. A nuance that can be placed here, says Neumeyer, is that in most cases it wouldn’t be that all three of the power plates fail at the same time, which means losses would be roughly one third of the aforementioned costs.


Potential SolarMax scenarios

There are a few potential scenarios that come to mind at this point. One of these could be that some SolarMax employees stick together to form a service company, specialized in these inverters. Another option is that the inverter service, which is still a valuable asset that the company possesses, is sold to a service provider.
While it is pure speculation, an ‘REC or Sunways scenario’ should normally not be unthinkable either, meaning that a Chinese company could take over SolarMax to (further) establish a European presence, such as what the Shunfeng Group is attempting to do. “This could usually be a possibility”, adds Neumeyer, “however in such a case it could easily take up to a year before SolarMax would be back to normal business”.


Future risk of similar bankruptcies

Cormac Gilligan, Senior Solar Analyst at IHS, states that “while there have been some market exits, there is still a large number of solar inverter manufacturers. The major issue, is that the European market is very competitive and new suppliers, such as Chinese inverter manufacturers, have entered the European market to fill the gaps left by the other bankrupt companies. It is quite possible that in the next five years or so, we will see a combination of mergers, acquisitions, and at times, bankruptcies."


Bigger problems with newer inverters

From the asset manager perspective, Gallego has noted that the problems arise when inverters are newer and under warranty, which on average lasts 2-5 years, though customers can pay extra for longer warranty periods. For the inverters installed around 2008, the risk of damage is lower to the plant because the inverters are either out of warranty, or are about to expire. In the case of the newer inverters, however, the SolarMax technology is now obsolete and replacements would be challenging to find. Luckily, despite the added difficulties, there are O&M contractors in existence who are working on providing pieces of equipment to plant owners with damaged inverters that can adequately replace SolarMax’s equipment.


Looking forward

First of all, the fact SolarMax has filed for insolvency, does not mean it is permanently out of the inverter manufacturing market. From the outside it’s hard to predict what still could happen. It’s for sure a good example of the still very ‘dynamic’ PV market and urges for approaches and strategies to be developed to face these kind of situations. For instance, many portfolio owners do not have a defined ‘spare part strategy’, which could cause problems in situations such as the ones discussed here, expresses Stefano Cruccu, Project Manager from Solarplaza.






Topics like the above are discussed at the Solar Asset Management conferences which Solarplaza organizes around the world. The first of these events coming is Solar Asset Management North America , coming up in San Francisco on April 1-2, 2015.

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