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Global solar inverter shipments are forecast to decline in 2025 and 2026.
The downturn follows record installations in 2024, the report says.
China’s market is expected to shrink for the first time since 2019.
Europe faces a prolonged decline, while US demand may fluctuate.
Wood Mackenzie expects recovery in the early 2030s.
The global solar inverter market is set to contract for two consecutive years, declining by 2 per cent to 577 gigawatts AC (GWac) in 2025 and by a further 9 per cent to 523 GWac in 2026, according to consultancy group Wood Mackenzie’s latest market outlook for 2025.
The downturn follows record shipments in 2024 and reflects rising uncertainty across major markets including China, Europe and the United States.
Solar inverters are a crucial part of a solar power system and convert the energy output from solar panels into a usable electricity form.
“The solar inverter industry faces a period of strategic realignment as manufacturers navigate evolving market dynamics and regulatory frameworks,” said Joe Shangraw, a research analyst at Wood Mackenzie, in a statement. “After years of exponential growth, continuous shipment expansion is no longer realistic, even for the top global inverter manufacturers.”
He added that vendors would need to adapt to new demand drivers to remain competitive, including hybrid solar-plus-storage systems, retrofits and repowering, enhanced cybersecurity features, 2,000-volt architectures and grid services.
China’s inverter market is forecast to decline by 5 per cent in 2025 to 304 GWac, marking its first contraction since 2019. Despite near-term uncertainty during the transition between the country’s 14th and 15th five-year plans, China is expected to retain its dominance, with cumulative inverter demand exceeding 2.9 terawatts AC (TWac) through 2034.
Elsewhere in the region, Asia-Pacific markets excluding China are projected to grow to 89 GWac in 2025, supported by major investments in domestic manufacturing and expanding rooftop solar segments in India and South-east Asia.
While China faces policy uncertainty, Europe and the United States face different challenges. Europe is expected to experience a sustained decline, while the US market faces volatility driven by policy changes.
European inverter shipments are forecast to fall from 88 GWac to 83 GWac in 2025 and to decline further to below 75 GWac a year by 2032. Wood Mackenzie attributes this to persistent inventory challenges and lower capture prices for utility-scale projects in key markets such as Spain.
In the United States, shipments are expected to reach 47 GWac in 2025 before falling by 22 per cent in 2026, as tax credits under the Inflation Reduction Act are phased out.
Inverter prices are continuing to fall across all product categories, driven largely by competition from Chinese manufacturers and ongoing technological advances.
Module-level power electronics (MLPE) continue to show wide regional price differences, with prices in the US more than 50 per cent higher than global averages. This reflects the efforts of market leaders Enphase and SolarEdge to compete with a growing number of Chinese vendors in Europe, Latin America and the Asia-Pacific region.
Hybrid inverter prices fell by 13 per cent in 2024, as DC-coupled, battery-ready systems became standard offerings from major manufacturers including Huawei, SolarEdge and Tesla.
Utility-scale inverters are seeing the steepest price declines. Chinese domestic three-phase string inverter prices are expected to fall below $0.02 per watt AC, while central standalone inverters are projected to approach $0.01 per watt AC by 2034. Wood Mackenzie said intense competition among leading Chinese suppliers such as Huawei and Sungrow is driving aggressive pricing, alongside a shift towards larger unit sizes of 350–400 kilowatts AC and falling costs of silicon carbide semiconductors.
Concerns over the cybersecurity risks associated with inverter remote-access capabilities are gaining traction among governments in both Europe and the US, with stricter regulations expected from 2026.
“Cybersecurity concerns could reshape the competitive landscape between domestic and foreign manufacturers,” Shangraw said. “Europe is likely to expand on the Cyber Resilience Act with additional software, reporting and remote-access requirements that could create economic or logistical barriers for foreign manufacturers. Meanwhile, Republican lawmakers in the US are urging the Department of Commerce to restrict Chinese inverter imports, adding uncertainty for both foreign and domestic players.”
Despite the current downturn, Wood Mackenzie expects the market to recover over the longer term.
“Following the current downturn, we expect the solar inverter market to recover and surpass its 2024 size by the early 2030s,” Shangraw said. “Electrification, AI-driven demand growth and a cyclical repowering market will provide a solid foundation for inverter demand over the next decade. Companies that navigate today’s challenges while investing in next-generation technologies will emerge stronger when the market recovers in the late 2020s.”