Global solar inverter market faces two-year decline before stabilising, Wood Mackenzie forecasts

The global solar inverter market will contract for two consecutive years, declining 2% to 577 Gigawatts AC (GWac) in 2025 and a further 9% to 523 GWac in 2026, according to Wood Mackenzie's latest 2025. The downturn follows record shipments in 2024 and reflects market uncertainty across major regions including China, Europe and the US.  

“The solar inverter industry faces a period of strategic realignment as manufacturers navigate evolving market dynamics and regulatory frameworks” said Joe Shangraw, Research Analyst at Wood Mackenzie. “After years of an exponential rise in solar inverter demand, continuous shipment growth is no longer realistic for even the top global inverter manufacturers. Instead, vendors will need to adapt to new demand drivers to stay competitive: hybrid solar-plus-storage systems, retrofits and repowering, cybersecurity features, 2000-volt architectures, and grid services.” 

Chinese market sees first decline since 2019 

China's inverter market will decline 5% in 2025 to 304 GWac, marking the first drop since 2019. Despite this near-term uncertainty between the 14^th and 15^th five-year plan, China will maintain its dominance with over 2.9 Terawatts AC (TWac) of cumulative inverter demand through 2034. Meanwhile, the Asia Pacific region excluding China (APeC) will grow to 89 GWac in 2025, supported by major investments in domestic manufacturing and emerging rooftop photovoltaic (PV) segments in India and Southeast Asia. 

Europe sees sustained decline, while US prepares for volatility  

While China grapples with policy uncertainty, other regions face their own distinct challenges. European and US markets present contrasting challenges, with Europe facing sustained decline while the US experiences policy-driven volatility. European inverter shipments will drop from 88 GWac to 83 GWac in 2025, continuing to decline below 75 GWac annually by 2032 due to persisting inventory challenges and reduced utility-scale capture prices in key markets like Spain. The US market will reach 47 GWac in 2025 before declining 22% in 2026 as Inflation Reduction Act tax credits are phased out. 

Inverter pricing declines as competition intensifies  

Inverter pricing continues its downward trajectory across all product categories, driven primarily by Chinese manufacturing competition and technological advances. Module-level power electronics (MLPE) maintain significant regional price disparities. US MLPE prices are over 50% higher than global averages, as market leaders Enphase and SolarEdge must compete against a growing number of Chinese vendors in Europe, Latin America, and APAC markets. Hybrid inverter prices also declined 13% in 2024 as DC-coupled battery-ready systems become standard offerings from major manufacturers like Huawei, SolarEdge, and Tesla. 

Utility-scale inverter pricing faces the steepest declines, with Chinese domestic three-phase string inverters expected to fall below US$0.02/watts AC (Wac) and central standalone inverters approaching US$0.01/Wac by 2034. Competition between leading Chinese vendors including Huawei and Sungrow forces aggressive pricing strategies, along with a shift towards larger unit sizes of 350-400 Kilowatts AC (kWac) and reduced costs of silicon carbide semiconductors.  

“Cybersecurity concerns over inverter remote-access capabilities are gaining significant traction in both US and European governments, with stricter policies expected in 2026 that could impact the competitive landscape between domestic and foreign manufacturers,” said Shangraw, Research Analyst at Wood Mackenzie.  “We expect the two regions to follow different strategies to address cybersecurity concerns. Europe is expected to expand upon the Cyber Resilience Act by introducing additional software, reporting, and remote-access requirements that could serve as economic or logistical barriers to foreign manufacturers. Meanwhile, Republican lawmakers in the US are urging the Department of Commerce to implement restrictions on Chinese inverter imports, adding uncertainty to the roadmap for both foreign and domestic manufacturers. 

Shangraw continued, “Following this current downturn, we do expect the solar inverter market to recover and even surpass the 2024 market size by the early 2030s. Electrification, AI demand growth, and a cyclical repowering market will provide a solid foundation for inverter demand over the next decade.  Companies that navigate the current challenges while investing in next-generation technologies will emerge stronger when the market recovers in the late 2020s.”