China’s Majors Well Placed, Other Than Huawei 

Chinese firms Huawei, Sungrow, and Ginlong Solis lead the global inverter market. It doesn’t help that Huawei in particular has been under the lens for its telecom business for a long time, leading to a ban on its use in India, the US and Canada and UK,  for instance. It had earlier exited the US inverter market in 2019. In other words, it has the kind of reputation that marketing will struggle to fix in most key markets. Expect reluctance to use its inverters, directly or even white labeled, to grow further in more markets.

Others like Sungrow, Solis, Sineng, Goodwe, Growatt etc have enjoyed strong runs in recent years, and will probably go out of their way to dispel any doubts, considering the quality of management and global exposure they all have. All these firms are familiar names across markets today, with a good reputation to match. Sungrow even has a manufacturing presence in India. Beyond that, it is scaling up a strong storage division that has already achieved notable success in various parts of the world. These firms have built in the kind of scale and presence across markets to effectively counter any misinformation around their brands, in no small measure due to their large and mostly satisfied customer bases now. They appreciate the future value of the success of their brands and business.

Government’s At Work

In the US, attention has ironically been on batteries rather than inverters until now. Mainly due to the impossibility of avoiding Chinese products currently, thanks to the Chinese dominance of the battery supply chain, especially Lithium batteries. The Senate introduced the Decoupling from Foreign Adversarial Battery Dependence Act, aimed at banning Homeland Security from buying batteries from six Chinese companies by 2027. In some other cases, utilities have announced plans to move away from Chinese inverters on their own.

India

In India, power electronics is expected to be a major focus area to build self sufficiency, constrained only by the high dependence on Chinese supplies for now. Targeting the same right now doesn’t make sense considering the restricted state of the local manufacturing eco system, even as the duty on imported inverters has been slapped on from 2021-22 and progressively raised to 20% to support local manufacturing. This was after withdrawing the concessional duty on solar power imports in 2021. With a high 40% rate on module imports, besides a recent anti dumping duty on solar glass as well, further rise in import duties on solar inverters would appear to be counter productive, especially when solar prices are not drawing in buyers as easily as earlier.

Europe Already Seeking Protection

European inverter majors have already been lobbying intensely for protection from Chinese players, in a repeat of the module manufacturing playbook that justifies it on energy security grounds.   The only thing holding back governments has been the huge price difference vis a vis Chinese products, going upto 3x in cases. With little complaints on quality or performance, there have been no compelling reasons to act.

Conclusion

Developers we tried to speak to also claim that they usually have their own firewalls to prevent any unauthorised communication. Expect stricter norms to be mandated for all in due course, besides more stringent checks and threats of punishments in case of missteps.

Perhaps most importantly, we might soon be looking at a situation where the Chinese government itself steps in to become a sort of guarantor for the bonafides of its manufacturers, as it has the most to lose in case of a crisis of confidence in its exports. That will mean a far more transparent and accessible regime for verifying quality and security checks.  Keep in mind that electronics exports as a category leads overall Chinese exports worldwide.

For China, being proactive would not be a bad thing at all, including offering Pharma-like access to foreign government inspections possibly. India knows it only too well, as firms have seen whenever a negative observation follows a US FDA inspection here. But being open has been a key part of its Pharma sector growing strongly. With most top Chinese firms listed on the stock exchanges, the implications of negative news is far higher than ever for them.