According to a new report from Wood Mackenzie, the global solar inverter market is expected to contract for two consecutive years: a 2% decline to 577 GW/AC in 2025, followed by a further 9% drop to 523 GW/AC in 2026.
This decline follows record shipments in 2024 and reflects uncertainties in major regional markets, including China, Europe, and the United States.
“The solar inverter industry is entering a period of strategic adjustment, and manufacturers need to navigate changing market dynamics and regulatory frameworks,” said Joe Shangraw, a research analyst at Wood Mackenzie. “After years of exponential growth in solar inverter demand, continued shipment growth is no longer realistic, even for the world’s leading inverter manufacturers. Instead, suppliers must adapt to new demand drivers—such as solar-plus-storage hybrid systems, retrofits and upgrades, cybersecurity features, 2000-volt architectures, and grid services—to remain competitive.”
U.S. Inverter Market Braces for Volatility
The U.S. market is experiencing policy-driven fluctuations. WoodMac forecasts that, as the tax credits under the Inflation Reduction Act (IRA) taper off, the U.S. market will reach 47 GW/AC in 2025 before falling by 22% in 2026.
Prices across all inverter categories continue to decline, driven by competition from Chinese manufacturing and technological advancements. Significant price differences for Module-Level Power Electronics (MLPE) products persist across regions. MLPE prices in the U.S. market are over 50% above the global average, as market leaders Enphase and SolarEdge face increasing competition from Chinese manufacturers in Europe, Latin America, and the Asia-Pacific.
Hybrid inverter prices fell by 13% in 2024 as manufacturers like Huawei, SolarEdge, and Tesla integrated DC-coupled, battery-ready systems as standard. Prices for inverters in large utility-scale projects saw the most significant drop. By 2034, prices for centralized standalone inverters are projected to approach $0.01 per watt.
“Governments in the U.S. and Europe are increasingly focused on cybersecurity concerns related to remote access to inverters, with stricter policies expected in 2026, which could impact the competitive landscape between domestic and foreign manufacturers,” said Shangraw. “We anticipate differentiated approaches in these two regions to address cybersecurity concerns.”
Europe is expected to introduce additional software, reporting, and remote access requirements based on the Cyber Resilience Act, which could pose economic or logistical barriers for foreign manufacturers. Meanwhile, Republican lawmakers in the U.S. are urging the Commerce Department to impose restrictions on Chinese inverter imports, adding uncertainty to the future roadmap for both domestic and foreign manufacturers.
“After the current downturn, we expect a gradual recovery in the solar inverter market. By the early 2030s, the market could even exceed the scale of 2024, supported by the fundamentals of electrification, growing demand driven by AI, and the market for equipment replacement cycles. Manufacturers that navigate the current challenges and invest in next-generation technologies will emerge stronger by the late 2020s as the market recovers.”
