Energy & Resources

The brains on the panel

Huawei moves deeper into solar power with new types of power inverters


Huawei’s string inverters allow faults to be found faster

What turns a country into a superpower? In economic terms nations that produce the most goods and services have an edge, or those that can amass the most capital to spend on them.

Another factor is how successfully a country can generate and distribute its energy supply. That is what helped the British rise to global prominence during the eighteenth and nineteenth centuries when the nation was the first to harness the power of steam and coal. This industrial revolution transformed the UK economy and the British brought these advances to the rest of the world, adding new technology like telegraphs and trains.

The US dominated the last century after it spearheaded the next round of revolution in the energy world, led by oil. New technology came with it, including telephones, televisions and cars.

In the current century, the energy world is more focused on renewables and, more specifically, integrating advances in green energy with next-generation applications of the internet.

In his book, The Third Industrial Revolution, US academic Jeremy Rifkin describes this stage of human development as one that will be powered by the ‘Energy Internet’.

And one of the companies dominating the sector looks (as you’ve probably guessed) like being Chinese. It is also a name that WiC readers are already familiar with: Huawei. The Shenzhen-based giant is better known for selling smartphones and telecoms infrastructure, although that is starting to change as it pushes into areas like cloud computing and autonomous cars. Huawei is also focusing its efforts on renewables – specifically technology products that manage energy production and distribution, and exploit artificial intelligence to boost their effectiveness.

Where the conventional power grid is concerned, Huawei has pioneered string inverters, which convert DC (direct current) energy produced by solar panels into AC (alternating current) power, which runs along the existing grid.

However, Huawei is also working on a different kind of energy router that can guide and manage how solar power is uploaded into the 23 ultra high voltage transmission network (UHV) that China hopes to complete by 2030 at a cost of $88 billion.

And then there are retail users who consume energy, but are increasingly producing it as well from solar panels fitted to their homes. The idea is to make millions more of them generators of power, and not just consumers of it. Chinese society could be as energy integrated in the not too distant future as it is digitally integrated today.

The foundation of Huawei’s success has always been its expertise in communications technology. This is what underpinned its rise in the smartphone sector and it is now powering its growing presence in the energy sector too.

Huawei describes the AI behind its string inverters as smart I-V curve analysis. In practical terms that means it can find degradation faults within solar panels. Its chips mine the data, looking for abnormal patterns as clues to problems such as cracked glass or hot spots.

Analysts say this functionality helped sales of string inverters exceed those of centralised inverters for the first time in 2017. While the latter are still cheaper on an upfront basis, the newcomers are better value over the lifetimes of a photovoltaic (PV) plant because they improve its operational effectiveness.

Huawei’s FusionSolar products also have low failure rates of just 0.5% per annum thanks to two design innovations: they cool down naturally rather than relying on fans and their screens are more weather resistant.

Huawei only entered the PV sector in 2013. Yet it was already making its presence felt in major markets within three years, just as it did by getting into smartphones a few years ago.

According to PV Magazine, Huawei became the world’s top inverter supplier in 2016 when it shipped products capable of handling 20GW capacity. In 2017, it passed the 30GW mark.

In 2018, it is believed to have crossed the 40GW threshold, giving it roughly 30% of global market share. Industry analysts say there is now clear water between Huawei and its main rival Sungrow (also Chinese), which manufactures centralised inverters.

Sungrow has long disputed the ranking, telling China Entrepreneur magazine last month that Huawei is better at self-promotion than anything else. All the same it signed a strategic agreement with Alibaba Cloud in 2015 to try to counter Huawei’s challenge. But as China Entrepreneur points out, Alibaba does not have the same expertise in communications technology as Huawei.

In the meantime China is powering ahead in terms of the amount of renewable energy that it connects to the grid each year. In 2017, it linked up 53.06GW of solar capacity, more than half of the world’s 98.9GW total. As of September it had cumulative installed solar capacity of 165GW, more than 50% above its original 2020 target.

In May, the government decided to slow down the connection rate in order to prioritise energy efficiency and control costs. So far this year, capacity growth is believed to have dropped by about a quarter compared to 2017. News of the slowdown fed through quickly into companies like Sungrow. The Shenzhen-listed group’s shares plummeted 75% between May (when the government announced the new approach) and the end of October.

However, they have staged a remarkable rebound since the start of November, rising nearly 30% over the first four trading days of the month. This is thanks to another about-turn by the government, with PV Magazine reporting that the National Energy Agency is poised to announce new installation targets of up to 270GW by 2020, plus a continuation of subsidies through to 2022.

Huawei, meanwhile, is forging ahead by improving the electronic routers that manage the way that solar power is uploaded to China’s growing UHV electric grid network.

UHV transmission heralds a return to the ideas of Thomas Edison, who lost the ‘war of the currents’ to Nikola Tesla more than a century ago. Conventional electricity transmission lines use AC currents. However, UHV lines work better with the DC currents that Edison pioneered. Their biggest benefit is being able to transport electricity over longer distances with minimal power loss. But they have been controversial in China for years because of the enormous investment UHV lines entail.

That debate seems to have ended, with UHV’s backer State Grid now putting up new pylons across the country. Indeed, China is the leading force for UHV transmission, thanks to its need to transport energy from the west (where most of its clean wind and hydro power is located) to the east (where more of the energy is required).

In a similar way to its railway manufacturers and their high-speed trains, State Grid plans to export the technology overseas when the effectiveness of the UHV network is proven at home. The Financial Times’ James Kynge wrote a lengthy article on this strategy earlier this year which is well worth reading.

Huawei’s chief energy scientist Liu Yunfeng told PV Magazine that its electronic routers are only an interim step. The Holy Grail for getting solar power flowing into the grid is a battery that can store energy until it needs to be uploaded. This technology will underpin a more profound revolution, which is starting to take shape in the retail sector with the launch of Huawei’s first product for homeowners (the FusionHome NetEco 1000S PV Management System), which allows customers to convert, manage and monitor their personal solar power production.

This is the ‘Energy Internet’ that Rifkin first described back in 2011.

Talking about Huawei’s energy ambitions, PV Magazine describes a company that is going from “pocket to socket”. Of course, one of the many challenges is whether it will get the chance to take its new products to new markets. The tariff war already means that competing products will be cheaper in the US unless Huawei moves its supply chain out of China. Israel’s SolarEdge and America’s Enphase have said they are doing just that, shifting to Mexico and Eastern Europe respectively from China. And then there are the typical security concerns whenever Huawei is mentioned within the Western world. In a recent review of Huawei’s FusionHome product, Australia’s SolarQuotes made the point that “there’s no spying going on here”. However, social media commentators aren’t so sure.

“Their converters are connected to your internet so be careful what you say,” warns one. “Your inverter could be listening.”

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.