Limitations with Traditional Inverters
In today’s solar installations, solar modules are connected together in series and parallel combinations, where power is transmitted from module to module until it reaches the central, or string, inverter. This single inverter converts the DC output of the solar modules to the AC power used in homes, businesses, and the utility grid.

Unfortunately, whenever the performance of even one module is impaired, there is power loss along the entire string. The weakest module limits the energy production of the entire string. A degradation in performance of a single module can occur from a variety of sources, such as shading or soiling. A very small amount of shading or soiling, affecting just a few cells of one module, will significantly reduce the power output of the entire string. Another source of performance degradation is the mismatch between modules. Solar modules ship from the factory with slightly different voltage and current characteristics and this “mismatch”, which is unavoidable, further reduces the power output from a solar installation when using a central inverter. 

In a traditional solar installation, shading, soiling, and mismatch issues typically reduce the power output of the system between 5% and 25%. During the 30 year life of the modules, this problem only gets worse. A study performed by Kema, Inc. for the California Energy Commission revealed that 85% of residential and small commercial solar installations have shading, despite the best intentions of installers to avoid it. Soiling and panel mismatch cannot be prevented by system integrators and installers.

Central inverters are the least reliable part of any solar installation. Approximately 70% of all field issues are related to the inverter. Because a central inverter is a single point of failure, a fault condition with this unit causes all energy production to cease until it can be repaired or replaced. This can often takes weeks.
 
Another major limitation with central inverters is that they are only able to monitor performance at the system level. There is no ability to know what is happening at the module level. Because of this limitation, failed or underperforming modules will normally go undetected and the system owner will get reduced energy production for the remaining life of the system.