* Prices under pressure, dropped 17 pct in 2016 - CFO
* Chinese market expected to shrink by 30 pct in 2017
* 2016 net income at 29.6 mln euros, up from 14.3 mln (Adds quotes, details on new strategy)
By Christoph Steitz
FRANKFURT/DUESSELDORF, March 30 (Reuters) - SMA Solar , Germany's biggest solar company, plans to expand its energy management business, hoping the market will have higher entry barriers for Chinese competitors than its core business of making invertors to feed solar power into the grid.
SMA Solar is the world's largest maker of solar inverters, a key component in solar plants that convert direct current generated from panels into alternating current, where it competes with the likes of SolarEdge and ABB.
But that market has got a lot tougher since China, the world's largest market, has curbed support to its domestic industry, leading local suppliers to flood other regions with their products and pushing down prices.
Among the products in its new drive, SMA will launch software that enables commercial clients such as supermarkets to monitor energy flows from systems based on solar panels, air ventilation, storage and heating, and optimise their costs.
"That is the trend in the energy sector we see over the next three to five years," Chief Executive Pierre-Pascal Urbon told journalists at the group's annual press conference on Thursday.
Prices for inverters have tumbled by an average of 10 percent per year since 2010, SMA said, echoing remarks from panel maker SolarWorld a day earlier.
"Last year, it was even 17 percent," SMA Chief Financial Officer Ulrich Hadding said.
New energy management products will drive profitability from next year onwards, Urbon said, declining to be more specific about the potential size of the market SMA is targeting.
Urbon said the group was planning to enter into cooperation deals in energy management, where utilities including Innogy and E.ON as well as engineers such as Siemens and General Electric are vying for dominance.
SMA is forecasting falling sales and profits this year, but proposed a dividend of 0.26 euros per share for 2016, almost twice what it paid for 2015 after efficiency gains led its net profit to double to 29.6 million euros ($32 million).
$1 = 0.9302 euros Editing by Mark Potter