Nanalyze

Will SolarBridge Micro-inverters Challenge Enphase?

When building a photovoltaic system that can capture solar power, one key piece of equipment needed is an inverter to transform the DC power generated by the solar panels to AC power which can then be used by ordinary household appliances or fed back into the electrical grid. Previously we highlighted SolarEdge, a company that sells a single conventional inverter which can be used by multiple solar panels. An alternative approach to using a single conventional inverter is to instead attach a mini-inverter to each solar panel.  Each method has its advantages and disadvantages as highlighted in this article published by Green Tech Media. One startup which is betting on the micro-inverter method is SolarBridge.

About SolarBridge

Austin based SolarBridge Technologies was founded in 2004 to commercialize power electronics technologies created at the University of Illinois. In 2009, the company changed their focus exclusively to micro-inverter and monitoring solutions for the solar industry. The company has taken in over $100 million in funding so far from the likes of Battery Ventures, Rho Capital Partners, the U.S. Department of Energy, Constellation Ventures, and Shea Ventures.

Solarbridge versus Enphase

Solarbridge plans to differentiate its micro-inverters from the competition by offering unmatched reliability. They claim to be the only micro-inverter company offering a 25-year warranty for a module-integrated micro-inverter.  However, this reliability comes with a cost. A recent GTM Research report,The Microinverter and DC Optimizer Landscape 2014, notes that Solarbridge’s “cost structure is still the highest in the market, which is a bad place to be in the solar industry.” The report estimated 2013 shipments for SolarBridge at roughly 100,000 units, with the market leader Enphase (NASDAQ:ENPH) shipping 1.6 million micro-inverters in 2013. While “micro-inverters” don’t sound like the sexiest technology to invest in, the potential for significant revenue growth is very real. While market leader Enphase continues to operate at a loss, their revenue growth over the past 5 years has been impressive:

Enphase_Revenues

In an article last month by Greentech Media, Craig Lawrence, the VP of marketing at SolarBridge was quoted as saying the following regarding their most recent funding round of $42 million last month:

The new funding will be used to develop a large sales and marketing effort, as well as “bulking up in R&D.” Lawrence notes that the “competitive and regulatory landscape [for inverters] is going to get pretty treacherous.” He said that the firm is developing next-generation features to meet new utility “command and control” features imposed by CPUC Rule 21. Lawrence spoke of the need for the inverter to provide control over reactive power and ramp rate. He said that a number of other microinverter vendors are not prepared for these requirements.

It’s hard not to believe that Enphase isn’t prepared for these requirements. Enphase has spent over $115 million in R&D over the past 5 years spending $34.5 million in R&D during 2013 alone.

In its PV Inverter World Market Report – 2013IHS Research reported that in 2012, Enphase (NASDAQ:ENPH) was the number one residential PV inverter supplier in the Americas with 53.5 percent market share, however, returns for Enphase shareholders have not been so spectacular. If you became an investor on the day of the Enphase April 2012 IPO, you’d be up just +4% to date having to endure a paper loss of over -70% in late 2012. While Enphase may be the market leader for now, companies such as SolarBridge need to be watched closely to see if their “reliability” value proposition truly stands to displace the Enphase micro-inverters.

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  • Inverter Herder

    “Will SolarBridge Micro-inverters Challenge Enphase?”
    Short answer: Nope.

    ENPH has the lion’s share, but SolarEdge is creeping up on that module level power electronic market now. I think people are realizing that ENPH just isn’t a good company to work with and that ENPH promised more than they can actually deliver- just ask the Hawaiians…

    Don’t hear much about Power One micros and SMA is kind of getting out there with theirs because of their reputation, but SolarBridge?

    • Nanalyze

      Thank you very much for the comment. We’ll look to highlight other “micro-inverter” companies in future articles.

  • MotoMike

    First of all, a 25-year warranty is not unmatched since that is the current Enphase warranty. Power One is 10-year and SMA is 5-year. I don’t really care what Renesola offers.

    Secondly, combining a solar panel and a micro-inverter is nothing new. Also known as an AC panel or grid-ready module, these have been around for years. Over 5 year ago, Enphase teamed up with Akeena Solar to make an AC panel and LG has an Enphase based “GridReady” panel and there are other Enphase based AC panels on the market as well. It’s nothing Enphase hasn’t long-ago thought of.

    They sounded clever at the time but they really don’t sell like you’d think. Contractors want flexibility and they don’t like being roped into a certain panel dimension, brand or output when designing a system.

    Enphase is thriving in a market of ever-decreasing panel prices since they can mate their micro-inverters to just about any panel you buy.

    And as the author states, building these combo-things just fixes the unit price at a level that most simply will not pay. I can’t believe that someone is re-trying this so late in the game and calling it innovation.

    • Nanalyze

      Thank you for the comment and your perspective MotoMike. What is puzzling though is why knowing this information, three venture capital firms would still participate in the latest venture round of $42 million last month. Surely these venture capital firms would have performed extensive due diligence prior to making an investment of this size into Solarbridge. Do they know something we don’t about Solarbridge and/or Enphase?

      • MotoMike

        Thanks for tyour article BTW.

        I was wondering the same thing but there is a lot of money looking for a home in the alternative energy markets. $42 million really isn’t that much. Since it’s a private affair, they can tell their investors whatever they wish. Perhaps the VC’s think they can sell it to the public with the right underwriter for an IPO? I’m only sort of joking. The solar market is known to have large future growth potential so it takes far less lipstick to sell the . . . you know ;-D

        I looked around a bit more and found more comments from contractor/installers and even owners who bought the combo products where one side of it has failed. They’re lucky if they can even figure out which part failed. If it’s Enphase based, the inverter should tell them what’s up but it won’t matter since warranty requires replacement of the entire combo unit. If it’s odd-ball stuff, they can’t go out and buy a replacement component on the open market. BenQ has also been selling all-in-one AC panels for quite a while. (search PM240PA0). I’m fairly sure they use Solarbridge inverters or possibly Power One inverters. Sorry, not sure.

        Depending on the age of the panel or inverter that needs replaced, they may never be able to replace the component so now they have a tooth missing in their solar array. Solar panel dimensions change constantly and they are nearly always installed side-by-side. If a panel fails and you can’t find one of the exact same dimensions, you’re buggered. Three or four years could be enough time for something like that to be unserviceable. If either side fails on a Solaredge (Solarland in Australia) they must replace the entire combo unit, if they’re still around to do that.

        During installation, the combo units are a bit faster. From a future maintenance view, it truly is preferable to have separate components from well-known manufacturers using common connectors. IMHO

        • Nanalyze

          Thank you for the additional info MotoMike. We’ll have to wait and see which exit strategy the VCs manage. At least in the case of an IPO, we can get a good look under the hood to see just what progress they’ve been making.

  • Craig Crouch

    RE: “the most sexiest technology” and “It’s hard not to believe that Enphase isn’t prepared for these requirements. ” I recommend you have an editor review your writing for grammar. …Unless you are being campy, in which case you really got me!

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