The challenge for any of the players in the inverter market is that the IP behind inverter implementations does not create a sustainable barrier to entry. We discuss how the inverter market has evolved over time. However, that quality perception has changed over time. Micro inverters, a primary example of MLPEs, are deployed at a module level and are an extreme form of distributed functionality where each module can be monitored and controlled individually. 1 0 obj A variant of the microinverter technology that uses a different architectural partition to achieve benefits similar to the microinverters is the optimizer. There is one public company that appears to be staking a leadership claim when it comes to integratable inverter IP - Ideal Power (IPWR). This centralized power conversion model worked well for residential, commercial, and utility scale deployments until the turn of the current decade. The platform is about growth oriented investments primarily in market leaders and technology leaders. We review why SolarEdge is succeeding while Enphase is failing. The competition in the MLPE space is likely to be intense and semiconductor players like Maxim Integrated (MXIM) will increasingly take market share away from the other players. I have no business relationship with any company whose stock is mentioned in this article. <> I am not receiving compensation for it (other than from Seeking Alpha). A lot of views tend to be controversial, against the grain, and remarkably accurate. Setting aside the competitive claims of these technologies, both offer the following key advantages compared to central and string inverters: While central and string inverters are impossible to beat when it comes to deployed cost per watt, the above-mentioned advantages mean that optimizers and microinverters can dramatically improve the safety and increase the energy (kWh) ratings of the systems. Disclosure: I am/we are long SEDG. Investment philosophy is long term buy and hold with average holding time of several years. Where emerging technology and truth converge. Consequently, in this article, we do not delve much into the utility inverter opportunity but focus more on the distributed generation side of solar deployment where there are more ready investment opportunities. We also cover other entrants in the inverter market. At a high level, the DG inverter space has split into two categories - central/string inverters and Module Level Power Electronics. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 9 0 R] /MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> The long-term failure rate of optimizers is likely to be substantially below that of microinverters. Huawei is also expected to announce an optimizer solution in the second of this year. Due to these reasons, activity in the optimizer space is starting to ramp up. Enphase (NASDAQ:ENPH) is the dominant microinverter vendor in the market. Until about a decade back, an inverter in a solar system was the rough equivalent of a mainframe computer for computing. for investor consideration. In investing, people typically talk about high risk, high reward. 'l>9|5r ^,B The company's product line will be increasingly marginalized as we move towards next generation solar modules. Beyond the Hype is different because it is dedicated to cutting through management and Wall Street commentary and providing fresh and insightful perspectives on companies and investments. At Beyond The Hype, we would like to do a little better. endobj Due to the low rate of innovation and adverse ASP and margin trends, we do not find this segment to be a good candidate for investor consideration. What is probably less known is the rate of change and underlying reasons for the change. Given the increment expense of servicing a failed part on a residential rooftop, optimizers can be attractive for investors with a long-term view on the energy yield. In the image below from a recent GTM article about SMA investment in Tigo, note that while the "Smart Module" quadrant is busy, there is very little activity in the "AC Module" quadrant. Author of Beyond the Hype, a comprehensive emerging technology stock analysis and discussion service on Seeking Alpha Marketplace. The biggest story of 2015 in the MLPE market was the clash between Enphase and SolarEdge. Enphase could have a viable path with proper strategic approach and hard-nosed management, but the company is currently struggling to survive. I wrote this article myself, and it expresses my own opinions. When it comes to distributed generation, the progression of inverter technology has been similar to the utility side and, in many ways, more dramatic. 2 0 obj D\%o.\Qjypx%"T"Mo`azw7pSy8A|i6YQes}I6/ac;xPY(x= " It should be noted that in the residential/commercial context, the differences between central and string inverters are generally ignored, and both of these are lumped into a single category. However, SolarEdge appears to be up to the challenge and could end up being one of the few players that will survive the transition to "Smart Modules". These microinverters do not provide ROI at utility scale but can be attractive at residential and commercial level. We see through hype, show the true value of companies, and make investments safer. As the technology march continues, the inverter functionality is likely to be integrated into other products. Currently, Chinese inverter vendors are considered bankable and have been growing market share at the expense of earlier western leaders. <> %

3 0 obj Currently, we focus on identifying and investing in the semiconductor, renewable energy, storage, EV, autonomous vehicle, CPU, and GPU markets. endobj Our motto is: Low Risk, High Reward. Because of the lower cost, higher reliability, and lower power dissipation, optimizers are well suited for integration into solar modules.

However, given its sub-$50M market cap, any meaningful design wins, either on the product side or on the IP side, can move the stock price in a big way. I wrote this article myself, and it expresses my own opinions. A look at product line of the market leader SMA Solar sheds some light into the types and capabilities of various inverter types, including central inverters, string inverters, and micro inverters. Coming back to the battle between Enphase and SolarEdge, it is clear from market shares and stock prices of these companies that optimizers are winning the battle against microinverters. Recent Tesla (TSLA) drive to integrate inverters into batteries is one example. The utility inverter market is dominated by "big metal" players such as ABB (ABB), Huawei, SMA Solar, and Sungrow. While some analysts and Seeking Alpha authors seem to lump these two in to the same category, technically, that is inaccurate. Generally speaking, the rate of innovation in this extremely cost-sensitive market has been limited, and increasingly, the low-cost Chinese players are starting to gain market share. 370-390WMWT Mono PERC Half-Cut Module & All Black Module, Sunport Power Solar PV Flexible Modules Installation and User Manual, SPP-LV3-QAM(T)-02 SUNPORT Limited Warranty, SPP-LV3-QAM(T)-02 SUNPORT Limited Warranty_V1811_AUS 20201027, SolarEdge 300W Mono PERC Smart Module (P370), StorEdge SE3000 SE6000 Single Phase Inverter with Backup, SolarEdge SE5K SE8K Resi 3 Phase Inverter, SolarEdge SE15K SE27.6K Commercial 3 Phase Inverter, SolarEdge Synergy SE50K SE82.8K Commercial 3 Phase Inverter, SolarEdge P650 P850 Commercial 2 to 1 Optimiser, Limited Warranty for Single Glass Solar PV Modules 2020, Sungrow SG2K-S SG3K-S Gen 2 Single Phase, Sungrow SG3K-D SG6K-D Gen 2 Single Phase, Sungrow SG5KTL-MT Three Phase Gen 2 Inverter, Sungrow SG10KTL-M 12KTL-M Three Phase Gen 2 Inverter, Sungrow SG15KTL-M 20KTL-M Three Phase Gen 2 Inverter, SPI Single-Phase String Inverter 1.5kW-6kW, SPH Hybrid Single Phase Inverter 3.6kW-5.0kW, SPI12K-BL to SPI20k-B Three-Phase On-Grid String Inverter, SPI5K-B to SPI10K-B Three-Phase On-Grid String Inverter, SPI Single-Phase String Inverter User Manual, SPH Hyrbid Single-Phase String Inverter User Manual, Kehua Wi-Fi User Manual (Solarman Mobile App), Solis 3p smart meter with CT installation guide, Solis 24-hour Consumption Monitoring with Smart Meter, Sunnyboy SB1.5 2.5 AV-41 SMA Smart Connect, Sunnyboy SB3.0 6.0 AV-41 SMA Smart Connect, Sunnyboy SBS3.7 6.0 StorEdge AC Couple HV Single Phase, SMA STP15000 25000TL-30 Three Phase Inverter (MIG), Huawei Single Phase SUN 2000L-5KTL Inverter, Huawei Three Phase SUN 2000-5KW TL-M0 Inverter, Huawei Three Phase SUN 2000-10KWTL-M0 Inverter, Huawei Three Phase SUN2000-8-20KTL-M0 Inverter, Aoboet UhomeNCA 6.8kW/LV Lithium Battery Storage, Aoboet UhomeLFP 5.8kW/LV Lithium Battery Storage, Gamcorp_ Array Frame Engineering Certificate_ Roof Mount Tilted Array Frame System, Gamcorp_ Array Frame Engineering Certificate_ Tile Roof Mount Flush Array Frame System, Gamcorp_ Array Frame Engineering Certificate_ Tin Roof Mount Flush Array Frame System, Aluminium Alloy Protection Cover for DC Isolator Switch, ZJ BENY SAA Compliance Document and Manual 1000 1500V. It is not that AC Modules are not a good solution; the problem is that AC Modules do not scale well with large systems. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Going forward, we expect the MLPE market to move increasingly towards modules with integrated optimizers (DC Modules or Smart Modules) compared to modules with integrated microinverters (AC Modules). From a utility scale perspective, the large central inverters are increasingly being replaced by smaller string inverters. Beyond the Hype is different because it is dedicated to cutting through management and Wall Street commentary and providing fresh and insightful perspectives from a mid-market M&A consultant specializing in the technology and energy industries who's also been an individual Investor for over 25 years. stream We do not believe there is much market for integrated solutions today, but it will be an interesting development to watch. However, this model started evolving due to the constant increase of power produced by modules over time and the realization that a distributed architecture would work better for scalability, performance, and cost. In 2016, one of the leaders of the PV inverter space, SMA Solar Technology AG, announced that it is making an equity investment in optimizer player Tigo. Editor's Note: This article covers one or more microcap stocks. Please.

To say that the solar inverter market is changing would be stating the obvious. A comparison of microinverter and optimizer as well as SolarEdge's and Enphase's claims and counterclaims can be seen here and here. endobj Judging by the company's revenue and profit trends, it is easy to argue that Ideal Power does not even deserve to be a public company. Consequently, in this article, we do not delve much into the utility inverter opportunity but focus more on the distributed generation side of solar deployment where there are more ready investment opportunities. I am not receiving compensation for it (other than from Seeking Alpha). However, note that this movement towards "Smart Modules" does not ensure the success of SolarEdge. With a $20M deal for 27% equity, SMA also got a board seat, exclusivity for marketing certain products, and an agreement to work together with Tigo on various products and technologies. Is this happening to you frequently? 8HUI gcH__ IT* xT2. In our view, the above is one of the most telling pictures about the future of Enphase. Please disable your ad-blocker and refresh. This can be a major consideration for lease/PPA providers selling 20/30 year energy contracts to customers. 4 0 obj Please be aware of the risks associated with these stocks. %PDF-1.7 Consequently, when measured in terms of cost of energy and cost of operations, MLPEs have much to offer in select situations. However, many an investment opportunity does get formed at such early stages. There are three main reasons for optimizers winning the battle in the market: In a typical system with 10 or more panels, optimizers deliver a compelling cost advantage at the time of installation. x=isF] a.$_-_kiJ%"A,@k_w}X${z\/yiYU~;9_'c~z98\,g/__>KQ2 If you have an ad-blocker enabled you may be blocked from proceeding.

Ability to monitor and control each independent module in the system, Ability to remotely turn power off at the module (emerging fire safety requirement), Ability to maximize module performance when not all modules are facing the same direction or have varying tilts, Ability to maximize system performance when some of the modules are shaded. At a conceptual level, the difference between a central and a string inverter can be seen in the image below. As with many products, there was some initial aversion to adopting Chinese products perceived as low quality. Ideal Power's inverter IP is similar to that of SolarEdge, and there is a fair chance that the company may see some significant penetration in commercial and small utility scale applications. I have no business relationship with any company whose stock is mentioned in this article. <>/Metadata 779 0 R/ViewerPreferences 780 0 R>> SolarEdge (NASDAQ:SEDG) is the dominant optimizer vendor in the MLPE industry. From an investor viewpoint, SolarEdge remains the only viable investment candidate in the space for the time being.

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