Enphase Sales to Grow as Rooftop Solar Shifts, CEO Says

Enphase Energy Inc. (ENPH), which has increased 39 percent since its shares began trading March 29, expects a technological shift in the rooftop solar market to spur demand for its microinverters.

Enphase had about $150 million in sales last year and Chief Executive Officer Paul Nahi expects that to grow this year as solar companies seek ways to reduce system costs and offset declining government subsidies.

Solar panels require inverters that convert the direct current generated by the photovoltaic process into alternating current used on the grid. Most current systems use a few, large inverters and Nahi said residential projects are starting to use microinverters wired to each panel individually, an approach that’s less expensive to install and may boost performance.

“Everybody is recognizing that there’s a wholesale shift” occurring, Nahi said in an interview today. “The entire residential global market will be microinverters.”

Enphase was one of two renewable-energy initial public offerings this year. Two other companies withdrew their registrations in April, the solar-thermal developer BrightSource Energy Inc. (BRSE) and the ethanol producer Enerkem Inc. Renewable Energy Group Inc., a biodiesel maker, debuted in January.

Enphase’s share of the California inverter market is about 28 percent for residential systems and 16 percent for commercial systems, according to the California Solar Initiative, a state incentive program.

The global inverter market is about $7 billion a year, Nahi estimated.

‘Plug and Play’

Microinverters let system owners and installers monitor the performance of individual panels and make adjustments as needed to optimize performance. Incorporating the inverter into each panel simplifies installation because there’s no need to wire them to centralized inverters, Nahi said. The idea isn’t new and is now starting to take hold in the solar industry.

“It’s plug and play,” he said.

Conventional inverter suppliers SMA Solar Technology AG (S92), Power-One Inc. (PWER) and SunPower Corp. (SPWR) are expected to introduce microinverter products this year, Enphase said in a March 26 filing.

“All manufacturers, anyone who does inverters, will tell you that they are working on microinverters,” Nahi said.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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