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An Enphase Energy Update

November 22, 2016

Enphase has been on a long roller coaster this year, but they’ve overcome each obstacle with the strength of a company set for success as we near closer to 2017. They’ve made it through difficult decisions (11% company reductions) and vulnerable stock options. Those who keep a close on eye on Enphase’s development already know that the company is a leader in microinverter technology. A recent Pew Research Study shows that 89% of US adults favor the expansion of solar in their communities, and Enphase is poised to be a leader in these markets as the renewable energy movement continues to grow.  

How will Enphase lead?

Enphase recently introduced their new AC battery storage product. Extending their product line from cutting-edge microinverters to now include cutting-edge battery storage is bound to include an even more viable market moving forward. Their AC battery storage market has already sold 70,000 units to Australia, and controls 50% of the residential storage market on the down-under continent. 

This AC battery storage unit provides lower upfront costs, higher performance (96% round-trip efficiency, most usable capacity with >95% D.O.D., and 2 cycles per day for faster payback and twice the value), greater reliability (built with lithium iron phosphate chemistry, minimum of 10-year expected life, and no single point of failure), and safer performance (safety certified by TUV Rheinland and no high-voltage DC). 

The AC battery storage works seamlessly with other Enphase home energy solution products, but Enphase wants their product to be accessible to even more customers. In the last few months, Enphase has announced partnerships with LG, JinkoSolar, and SolarWorld. All of these partners say that the AC module will be available and compatible with their products in mid-2017. 

In addition to the AC battery unit, Enphase is also working on a new smart meter solution called the Envoy-S Metered, a product that could be considered a utility scale installation that could significantly affect utility companies and solar homeowners. 

Overall, it is Enphase’s superior technology that will help them prevail in a competitive market. The laws of capitalism work well for solar product companies, and Enphase has the low price advantage. Developers recognize that their next generation microinverter must be smaller, cheaper, and more profitable for their company to continue growing. One of the strongest features of the Enphase microinverter is its “no single point-of-failure” technology that outperforms many other competing microinverter systems and companies. If one point fails, it does not affect the system as a whole. In other systems, if one point fails, the entire system fails. 

Though product roll-out is an important component for Enphase as it looks toward the year ahead, education is equally important. Enphase recently announced a new education initiative with Generac Power to “educate homeowners and distribution partners on the benefits of outage protection and solar generation.” Generac, a leading generator manufacturer, and Enphase plan to work together to produce product integrations that provide secure and cost-effective energy solutions for homeowners. 

Being a solar user does not make you completely independent of the grid. In a power outage, solar doesn’t replace the grid; however, a generator can. In a study considering solar homeowners in CA, HI, MA, and NJ , 18% already own a generator, while 47% of generator owners in these states say they are or would consider solar for their home. Solar and generators are completely complementary systems, and by pairing together, both Enphase and Generac will access entirely new markets. In early 2017, Spruce Financial will begin to offer solar-plus-generator financing for homeowners interested in creating a home energy solution that encompasses both solar generation and outage protection. 

Let's talk numbers

You can look at the product roll-out of any given company to gauge their impending success or doom, but you can also look at stocks, though that might be a bit harder and a little more risky. Looking at Enphase’s numbers from the last year, you can tell they’ve had some trouble. So they made company cuts; they re-envisioned what their products needed to be in order to protect their bottom line. In fact, the entire solar industry had a slower year than past years. Some regions have been affected less than others; however, in previous years, the smallest year-to-year growth experienced by the residential solar was 59%. This year, the year-to-year growth will be between 20 and 23%. Smaller, right? 

But Enphase is on the up and up. The 2016 Q3 marked the largest quarter ever of megawatts shipped, and revenue was up 12% from previous quarters. Oppenheimer changed the Enphase stock rating from “perform” to “outperform,” and justified the change by saying, “We believe Enphase is the clear leader in microinverters and continues to grow with core markets while expanding its addressable market segments.” 

Cowen also rated Enphase at “outperform,” saying “We are optimistic about the company’s entrance into the storage segment in 2016 which should allow it to offer a holistic energy management solution.” 

Moving forward

PV solar combined with energy storage creates a real threat to utility monopolies. For nearly 100 years, utility companies have held an advantage over the citizens of their town, big or small. You need energy, so you go to the place that sells it. No more! As utilities continue to grow greedier, homeowners are actually encouraged to go solar. By going solar, homeowners are actively resisting the greed of utilities and the monopoly they hold over the energy industry. 

Residential PV solar has the power to mobilize communities insofar as they are no longer completely dependent on their local utility company. When citizens speak up and act, the utility monopolies will have no choice but to respond with a change in business structure. Alternative energy advocates must remain steadfast in their belief that renewable energy is a priority in our country, and we must now cower to the bullying utilities or governmental policies. 

 

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