Enphase: The Secret Of Solar Success
Micro inverter company Enphase has been a fast growing success story in the solar industry and continues its global expansion from its US base. David Ridsdale of Solar UK recently caught up with CEO Paul Nahi to discuss future directions.
One of the first things that struck me about Enphase Energy as a company when they first began to make a splash on the international solar market a few years ago was how much they were like Silicon Valley companies I used to cover in an earlier editorial role. The company was very technically orientated and had a very specific mode of entry to new markets that reminded me more of tech giants like Cisco or Intel , rather than the companies that were involved in solar at that time.
It turned out to be no coincidence as the two individuals from the telecommunications sector were the founders of Enphase. Martin Fornage was a fibre optic engineer for Advanced Fibre Communications and Raghu Belur, previously a designer of high-speed optical communications equipment for Cerent are the founders of Enphase. Both men have strong technical prowess and the story goes the idea for Enphase came about when Fornage put solar on his roof and had challenges with the inverter. His engineer brain kicked in and he realised he could solve the issues he faced by developing a different type of inverter.
Fornage and Belur founded Enphase in March 2006 with the idea of developing micro-inverters at a time when inverters were only 10% of the overall cost and were considered no more important than any other balance of system component. At the end of that year Paul Nahi was invited to join the company as CEO. Nahi had been head of design at Crimson Microsystem, a telecom semiconductor company. Solar panels were the focus of the industry at the time with most research efforts looking at how to reduce costs while improving output. There were plenty to tell the start up that they were chasing too small a market.
Nahi tells a story how he coped with the early days of uncertainty by literally convincing himself that the plans were an exciting opportunity and that is how he would face the challenge. You do not have to be in Nahi's presence for long to realise that a tale of convincing belief, not only in himself, but in the workforce that was rapidly developing as the company went from success to success, was not an idle boast. Nahi is a gregarious man with a broad smile that carries to his eyes. He invests in the conversation, whatever the topic, with infectious enthusiasm. When he discusses Enphase products and the number one position he is aiming for, it is easy to believe he will see his plans through.
Sticking to plan
Building a micro-inverter is not a simple matter of shrinking a string inverter and Enphase spent more than a year testing the first version of their inverter containing a mixed signal chip co-ordinating and analysing the electronics in every unit, maintaining the 60 hertz frequency requirement of grid connected energy. The company takes a similar planned path when entering new markets. Enphase shipped its first microinverter in 2008 and have ridden a path of planned success ever since. The first market to conquer was the home territory of the USA and by 2008 Enphase held 50% of the residential market. They then expanded market by market, employing the same plan of entry each time. A key factor in the company's success is the close relationship they form with installers.
"We recognised early on that the installers were the people to be convinced of the product," says Nahi. "The focus had been on the panel efficiency but this was not a big issue for installers."
Enphase highlighted the safety aspects for installers as an initial selling point. A major factor for micro inverters rise in market share is that they make life easier for installers and increase safety for the worker and the consumer. String inverters required specialist electrical knowledge whereas a micro-inverter can in effect be installed by a handyman. With the ability to monitor each panel, energy harvesting is increased and areas unable to take on solar due to shading or house position can now do so.
"Installers are the ones who recommend product to the consumers," explains Nahi. "Developing local connections to installers is a foundation pillar of market entry for Enphase."
Enphase entered the European market in early 2011 with offices in France and Italy. They opened offices in Milton Keynes in 2012 and hired Paul Nightingale, a UK resident with global experience in the field, to lead the UK efforts. The first step in the plan was not to sell the successful product but to develop educational and training programmes for the country's installers. The company spent six months developing their network and convincing installers of the benefits in reducing install time while providing customers with good access to information from their investment.
"Every market entry is a huge up front investment for the company, said Nahi. "The UK market is attractive with strong growth predicted and probably the most stable policy in Europe at the moment."
The path may appear slow to some but the results have been impressive. Despite recent entry to the region, Nahi pointed out that Enphase now has around 20% of the French residential market and 6% of the UK market. A figure that will rise if previous history is any guide. A recent report from HIS stated that micro-inverter shipments worldwide are set to increase to 2.1GW per year in 2017, up from around 500MW in 2013. Although they are more costly than conventional inverters, micro-inverters can increase the energy harvest of a system compared to conventional devices, depending on location and shading.
Technical transparency
Early detractors of microinverters felt they were too technically advanced and any improvements did not merit the extra cost. The technically minded companies, such as Enphase, had a longer goal in mind and felt that the technology difference would sway most people and cost reductions that would come with success would increase market share. This has proven a solid model and their ability to repeat the process in new markets suggests a plan that many in the sustainable industry could use as an example. Nahi does not concern himself with negative press or fears that solar is only a part of an alternative energy source.
"Solar is not a science experiment for the consumer," explains Nahi. "Ignoring the negative commentary is the only option as the industry builds a future energy infrastructure. "
Enpahse is a technology company and they have been early adopters of strong data interface for the consumer and company. The communications systems attached to their inverters provide a level of information that some detractors feared was too high and could hurt the company. Nowadays all inverter companies offer a higher level of data control for consumers. Enphase likes to emphasise their ability to control and update products in the field from a central location. The data collection also provides data to the company providing direct feedback for future developments. The level of technology employed will allow for even more refined array performance as issues such as weather conditions, load and grid situations can be added and software control can alter the waveform on an inverter to better match changing conditions.
This can be done remotely with no hardware change. Such technical control has seen interest from large scale developers and fits well with the company's next phase of development.
Timely development
The UK market has proved challenging for many companies with fast growth tempered by policy changes and global disruptions. Enphase was no different and was hit with the recent downturn.
"The slow down in the global market was not expected," laments Nahi. "Growth is only as good as it lasts but growing in hard times forces you to become a stronger company."
The slowing of the global market, forced by oversupply, saw Enphase increase its installer base and saw a number of announcements from some installers who were going to change to Enphase inverters exclusively. The company goal is for consumers to ask for panels with Enphase inside. Much like another Silicon Valley company did with the computer world.
"The expectation is that solar providers are going to have to differentiate product more and more as consumers become more tech savvy," Nahi explains. The long term view is designed to ready for future technology challenges."
With such success at the residential end of the market it was inevitable for the company to look at larger PV arrays that are becoming more popular. One more the micro-inverter companies faced accusations that they could never compete on a cost basis with string inverters at a large scale. The company has been developing strategies to enter the commercial rooftop market and with the announcement of a DECC review planning to push the industry in that direction the timing is perfect.
"Scaling Enphase's technology up to large scale is relatively easy," explains Nahi. "Micro-inverters reduce downtime and can provide 99.8% uptime for power plants."
These are the sorts of statistics that are likely to sway large-scale operators and Enphase is all about the pre-planning and long term planning. The industry has developed with the idea that the larger the inverter the less power is lost when converting from DC to AC. This led to wiring panels in series and converting all the power through a central string inverter. The negative with such an arrangement is amount of heat generated that adds stress to components and impacts reliability. Micro-inverter do not have this issue and installers are seeing the benefits. Regardless of its detractors, Enphase has been attracting investment from the beginning, enabling the company to grow at its own pace. Not long ago the assumption was that micro-inverters would be too expensive for large scale arrays but the tide is turning as technology and costs have caught up.
The company has announced its fourth generation system which includes the M250 microinverter, which produces 250-Watts rated AC output power. Aimed at high-power solar modules in Europe, the M250 microinverter pairs with modules up to 310W. With micro-inverters, you are maximizing power at the module level.
All the technical issues are handled and processed at the module level and the cost benefits of such an approach require a long-term approach at calculating returns. This is the key message as Enphase applies the same business plan and educating large array installers to convince them of the technology.
"Large scale installers are realising the benefits of micro-inverter monitoring that can identify problems quicker and reduce downtime as only one panel is impacted," says Nahi. "Many issues can be rectified remotely or at least identify the exact panel saving time when faced with a large array."
Even with the developing review of large-scale subsidies, Nahi believes that the UK offers long term stability and potential. He feels the long-term view is still stable enough to instil confidence in investors despite their noise whenever change is announced. Enphase continues to impress with its ability to take a long term and slower path to regional and global success.
"The solar industry needs to remain aware of the need to attract consumers," said Nahi. "This is just as true with the commercial market as with domestic."
©2014 Permission required. Angel Business Communications Ltd.
