In the solar power business, the inverter is the second major component after the solar panel itself. And like the solar panel business, the solar inverter business is also facing a shakeout due to decreasing margins and increasing competition, according to Forbes.com blogger Tom Konrad (http://www.renewableenergyworld.com/rea/news/print/article/2012/06/solar-inverter-shakeout-3-survivors-2-buyers-a-loser-and-a-wildcard), who conducted a mini-survey on the issue from a group of green money managers. His
posts also run on Seeking Alpha.
The inverter is the device that takes the DC power generated by the solar module and turns it into AC power to be fed into a home or business. But inverters are becoming increasingly commoditized, according to the money managers. The inverter companies who survive this shakeout will be those that can diversify their business, build market share and maintain a strong balance sheet as the global market expands, which it is likely to do over time.
The consensus is the undercapitalized companies, while apparently fewer in the solar inverter business than in the panel business, are going to have to last somehow as new low-cost Asian entrants join this market.
So who are the inverter companies to watch? Here is a short list, along with some of the comments from the money managers in Konrad’s article.
Camarillo, CA-based Power-One (Nasdaq: PWER, http://www.power-one.com) also manufactures wind energy inverters and a variety of other electronic components it sells to computer and storage customers. The managers say Power-One is well capitalized with a strong balance sheet. PWER’s market cap is not about $551 million and its 52-week trading range is $3.51-$8.23. It closed June 27 at $4.52, up 9 cents on the day.
Boston-based Satcon Technology Corporation (Nasdaq: SATC, http://www.satcon.com) makes inverters called PowerGate Plus, Equinox and Solstice, among others. It is struggling, according to Konrad and his sources, due to shrinking sales and poor operating margins. SATC’s market cap is now about $33 million and its 52-week trading range is $0.18-$2.75. SATC closed June 27 at $0.23, up 1 cent on the day.
Germany-based SMA Solar Technology AG (OTC: SMTGF, http://www.sma.de/en.html) is global in scope and offers inverters under the brand names Sunny Boy, Sunny Tripower, Sunny Central and Sunny Tower brand names, among others. Like Power-One, SMA is well capitalized with little debt, according to the money managers. SMA’s current market cap is $1.1 billion and its 52-week trading range is $30.25-$110.50. It closed June 27 at $31.25, down $3.15 for the day.
Fort Collins, CO-based Advanced Energy Industries (Nasdaq: AEIS, http://www.advanced-energy.com/) is well-positioned because inverters are only a small part of its business. Its market cap is currently about $525 million and its 52-week trading range is $7.56-$15.07. AEIS closed June 27 at $13.21, up 1 cent on the day.
Petaluma, CA-based Enphase Energy (Nasdaq: ENPH, http://www.enphase.com) is growing due in part to its technological advantage: it makes microinverters that simplify the installation and also are “better at optimizing system output,” according to the article. Because it is growing and has advanced technology, it’s considered a wildcard and an acquisition candidate, some say. ENPH currently has a market cap of about $238 million and a 52-week trading range of $4.90-$9.57. It closed June 27 at $5.85, down 14 cents on the day.