Enphase S280 mini-review, and the future of Enphase November 27, 2015Posted by Maury Markowitz in solar.
Tags: micro-inverters, solar power
In spite of 2015 being the best year in PV’s history in terms of installs, including residential, Enphase is having a rough go of it.
As CEO Paul Nahi put it, “The fourth quarter of 2015 is more challenging than expected”.
But they’re fighting back with their new S series inverters, and have ambitious plans for the next two years. Lets take a look at both.
I first started looking into the PV market seriously in 2007, when I was working at a Toronto investment company. Back then complete commercial/industrial installs were getting panels at around $4 a Watt and doing the complete install for about $6. We all hoped we’d live to see the day when PV was cheaper than coal, which at that time was around $2.
Well we did all live to see that day, because it happened in late 2013. After two more years, utility scale sites are now being built for around $1.50. Moreover, during that same period the cost of coal went up, and Lazard puts it a little over $3.
But while this was great for the utility scale sites, it played havoc with the smaller players. Distributers who were taking 20% cuts on a total package worth maybe $3 a Watt (smaller systems cost more in relative terms) simply couldn’t survive when that kit hit $2, let alone $1.50 where it is today.
And that’s just as true for the manufacturers. Some had the scale that let them sell across markets, especially into the larger systems, but most of the classical inverter companies took a beating on their profits in spite of moving more and more product.
For a while, Enphase was the exception to the rule. They had a technological story to tell that connected with the customers, and for small systems where the cost is dominated by the installation, as opposed to the equipment, the added cost of the M190s simply wasn’t all that bad.
But even they weren’t immune to the market pressure, and introduced a number of upgrades and lowered prices to compete. But they didn’t really; by the start of 2015 Enphase kit was still at least 50 cents/Watt, and sometimes more when you added in those expensive cables and monitoring. But when you compared them to kit like ABB or SMA, the extra 15 cents or so didn’t seem like a big deal. On January 2 their shares were still trading at $14.71.
By the middle of 2015 it was already clear that the honeymoon was over. During their Q3 shareholder meeting in early November, Nahi noted that customers were no longer willing to pay any premium for their equipment.
That’s a problem. If they want to keep their sales up and no longer have the brand appeal, they need to compete on price. And according to Nahi, that’s precisely what they intend to do.
So, the S280
And that’s where their fifth-generation microinverter comes into play, the new S series. Apparently there’s two, the S230 and the S280, but it appears only the S280 is available in the short term.
By most measures the S series isn’t that much different than the M series it replaces. One of the greatest changes is the case, which is rather fancy looking all things considered, especially when you consider that you’ll never see the thing once its installed. But they’ve also tweaked it, bumping the efficiency to 97%, which makes it the highest rated micro, and head to head with the best transformerless wall-hangers. That’s no small achievement when you look at how these things work.
But the real difference is supposed to be the price point. It’s always hard to get real prices on these products because the vendors list one price and sell at another. But you can get a reasonable feel for the relative price by comparing it to other products from the same vendor. So, let’s do that.
The Solar Panel Store lists the M250 at $165, which comes to 66 cents/Watt. They list the S280 at $160, so that’s 57 cents/Watt. That’s a little cheaper, but it doesn’t strike me as a whole lot. WholeSale Solar is $159 for the M250, which is 63.6 cents, while the S280 is $174, or 62 cents. Pretty much flat. Now it’s not clear that these are actually shipping yet, so who knows what the final price will be, but this doesn’t look like a price drop that’s going to really change anything that much.
The other thing that changed was monitoring. The new inverters also need a new monitor, the Envoy-S. This has a bunch of new features, but its not clear whether the average user might find these too interesting. It’s also not clear what the price will be.
So far the S series looks like “more of same”. But Nahi has been talking aggressively. He’s been saying that they can drive down the price by 50% within two years.
According to a chart they showed at their quarterly meeting, they are aiming to drive the cost of their inverters to 10 cents/W by Q4/17. Wow. Still, that same chart shows the current price as 25 cents, which certainly isn’t what’s in the market, even considering distributor markup and such.
In order to get to these points, cofounder Martin Fornage proposes to further integrate the chips to get the part count down, and move to a plastic enclosure. Now that later bit means they’ll have to introduce another new model in 2016, and yet another in 2017.
Which brings us to the Osborne Effect. We’ve just been told the price will be something like 30% cheaper by the end of next year, so why in the world would I buy the S series models today? Is it just me, or is this crazy?
And some of the claims seem odd. One is that the parts count will be reduced by 150. Well I’ve seen the guts of the M-series, and I don’t recall there being 150 parts in there. Another change is that the plastic case means they don’t need to ground the equipment, so they can move to two-wire cabling. That does seem like a real advantage, but leaves the question how to ground all the other equipment like the panels and racking. If I still have to run some 6 gauge for those bits, I haven’t really saved anything.
Don’t get me wrong, if they can pull this off it will be amazing for everyone. The customer will get a smaller, lighter and more efficient product for less money, systems will have no price argument not to go with micros, which I still think is a sellable concept, and Enphase continues to be the belle of the ball.
But if they’re going to pull this off they have to execute perfectly. We’re talking Steve Jobs perfect here. And that definitely remains to be seen.
So what does the market think? Their shares are trading around $1.70 as I write this.
Ball of confusion
I was looking at putting up a second array on my garage, a small one maybe eight panels. Now what? Do I just go with the equally great SolarEdge kit, or wait a summer and try the new hotness from California? I suspect I’m not the only one who will end up confused by all of this.
If there’s one thing working in their favor its that everyone else has fallen flat. ABB and SMA were never really in the game. Enecsys is dead, Sparq relaunched with a quad product (which, IMHO, defeats the entire purpose of a micro), Tigo I haven’t heard of in a while, and all the commercial three-phase players are gone. Chilicon seems to be taking a stab at it, and I promise to take a look at their kit when I can, but that’s basically that.