In a solar universe of more than 250 early-stage startups, many of them shipping PowerPoints in volume (See Solar Bloodbath 2010), microinverter builder Enphase has essentially created a new market sector and run with it. This approach has won them more funding and strong market acceptance.

We've reported on the many aspirants in microinverters and DC-boost architectures in detail here and here, and we've reported on recent developments at Enphase here.

Today Enphase announced that it has won $40 million in funding in an oversubscribed round, with new investor Bay Partners leading the equity financing. This round of financing also includes Horizon Technology Finance (that's debt finance, not VC), more debt from Bridge Bank (NASDAQ:BBNK), and VC from existing investors Third Point Ventures, RockPort Capital Partners, Madrone Capital Partners and Applied Ventures.

I have to admit that I was initially one of the skeptics of the microinverter concept, citing the conservative nature of the solar installer trade and the multiple failure points.  I had bumped heads with an anonymous gentleman at one of Enphase's venture investors (Abe Yokell of Rockport) on this topic. But nothing proves the skeptics wrong more than purchase orders, backlog, improving sales numbers, and millions of hours of real-world field testing at residential and commercial installations.

Enphase's recent spate of announcements continues to prove the microinverter skeptics (see PV Powered on microinverters) and electrolytic capacitor skeptics (see SolarBridge on electrolytic capacitors in microinverters) wrong and has transformed Enphase from early-stage startup to young company shipping in volume.

Enphase, with the help of its manufacturing partner, Flextronics, has managed to ship more than 250,000 microinverters since beginning shipments about two years ago.  The wholesale price of the unit is in the $150 range, so that's $40 million dollars in revenue so far and growing fast.

Enphase also announced a microinverter design specifically for the Ontario, Canada market which will fulfill Ontario's Domestic Content requirement, allowing installers to participate in the Ontario Feed-In Tariff (FiT) program.  Enphase's Canadian production line will have a capacity of 100 megawatts (500,000 microinverters) in the first year. The company plans to double this capacity to one million microinverters in 2011.

Microinverters individuate and convert the energy output of each solar PV module into grid-compliant AC power, offering some potential advantages over traditional centralized inverters in energy harvest, system reliability, and ease of installation and design. Additionally, powerline communications enable continuous, remote, per-module monitoring.

So what's next for this fast growing startup? A focus on growth and expansion, sure.  The firm has to make sure the reliability story holds up.  And in a climate where companies like Tesla, Solyndra, Fallbrook and Codexis can seriously consider an initial public offering -- an Enphase IPO would not be out of the question.

And one more thing to consider -- if the microinverter (or centralized inverter for that matter) already has a communications link and already monitors energy production -- how much of a stretch would it be for the inverter and internet gateway to be the consumer's portal to the utility smart grid?

Tags: bay partners, distributed inverters, enphase, feed-in-tariff, inverters, microinverters, ontario, rockport, triple point capital, venture capital