SolarBridge, an Austin, Texas-based VC-funded integrated microinverter company, just got acquired bysolarpanel manufacturer and project developer SunPower.
Factory-integrated microinverters combined with solar panels have the potential to lower overhead and labor. SolarBridge has a high-performance, premium-priced inverter that is a good match for the industry's highest-efficiency solar module from SunPower.
The sale price was not disclosed, which is not usually an indication of a high-multiple VC exit.
The startup has raised a total of more than $105 million from strategic and tactical investors including SunPower, Battery Ventures, Texas Emerging Technology Fund, Constellation Technology Ventures (of Exelon subsidiary Constellation, a retail electricity provider), Shea Ventures, Rho Ventures and Prelude Ventures.
SunPower has had a longstanding investment and business partnership with SolarBridge. What's more, a number of SolarBridge executives, including its CEO, are former SunPower employees. Last year, SolarBridge appointed Bill Mulligan as president and CEO. Mulligan was SunPower VP of R&D from 1998 to 2010. In July, SolarBridge Technologies named Mark Sandoval, formerly an executive at SunPower, as executive VP of global strategy.
In addition to SunPower, SolarBridge's panel and integration partners include BenQ Solar, Hareon, Mage Solar, Kyocera and ET Solar. How this acquisition will impact the relationships with those SunPower competitors remains to be seen.
We were able to speak with Tom Werner, SunPower's CEO this afternoon. He viewed the SolarBridge acquisition as another "puzzle piece [that] increases the performance of the system over the life of the system."
It would seem that SunPower is envisioning a fully-integrated AC module where microinverters replace the junction boxes. Werner said that SunPower "likes that architecture."
Some years ago, SunPower founder Dick Swanson expressed some skepticism on the concept of module-level electronics to this reporter. Werner, the current CEO said that if you asked him the same question 5 years ago, he'd have expressed the same skepticism. But, Werner said, "Capitalism worked once again and created a highly reliable solution." He added, "The performance gain is real but that was not the key deciding factor." The tipping point on the move to module level electronics was the proven reliability of microinverters.
"We want to make our solution so compelling that the aesthetics and performance of the system" will create customer pull. Werner added that SunPower remains "one of the biggest string inverter customers in the world."
Ben Kallo at RW Baird sees the acquisition as a positive "as it expands SPWR’s residential solar offering which we believe is an important growth market. The acquisition should allow SPWR to develop panels with microinvertors pre-installed, which could reduce installation time and also increase gross margin."
MJ Shiao of GTM Research had suggested that SolarBridge's medium-term market path was in acquisition, and he was right. His recent report, The Microinverter and DC Optimizer Landscape 2014, provides detailed information on SolarBridge's price-per-watt selling prices and notes that the company's "cost structure is still the highest in the market." The report estimates 2013 shipments for SolarBridge at shy of 100,000 units, stating: "The company believed that there was a significant pocket of demand on the premium end of Enphase, with customers willing to pay a premium for a product with enhanced reliability." Enphase is the microinverter market leader, shipping 598,000 microinverters in Q2 2014 and coming very close to GAAP profitability with record revenue of $82.0 million.
Shiao adds, "SunPower's acquisition of SolarBridge represents another indication of two very important trends in the PV systems and technologies space. First, a continued affirmation of the promise and importance of module-level power electronics (MLPE) in the residential market and second, the second wave of module manufacturing investment into differentiated solutions."
"Led by Enphase Energy and SolarEdge Technologies, PV MLPE devices have been on a tear, surpassing 1 gigawatt of shipments in 2013 with strong growth in 2014. The U.S. residential sector, where MLPE has nearly 60 percent market share, has served as a base, but penetration in international markets like Australia, Germany, Japan and the UK is growing. While SolarBridge to date has been a minor player, the landscape is still very fragmented and there are still plenty of opportunities for Enphase alternatives to flourish in the market. By megawatts shipped, Enphase and SolarEdge together control three-quarters of the MLPE market, with the next largest suppliers all under 10 percent market share."
"MLPE, specifically microinverters, come at a significant increased cost versus traditional string inverters but try to achieve cost and performance benefits by improving operational efficiency and speeding the time from project proposal to permit. An integrated MLPE solution (as opposed to a standalone device) potentially eliminates additional installation steps such as mounting and connecting the MLPE device and so-called "rough-in" inspections from more stringent local authorities having jurisdiction (AHJs)."
"The environment for differentiated module solutions certainly seems to be improving. SunPower recently acquired very early stage MLPE aspirant Dragonfly Solar and LG has developed a proprietary fully-integrated AC module solution. Meanwhile, Trina, JA Solar, and Jinko have all pursued fully-integrated DC optimization solutions, with Trina partnering with Tigo Energy and the latter two looking towards cell-level optimization with Maxim-Integrated."
Additionally, Shiao notes, "This represents the fifth exit by a VC-backed pure-play MLPE provider - OKE (bought by SMA), Enphase (IPO), GreenRay Solar (bought by SunEdison) and Dragonfly Solar (bought by SunPower). SolarEdge's IPO would make it six.
Craig Lawrence, VP of marketing at SolarBridge, noted in a previous interview that the "competitive and regulatory landscape [for inverters] is going to get pretty treacherous." He said that the firm is developing next-generation features to meet new utility needs for "command-and-control" features imposed by CPUC Rule 21. Lawrence spoke of the need for the inverter to provide control over reactive power and ramp rate. According to Lawrence, "We have a product that is best-in-class" and "a full solution." He added that SolarBridge will "sell and win" when competing against Enphase on reliability, and suggested that SunPower's extensive vetting of the SolarBridge technology attests that its design "eliminates reliability risks."
Recent SunPower financial news
SunPower announced yet another strong quarter in this quarter's earnings call, as one of the world's leading vertically integrated solar manufacturers and power plant developers showed strength across residential, commercial and utility segments. The module manufacturer and EPC firm beat estimates and slightly trimmed its 2014 guidance, while continuing to amass its now 8-gigawatt pipeline and its HoldCo projects.
Highlights of the quarter:
- Q3 2014 GAAP revenue of $663 million, beating guidance
- Japan accounted for 28 percent of total shipments this quarter
- The Quito project remains on track for completion in the second half of 2015
- The firm produced its one-billionth PV cell, resulting in a cumulative output of more than 3 gigawatts
- Fab 4 is scheduled for first silicon early next year
- SunPower continues to develop its HoldCo strategy
- The Chilean merchant plant is almost at completion and will be fully energized by the end of the year
In the residential channel, third-quarter bookings were up more than 50 percent sequentially.
SunPower has been capacity-constrained since late 2013 and is essentially allocating its production. The company's construction of a new 350-megawatt fab in the Philippines, Fab 4, remains on schedule, while Fab 5 is still in the works. CEO Tom Werner notes that the firm is still improving efficiency, with a 24.5 percent efficiency anticipated in 2016.
The 350-megawatt Fab 4 solar cell factory is "on track" to produce up to 100 megawatts next year, according to Werner.
For Q4, SunPower expects GAAP revenue of $675 million to $725 million at a gross margin of 22 percent to 24 percent.
Fiscal year 2014 guidance
The company trimmed its fiscal year 2014 guidance, with GAAP revenue expectations of $2.535 billion to $2.585 billion, down from $2.55 billion to $2.70 billion, gross margin of 20 percent to 21 percent, down from gross margin of 20 percent to 22 percent.