Power-One (Nasdaq: PWER) is the quiet runner-up in the global photovoltaic inverter market. The firm's bread and butter is the small commercial sector with installation sizes in the 10 kilowatt to 50 kilowatt range, although it has moved to larger-scale sizes in the 500 megawatt range for utility-grade installations.
SMA is the elephant in the inverter market with a more than 40 percent market share. But it's a big and fast growing market and there's still room for competitors to maneuver -- as evidenced by Power-One's rapid rise from ninth place to second place in the market in just two years. GTM Research sizes the 2010 global PV inverter market as $5.3 billion and the 2011 market in the $5.6 billion to $6 billion range.
The firm has gone from just 200 megawatts of shipments to more than 2.6 gigawatts and a 15 percent market share in two years. This growth has come from a focus on the European and, more specifically, the Italian market, with an estimated 40 percent to 50 percent market share in Italy.
That leaves the firm overexposed to drastic shifts in the Italian subsidy and feed-in tariff structure, so Power-One seems to be making a strategic move towards the U.S. market with its expectations of rapid growth. The California-based firm is returning to the U.S. and opening up shop in a big way in Arizona.
I spoke with Dr. Alex Levran, President, Renewable Energy Solutions at Power-One. He added that the firm has also made strong gains in market share in Germany as well as in shipping worldwide to Korea, China and Taiwan. Power-One also has local manufacturing in Ontario to take advantage of that country's Feed-in Tariff.
Levran said that Power-One's "CEC efficiency levels are still the best in the industry."
One important topic we've focused on at Greentech Media is the integration of solar with the smart grid. Levran spoke of a law now on Germany's books that addresses "smart grid connectivity." With Germany obtaining an increasing amount of power from variable sources like solar -- the smart grid connectivity ruling insists that inverters and PV installs allow utility control of low-voltage ride-through as well as real and reactive power. All Power-One inverters will have this capability by April of this year according to Levran.
This morning, Power-One held a ribbon-cutting for a manufacturing facility in Phoenix, Arizona that will potentially create over 350 jobs. The grand opening was attended by the usual political suspects -- Arizona Governor Jan Brewer, Phoenix Mayor Phil Gordon, Arizona Commerce Authority and the Greater Phoenix Economic Council. Power-One's Phoenix facility will produce photovoltaic and wind inverters, with expectations of the manufacturing site reaching an annual inverter production capacity of 1.0 gigawatt by mid-2011.
The firm recently added Dick Swanson, the founder of SunPower, to its board of directors and also acquired the assets of solar monitoring startup, Fat Spaniel.
Mark W. Bachman of Auriga USA, an equity research firm, rates the stock as a "Buy," but has concerns over the effect of expansion plans on near-term product margins and longer-term opex. Bachman referred to Power-One as "one of the few U.S.-based renewable names left with real and growing cash flow." Power-One has a market cap of $1.1 billion.
With lower capex and energy cost, it would seem a bit easier to keep inverter manufacturing in the U.S. compared to PV panel production.