The U.S. residential solar market just experienced its best-ever quarter, with 712 megawatts (DC) installed. Growth is diversifying across U.S. state markets, and there is opportunity across the solar value chain.
So which inverter suppliers are benefiting?
According to the latest edition of Wood Mackenzie’s U.S. PV Leaderboard, released this week, SolarEdge inverters were used on 60.5 percent of U.S. residential installations through the first three quarters of this year. That’s more than triple SolarEdge's closest competitor, Enphase, with its 19.2 percent market share.
Source: Wood Mackenzie U.S. PV Leaderboard, Q4 2019
The current market stands in stark contrast to just a few years ago, when SolarEdge was still growing its footprint in the U.S. residential solar sector. In 2013, with just 4.5 percent market share, SolarEdge ranked fifth behind then-leader ABB, Enphase, SMA and Fronius.
It should be noted that there was about as much residential solar capacity installed in the third quarter of 2019 as there was in the whole of 2013. In other words, SolarEdge is today dominating a much bigger pie.
What are the strategies being employed by the top two inverter vendors in the U.S. home solar market?
SolarEdge differentiates its product by pairing residential single-phase inverters with DC optimizers, while Enphase manufactures microinverters.
SolarEdge’s rise has been complemented by significant market-share consolidation. Price pressure in the inverter landscape has led vendors to exit in recent years, and this has mostly benefited the top companies. Vendors other than SolarEdge and Enphase held over 67 percent of the market in 2013. As of Q3 2019, market share for this "other" group has fallen to just 20.3 percent.
It wasn’t too long ago that Enphase was on the brink of financial collapse. But from 2015-2017, the company made a concerted effort to reduce its costs by 50 percent. The company managed not only to stay afloat but also grew its revenue.
Enphase has recovered some lost market share this year, and captured over 20 percent of residential installations in Q3 2019 — a routine accomplishment for the company in prior years — for the first time since Q1 2018.
Pivoting from pure-play inverter manufacturing to providing more holistic energy services is a strategy seen throughout the global PV inverter landscape, but SolarEdge and Enphase are definitive leaders in this regard.
Both companies continue to expand their product offerings, and both have launched home energy platforms in recent years. These platforms are able to connect electric vehicles, solar-plus-storage, smart meters and home appliances. Such grid edge technologies are all poised for expansion.
Since 2018, SolarEdge has been on a bit of an acquisition spree, acquiring an e-mobility and a battery storage company that will contribute to its home energy solution platform. Additionally, SolarEdge made a third acquisition, an uninterruptible power supply company — a business not directly related to the inverter space, but still a growing market.
In line with SolarEdge’s forward-looking tactics, the company has built out a virtual power plant software offering that is compatible with all companies' inverter technology, not just its own. It also launched StorEdge, an EV inverter product.
Enphase on the other hand has made several strategic partnerships to build out its AC module business, which includes partnerships with SunPower, LG, Panasonic and Solaria. The company continues to develop its home energy solution.
SolarEdge and Enphase have grabbed the majority of the U.S. residential market as a result of innovative and forward-looking moves that position them to meet growing demand for holistic energy services.
According to Wood Mackenzie’s latest forecast, the U.S. residential solar market will reach 2.4 gigawatts in 2019 and grow to 3 gigawatts in 2020.
Wood Mackenzie's U.S. PV Leaderboard tracks both residential and commercial market shares for inverter suppliers, solar installers and module suppliers.