Enphase Energy, Inc. ENPH recently announced its strategic partnership with – Sunrun RUN —a solar energy service provider. Under the terms of the agreement, Enphase will supply its seventh-generation IQ microinverters to Sunrun, which the later will install in its residential solar projects.
The deal reflects the booming traits of the U.S. solar market, which is expected to witness a 17% growth this year, per the latest forecast made by the Solar Energy Industries Association (SEIA) along with Wood Mackenzie Power & Renewables.
Important Strategic Partnerships
In recent times, Enphase inked strategic supply deals with other solar players in the United States, which in turn should expand its revenue generation capacity. For instance, in the third quarter of 2019, the company shipped significant volumes of IQ 7AS microinverters to SunPower SPWR, which is expected to integrate the IQ7AS into SunPower’s 66-cell Next Generation Technology (NGT) DC modules.
Enphase’s latest supply agreement with Sunrun seems to be yet another move made by the microinverter-supplier to fortify its footprint in the growing residential solar market in the United States. Notably, in the second quarter of 2019, the U.S. residential solar market attained an annual growth of 8%, marking the fourth consecutive quarter of recording more than 600 MWdc of installed residential capacity (per latest data by SEIA).
Considering such growth patterns, we may expect Enphase to sign more such contracts, particularly in the U.S. residential solar market.
Meanwhile, since July 2019, Enphase has been shipping its seventh-generation IQ microinverters from Mexico to the U.S. market, as part of the company’s extended manufacturing agreement with the multinational technological manufacturing company, Flex Ltd FLEX. The agreement entailed Flex to deliver IQ microinverters and other products manufactured in Mexico to the U.S. market for mitigating the United States Trade Representative (USTR) Section 301 tariffs.
This partnership reflects Enphase’s move to increase its global capacity, improve customer delivery times and strengthen global manufacturing strategy.
Growing Solar Market & Enphase’s Microinverters
Per the latest U.S. Solar Market Insight Report from Wood Mackenzie and the SEIA, total installed U.S. solar photovoltaic capacity will more than double over the next five years, with annual installations reaching 17.6 GWdc in 2021. This has set the stage for solar players like Enphase, which already enjoy a notable position in the market.
To this end, it is imperative to mention that Enphase revolutionized the solar industry by pioneering a semiconductor-based microinverter that converts energy at the individual solar module level. Unlike string inverters, Enphase’s IQ family of microinverters is built-in, with no additional equipment necessary. These microinverters simplify solar installations and provide a complete alternative current solution that utilizes no high-voltage direct current. This provides safer solar solutions to homeowners.
Notably, out of the microinverters that the company shipped in the third quarter of 2019, approximately 99% was IQ7. This, along with the latest collaboration between Enphase and Sunrun all the more intensifies the growing demand for the IQ7 microinverters.
Looking ahead, Enphase’s new IQ 8 microinverter technology, set for commercial launch in mid-2020, will be able to power a home even without attached batteries by providing alternating current (AC) power directly from the modules to household wiring. The aforementioned developments should enable Enphase to maintain its dominating position in the solar microinverter market in the coming days.
Price Movement & Zacks Rank
In a year’s time, shares of Enphase have gained a staggering 251.8% compared with its industry’s growth of 34.5%.
Enphase currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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