SolarEdge and Enphase, which together dominate the US residential solar inverter market, achieved significant growth in the first quarter of 2020, but warned of lower demand in the coming months due to the global pandemic. Enphase delayed the rollout of its long-awaited household battery systems.
SolarEdge: Some markets are heavily impacted by COVID-19
SolarEdge posted record revenues of $ 431.2 million for the first quarter compared to $ 418.2 million in the previous quarter and $ 271.9 million in the year-ago quarter.
Net income for the first quarter of $ 42.2 million was also higher than income of $ 19 million in the year-ago quarter, but declined slightly from $ 52.8 million in the fourth quarter, while gross margin in the first quarter of 34.3 percent decreased to 32.5 percent in the fourth quarter.
CEO Zvi Lando said in a conference call on Wednesday that the impact of COVID-19 is affecting installations from country to country. In the United States, where SolarEdge held around three-fifths of the home inverter market in the first nine months of 2019 according to Wood Mackenzie’s US PV rankings, installations declined 33 percent in April, but have slowed in the last two Stabilized for weeks, Lando said.
Outside of the US, the number of installations increased 15 percent in the last two months from the previous year, with differences varying widely from country to country depending on the severity of COVID-19 outbreaks. Badly affected Italy, for example, has dropped 47 percent in the last three weeks compared to last year, while installations in Germany, where the disease was less common, increased by 42 percent compared to last year.
“In general, the mood in Europe and Australia is more positive than in the US,” said Lando. “The data, however [varies] from country to country and among our installers. “
In the first quarter, SolarEdge delivered 926 megawatts to the US, 641 megawatts to Europe and 283 megawatts to the rest of the world.
Looking ahead, Lando said the Israel-based company was preparing for a number of scenarios, including a potentially slower third quarter. While geographic and product diversity is a good sign of addressing the country-specific impact of the pandemic, “it will have an impact on business, which is reflected in our forecasts for the second quarter.”
CFO Ronen Faier noted that given the “unprecedented” impact of COVID-19, it is difficult to predict activity in the second quarter with confidence. While around 70 percent of the orders were received in the second quarter in February and the company has received additional orders since then, “we have also received requests to reschedule and / or cancel orders.”
Revenue forecast for the second quarter is now $ 285 million to $ 315 million for solar products and between $ 305 million and $ 335 million for the broader business, which includes energy storage from Kokam, the South Korean battery maker it acquired in 2018 as uninterruptible power company Gamatronic and Italian EV propulsion company SMRE.
On the home storage side, SolarEdge began shipping its third-party battery-compatible HD Wave energy hub inverter to North America in May. For the second half, a “complete solution” in connection with own home batteries is still expected by 2020, said Lando.
Plans for a 2 gigawatt factory to expand Kokam production remain on track to be built and begin manufacturing in early 2022, Faier said.
Enphase is delaying the introduction of home batteries
Competing supplier Enphase posted net income of $ 68.9 million on revenue of $ 205.5 million for the first quarter, a dramatic increase of $ 2.8 million on revenue of $ 100.2 million for the year-ago quarter .
This performance is in line with Enphase’s ongoing battle against SolarEdge to regain its former prominence in the US residential real estate market, which according to Wood Mackenzie’s US PV ranking for Enphase reached 20 percent in the third quarter.
The Fremont, California-based company achieved a record gross margin of 39.2 percent in the first quarter, up from 37.1 percent in the fourth quarter and 33.3 percent in the year-ago quarter.
While bookings remained strong in the second quarter through February, “the global spread of the pandemic has put significant downward pressure on global demand since early March,” CEO Badri Kothandaraman said on a conference call Tuesday. Enphase sold 84 percent of its inverters in the United States in the first quarter.
“In the US, we hear industry reports of a 30 to 50 percent decline in residential complexes in April,” said Kothandaraman. Some states, including New York and California, saw even bigger declines.
Enphase has gone to great lengths to support its installers through its cloud-based microinverter management systems, said Kothandaraman – a step in line with an industry-wide shift towards virtual sales and service on orders at home.
COVID-19 restrictions forced Enphase to postpone the launch of its ensemble energy storage systems, originally planned for March, until June because the systems’ testing and certification was not completed on time, Kothandaraman said. However, installer training at Fremont headquarters will continue. “Subject to further effects from COVID, we expect significant revenue from production deliveries” of the systems in the second quarter.
Enphase hopes that the rapid rollout of its own battery systems will help it compete with other solar companies like Sunrun and Tesla, where a significant number of their residential customers are adding batteries.
Enphase’s longer-term plan includes linking solar inverters, batteries and controls for house energy management. The forecast for the second quarter projected revenues between $ 115 million and $ 130 million with gross margins between 37 and 40 percent.