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SolarEdge partners with Flextronics for manufacturing of distributed PV power harvesting systems
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The “press embargo” is a fact of life in the media biz. It usually comes in the form of a press release that a trusted journalist receives in advance from a company, PR agency, or other organization, with strict instructions not to breathe a word of it before the agreed-to date and time. Sometimes, the arrangement is less formal, more of a head’s up about some news soon to be made public or a sharing of off-the-record information. Usually, an embargo lasts only a few days, maybe a week or two--rarely does it stretch on for months. 
Not so in the case of a juicy tidbit that SolarEdge’s Lior Handelsman told me in confidence all the way back in October when he briefed me at the Solar Power International show and which can now, finally, be made public here for the first time: His company has started working with the solar division of global electronics manufacturing services giant Flextronics for the high-volume production of SolarEdge’s distributed photovoltaic power harvesting and monitoring systems.
Handelsman, the company’s passionate VP of product strategy and biz dev and one of its cofounders, shared a few details about the partnership at the show, and more recently imparted additional information in an email interview from his home base in Israel.
The top EMS companies apparently bid on the contract, but Flextronics won the gig because of its “in-depth, long-evolved knowledge in reliable production of power electronics, global supply chain operation, and most importantly, factories in all geographies,” he explained. “This enables SolarEdge to manufacture close to the market, and provides manufacturing back-up in case of factory issues and all with global procurement and logistics.”
Although he wouldn’t divulge a specific dollar figure or time-frame for the agreement between the two companies, Handelsman ballparked the monetary amount at somewhere in the range of “$20 million to $45 million in the first year.”
SolarEdge will continue to do its own “new product introduction” manufacturing at its Israel facility, with Flextronics setting up dedicated production lines at its sites in Mexico, Hungary, and China. “Our current production ratio is 300KW of product a day (90-100MW a year),” he told me. “We will ramp up again to double that around Q3 2010.”
The press release to be issued March 3 also notes that there has been “six months of close collaboration between the two companies on preparing dedicated production lines located at Flextronics factories for the mass production of SolarEdge systems,” adding that “production has commenced during the previous quarter and expected to reach an annual capacity of 200MW”—a number that is in line with Handelsman comments about doubling the nameplate later this year. 
I asked him what some of the “special aspects of manufacturing SolarEdge’s systems” might be. “These products require very high quality due to the long warranty periods (25 years),” Handelsman (shown at right) replied. “We have, together, invested in advanced testing equipment for production quality and for functional testing.”
“Furthermore, all of our products are sent to the market after a burn-in period at high temperature to eliminate early mortality and production issues,” he continued. “Burn-in at these large volumes and high power requires heavy infrastructure. To add to this, there is no replacement to permanent, trained manufacturing personnel, and the SolarEdge production line currently holds more than 150 specifically trained people that will not be replaced.”
While the power electronics gear will be put together by Flextronics, the critical ASIC semiconductor devices in the systems are fabbed at what he described as the “largest foundry chip manufacturer”—in other words, TSMC.
The component supply chain has actually been a source of concern for SolarEdge. Handelsman told me in October (the month that the company started to ship product) that the company had a backlog of at least 25MW, because of a “global component shortage.” A perfect storm of reduced production and increased market demand added up to a net shortage of something like -40%. “If SolarEdge had all the components we needed, we would have shipped everything,” he told me.
When I asked him in our recent email conversation for an update on the backlog and components situations, he said the company has “supplied most of the backlog and accumulated significantly larger orders still. By May-June we will pass our 50MW installation. The components shortage is slowly going away but it is still complicated to get certain ICs, some specific UL-rated capacitors, and solar connectors.”
So what exactly does SolarEdge provide to the PV systems marketplace? As Handelsman tells it, the company “delivers the world’s first module-embedded electronics which maximize PV energy yield while reducing cost and complexity. It is the only distributed power optimization provider that offers a complete end-to-end solution, including PowerBox (on-panel optimizer with weighted efficiencies of 97.7%), highly efficient inverters (as in >97.2% weighted efficiency) and module-level monitoring, which maximizes energy output from any residential or large-scale installation, and provides the full set of advantages, in comparable prices of standard inverters.”
He ticked off several key features and perceived competitive advantages of the SolarEdge package (with my comments added parenthetically).
“Up to 25% more energy for a comparable cost of a traditional inverter, thus dramatically improving ROI [return on investment] and IRR [internal rate of return]. Lower operation and maintenance expenses thanks to full visibility monitoring and enhanced remote troubleshooting, which also contributes to a higher performance ratio.”
“A unique safety mechanism, which protects maintenance teams and firemen by automatically shutting down DC string voltage and preventing arcs,” he continued. “Reduced installation cost due to savings in wiring (how does 50-80% less cabling sound?), diodes, fuses, and much shorter design and installation time, plus for larger installations, more design flexibility and optimal space utilization. Hassle-free interoperability of any (emphasis added) module type connected to the same string (c-Si and thin film can play together!), straightforward inventory, and future scalability.”
SolarEdge is still a relatively young company. It was founded in August 2006 by technologists from the Israeli national labs with know-how in mission-critical systems and the reliability and system power optimization required for such. The firm, with a few dozen patents in the pipeline, has seen major investments from the likes of GE Energy Financial Services and kudos from Fast Company and GoingGreen for its potentially disruptive approach to distributed power harvesting and monitoring for PV power systems. BP Solar, Schott Solar, and Isofoton are among its module company customers, while AEE Solar was just signed up as a distributor in the U.S., joining Hawi and other distributors in various world regions.
But it’s a young firm with big ambitions. With well north of a hundred projects operating in the field and collecting critical performance info on crystalline, thin-film, and concentrator PV systems, an impressive 25-year warranty backed by countless bytes of reliability data garnered over the equivalent of billions of hours of rugged accelerated-lifetime testing of all components and subsystems (which has included devices catching on fire or just flat out failing to perform), and a cost model that offers potential differentiation in the increasingly commodified module and systems sectors, SolarEdge seems to be positioned to grab a sizeable chunk of the multibillion-dollar inverter market.
That’s right, not the so-called “power optimization” space that has emerged over the past year or so, but the good ol’ inverter market.
“When a sale is made, we don’t compete with National Semiconductor, we compete with SMA,” Handelsman explained, “since the other option to SolarEdge is always a standard inverter. And in 5-10 years, distributed power harvesting will become the inverter market.”
PHOTOS COURTESY OF SOLAREDGE
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Great article, thanks!