Enphase targets 1.1 million microinverters shipped from US facilities in Q3

Microinverter capacity shipped for the first half of the year is the lowest since 2020, as shown in the chart below. Numbers for Q1 and Q2 2024 combined (1.2GW) are even lower than Q1 2023 (1.9GW).

As of the end of Q2 2024, the company said it had five manufacturing facilities – two in the US and one each in Mexico, India and China – with a quarterly nameplate capacity of 7.25 million microinverters, five million of which are accounted for the US. These numbers are slightly down from what the company aimed to achieve over a year ago when it targeted a quarterly nameplate capacity of ten million microinverters by the end of 2023 and said it would open six new manufacturing lines as it sought to take advantage of the Inflation Reduction Act. Since then, the company announced in Q4 2023 that it planned to close down its plants in Romania and Wisconsin, US, alongside layoffs of 10% of its workforce. Enphase’s earnings call made no mention of its earlier pledge to open six new US production lines.

Furthermore, the company recently started shipments of its IQ8 microinverters made in its Arlington facility in Texas, US. The production of the IQ8 in the US would allow owners to qualify for the 10% domestic content adder through an investment tax credit (ITC).

Although Enphase only recently started shipping the IQ8 microinverters, it expects to launch the IQ9 microinverters, with gallium nitride, in 2025. This new product will support a higher DC input, up to 18 amperes and higher AC grid voltage, including 480 volts for small commercial market. The use of gallium nitride high-voltage transistors will allow for a higher output power at lower cost, according to Kothandaraman.

Quarterly increase in revenues, yet down YoY

Revenues in Q2 2024 have stopped decreasing, but are yet far from the numbers registered in the same period a year ago. In Q2 2024, Enphase registered US$303.5 million revenue, down 57% from the US$711.1 million recorded in Q2 2023. In the US, the company has increased its revenue by 32% compared to the previous quarter, while in Europe it remained flat.

“The sell-through of our microinverters was flat, and the sell-through of our batteries was up 18% in Q2,” said Kothandaraman.

Moreover, Enphase increased its capital expenditure from the previous quarter due to an increase in its US manufacturing spending. Capital expenditure in Q2 2024 was of US$9.6 million, up from US$7.4 million in Q1 2024.

Battery shipments rising

Enphase’s battery segment, on the other hand, performed much better than its microinverter counterpart in Q2 2024, with 120.2MWh of its IQ batteries shipped. An increase from the 75.5MWh registered the previous quarter and at levels similar to what the company shipped throughout 2022. With California’s new net energy metering 3.0 (NEM 3.0) scheme, the attach rate for batteries has been higher than solar PV. Half of the company’s NEM 3.0 systems have an Enphase battery attached to it.

The average revenue per NEM 3.0 system is nearly 1.5 times higher than it was with the average NEM 2.0 system, which will contribute to stabilising the company’s California revenue in the second half of the year, said Kothandaraman.

Kothandaraman added the company aims to start manufacturing batteries in the US with power conversion, battery management and enclosures made domestically, while using cell packs from China, starting from Q4 2024.

Q3 2024 guidance

In guidance for the third quarter of 2024, Enphase has forecast revenue to be within US$370-410 million, including shipments of 160–180MWh of battery energy storage products. Benefits from the IRA is expected to be in the range of 30-33 million with an estimated shipment of 1.1 million units of US manufactured microinverters.

The microinverter manufacturer expects a seasonal slowdown in Europe, while its US business to witness an incremental improvement for Q3 2024.

Earnings call commentary was sourced from Seeking Alpha.