Enphase Energy has embarked on a road to the public market. The microinverter developer filed its intent to carry out an initial public offering on Wednesday, a move that reflected the company’s need for capital to fend off a growing number of competitors.
In a government filing Wednesday, the California company said it plans to raise up to $100 million. Enphase only closed a $63 million private round in June last year, bringing the total private money raised to $104 million by then.
The company, founded in 2006, has been a leading microinverter maker. Microinverters, like the more conventional central inverter, convert direct current from solar panels into alternating current for feeding the grid or onsite use. Unlike a central inverter, which serves a bunch of solar panels at a time, each microinverter is matched with one solar panel.
Enphase says microinverters are better solutions because of their ability to calibrate and ensure the optimal energy output of each solar panel. A central inverter can do that, too, but because it is in charge of a bunch of solar panels, its calculations are influenced by the lowest-performing panels. If an array is partly in the shade, for example, then the optimal energy output of that entire array will be more on par with the output of the lower performing panels.
The company packages its microinverters with a communication gateway and performance monitoring software and service. Solar electric system owners can check out how well their solar panels are doing through an online portal.
Microinverters remain more expensive, and they haven’t been around long enough to generate enough data to show whether they will work reliably for a long time. Some installers have expressed concerns about having to replace microinverters often. So far, microinverters are largely used in residential and small commercial installations.
A growing crop of microinverters have emerged to launch products in the past year. It’s not just the startups that are now peddling microinverters. Last month, Power-One, among the top 3 inverter makers worldwide, launched a microinverter. Market leader SMA Solar Technology expects to do the same soon.
As the competition intensifies, Enphase will have to offer better and cheaper products more quickly. It also has to execute well in manufacturing and sales. All these on the must-do list require a big infusion of money, so it makes sense for the company to raise money from an IPO.
Enphase hasn’t made a profit. The company generated $61.7 million in revenue and posted $21.8 million in losses in 2010. In 2009, Enphase brought in $20.2 million in revenue and posted $16.9 million in losses. During the first quarter ending this March, the company reported $18.1 million in revenue and $9.3 million in losses.