Dive Brief:
- Solar equipment maker Enphase Energy opened and began shipping from a second U.S. contract manufacturing site last quarter, executives said during an earnings call last week.
- The company partnered with Foxconn as its new contract manufacturer, opening a site in Mount Pleasant, Wisconsin, to produce microinverters.
- Enphase plans to add another contract manufacturing partner in Q3 with plans to ship 600,000 microinverters from the three sites.
Dive Insight:
Enphase has been ambitious with its U.S. expansion plans in the wake of the Inflation Reduction Act. President and CEO Badri Kothandaraman noted on the call that the law is slated to increase domestic demand for solar energy and technology, as well as grow production capacity.
"We are pleased to be part of creating new jobs in the U.S. and advancing the country's clean energy economy," Kothandaraman told investors. The Wisconsin site is expected to create approximately 600 jobs.
The solar equipment manufacturer is already seeing financial gains from the IRA. Enphase saw a $1.6 million net benefit because of the legislation in Q2 — the company can claim tax credits from the law as direct payments, receiving a net payment of between $24 and $28 per microinverter sold, after accounting for domestic manufacturing costs, the CEO said.
The company expects to see between $14.5 million and $16.5 million in net benefits next quarter, based on an estimate of 600,000 units.
While Enphase is continuing with its expansion plans, the company has suffered the same downturn many in the U.S. have faced amid high inflation in recent months.
The company's U.S. revenue was down 1% YoY in Q2, and its sell-through rate of microinverters — when it has shipped product to distributors and large installers — in the first half of 2023 was down 20% compared to the peak levels of Q4 last year, Kothandaraman said. Enphase is focused on inventory reduction after over-estimating its sales numbers for the past two quarters.
"We are managing through a correction in the U.S. solar market after three years of phenomenal growth, a period in which the residential solar market doubled and Enphase sales tripled," Kothandaraman told investors.
The opening of the Wisconsin site is part of Enphase's planned $60 million manufacturing investment in the U.S. across six production lines. President Joe Biden toured the company's first contract site in West Columbia, South Carolina last month, touting the promise of Enphase's new facilities to advance American manufacturing.
"Jobs that used to go to Mexico, India, Romania, and China are now coming home," Biden said during his remarks. "We’re creating jobs here and exporting American product."
