Enphase Commits To Manufacturing Microinverters In US, Thanks To The IRA
Enphase makes microinverters — the tiny devices that convert the direct current produced by solar panels to alternating current to power homes or feed back into the electrical grid. The company is based in California, but manufactures its products in cooperation with global partners Flex and Salcomp in many locations in Mexico, India, and China.
This approach keeps capital investments low compared to building its own factories, Enphase spokesperson Andrew Newbold tells Canary Media.”We can turn on and off lines at will without having stranded assets,” he says. “We can diversify our manufacturing so we can get the best deals and make sure we’re serving the right markets.”
But the Inflation Reduction Act has changed everything. It increased and extended tax credits for solar installations. More rooftop solar means more demand for microinverters. It also created a tax credit specifically for domestically produced microinverters at 11 cents per watt (AC) of microinverter capacity. That provides a new financial boost for domestic manufacturing, which helps streamline supply chains, Newbold adds.
As a result, Enphase has announced plans to open between four and six US manufacturing facilities in the US by the second half of 2023 together with two existing partners and one new partner. Collectively, the new factories are expected to produce between 3 million and 4.5 million microinverters per quarter — about the same as number as the company produced worldwide in the third quarter of this year. Between its US expansion and another planned for Romania to serve the European market, Enphase could effectively double its global microinverter production capacity in the coming year.
Enphase said this week that the not yet finalized tax credits coupled with booming demand made US manufacturing the right move at this time. The company joins a growing list of clean energy companies that have announced expanded domestic production at least in part due to incentives in the landmark climate legislation. “We’re trying to align where we’re manufacturing products with where demand is or where we see demand coming. We’re bringing those jobs here for the products that we’re using here,” Newbold says.
Enphase is a leading supplier of inverters for residential and small commercial solar installations as well as residential storage batteries. Years ago, Enphase went against conventional wisdom by miniaturizing its inverters so they could snap onto each rooftop panel, hence the term microinverter.
Enphase signed letters of intent with the prospective US manufacturing partners, but the final details won’t be inked until the Treasury Department finishes clarifying the specifics of how the new tax credit will work. “Once the…details have been finalized and the implementation is clear, the U.S. manufacturing could provide substantial benefits in terms of the production-based tax credit,” Enphase CEO Badri Kothandaraman said on an earnings call on Tuesday.
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