SolarEdge Has Built The First Framework For The End-To-End Smart Home

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SolarEdge was one of the early leaders in the solar inverter space and is now leveraging its mastery of the inverter to build out a comprehensive new plan for the smart home of the future.

I first met SolarEdge co-founder Lior Handelsman at the 2018 Energy Taiwan Expo where I unsuccessfully attempted to convince the king of solar inverters that micro-inverters were actually the future. SolarEdge had recently brought its own inverter-tied residential EV charger to the market that leveraged the capability of its existing grid-tied inverters for EV charging. At the time, the move seemed niche as consumers don’t typically specify what brand of inverter comes with their solar system, but are typically required to select an EV charger.

Fast forward one year, and SolarEdge’s vision for a complete smart home ecosystem built around its inverter technology is more fleshed out. I sat down with Lior again at Solar Power International 2019 where he laid out SolarEdge’s plans to become the backbone of the cleantech home of the future building from its inverters on out into the home.

The Inverter as the Energy Manager for the Home

At its core, SolarEdge is an inverter company which may at first make its strategy to build the smart home of the future around the inverter as its own egocentric bias playing out in the business strategy. That was my take on SolarEdge’s EV inverter-tied EV charger when I first saw it. It seemed like an interesting novelty and it was only when I stepped back from the product itself that I saw the bigger picture.

Flipping power from DC to AC and back is at the core of the self-sufficient renewable home of the future. The home itself uses AC power for most functions, yet photovoltaic solar panels produce DC power. Batteries similarly store DC power whether they live in a sonnen ecoLinx on the wall of the home or in the electric vehicle sitting in the garage. All of the power coming into and out of most homes is AC power which leaves us with a fragmented landscape of electricity generation, storage, and consumption.

Which brings me back to the inverter. The team at SolarEdge’s vision for the smart home of the future wasn’t simply biased towards the inverter because that was their core competency. Rather, they built up a competency in inverters because of the potential they saw in the technology. Each time power is flipped from one to the other, power is lost. Optimizing the energy flow between all of the big producers, storage facilities, and consumers in the home can minimize the number of times that energy must be converted from AC to DC or DC to AC and that can make the overall system more efficient.

SolarEdge is working to leverage the inverters that are used in most rooftop solar systems to convert the incoming DC to AC that the home can use to not simply perform a conversion, but to intelligently decide where the power can be best used or stored. “You can optimize to the next level so if the battery is full, you can route energy from the sun to other appliances,” Lior said. For example, if the home does not immediately need the power coming out of the solar system, why not keep it as DC and send it to battery for storage?

SolarEdge is already doing this type of energy triage and is now moving beyond inverter-based units to the other energy hogs in a home. “We saw more and more of a need to optimize energy in the home for various things,” Lior told me. “The inverter is literally the energy manager for the home. You can control your AC or your heat pump or your pool pump or your hot water heater or your EV charger.” SolarEdge is extending the home energy management solutions it pioneered at the inverter level out into the rest of the home.

A new water heater module taps into the power feed for an electric hot water heater unit and allows homeowners to use excess solar generation to pre-heat water, effectively storing the energy in the tank instead of sending it back to the utility. Many utilities have less than favorable or non-existent net metering schemes that make sending power back to the utility a bad proposition, so the more power than can be used or stored in the home in one form or another, the better. HVAC units are similarly being tapped, and preheating or cooling the home with excess power instead of sending it back through the meter.

SolarEdge is now building smart plugs and switches in a push that makes it clear it is working towards managing the entire energy profile of a home, from soup to nuts.

Virtual Power Plants

Home energy management is exciting for those of us who geek out on that kind of thing, but even for people who just want the lights to go on and off when they flip a switch, adding SolarEdge’s smarts adds value because everyone cares about cold hard cash.

Being able to see and control the entire electrical network of a home puts SolarEdge into a unique position when it comes to offering grid services to utilities. “It’s the segue for the next thing,” Lior said. “We already started to sell Virtual Power Plant software. We can offer not just the management of the battery and inverter, but the control of loads as part of the VPP. The utility doesn’t care if I turn off the EV charger for 15 minutes or dispatch energy from the battery for 15 minutes. As long as I take off the grid X number of kilowatts, they’re happy.”

If you didn’t catch it, Lior just did a proverbial mic drop and walked off stage. Building out an intelligent, connected electrical network in the home gives SolarEdge control over PV generation, energy storage, EV charging, hot water heating, HVAC, and the rest of the loads in the home. Control means they can throttle those loads up and down, and along with a bit of help from the solar and storage, that has the potential to add immense value to a utility.

For a single home, it’s not too much to write home about, but when you start talking about hundreds or thousands of homes in a city, the ability to throttle the combined load up and down or even the ability to push power from their respective energy storage units back to the grid starts to get exciting.

Intelligence is a Key Enabler

SolarEdge is a firm believer that it is the software that adds most of the value in the inverter. As we are increasingly seeing in the clean tech space, solutions are increasingly heavier on the software side of the equation than hardware. Batteries, inverters, and even electric car chargers are exciting, but adding a brain and an internet connection takes the potential to a completely different level.

“When we IPOd, I remember sitting with the market analyst and he was telling me that the thing that worried him the most was that inverters will become a commodity like modules,” Lior told me. “I tried to explain to him that it’s so much not that. Storage is coming, grid integration is coming, and home energy management and building energy management. Inverters are more software than hardware. There’s so much value to unlock still that I don’t think inverters are going to be a commodity anytime soon.”

Lior believes that not only is the software in his inverters a key strength, it is necessary to increase the percentage of renewables on the grid. “The solar industry will not evolve without this, because of the intermittent nature of solar. Solar is already cheaper than everything else, but it’s still not one with the grid,” Lior told me. “These technologies are what is going to drive solar and make it one with the grid and allow for the growth of solar and allow solar to become the energy source.”

I pushed him about wind and he was very blunt about his perspective on wind. Wind is a finite resource that can only truly be tapped at scale in a handful of locations around the world. “It’s not like you can put wind [generation] everywhere,” he said. Cheap, easy onshore wind has already largely been tapped. It will continue to be refined, with increased efficiencies, larger turbines, and the like, but it is still limited in terms of the size of utility scale wind. Developers are already starting to migrate to more expensive offshore and floating wind generation, but profits tail off and even these are limited by the natural conditions.

Solar, on the other hand, can be put anywhere the sun shines. Thankfully, that’s just about everywhere (though we’re keeping a close eye on the Pacific Northwest, where the sun is known to go into hiding for far too many weeks at a time). “The potential of solar, just on rooftops, is not finite, but it’s so much more than we need,” Lior said. “40 years from now, mankind is running mostly on solar.”

SolarEdge continues to push the world forward into a newer, more renewable energy mix. The technology the company put on display at this year’s Solar Power International has me thinking and rethinking about new opportunities in the home to bring the future we all want that much sooner.

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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