Enphase may add back-up capability to batteries as sales fall short

Enphase Energy says it is looking at adding back-up power capabilities to its AC battery storage product, after identifying it as one reason why sales have so far fallen short of its highly ambitious targets.
Enphase says sales in the first nine months are “pretty good”, but concedes it will struggle to reach its original estimates, which were for 60,000 units in its first year.
But the US-based inverter and storage company insists that it has significant market share, capturing nearly 20 per cent of the market, to trail only LG Chem and Tesla.
Those sales estimates are hard to verify, given that most companies are keeping their sales close to the chest. Because systems do not need to register to claim a rebate like rooftop solar – hard data is difficult to obtain.
But it seems that Enphase is sharing the experience of much of the industry – that while inquiries from consumers are very, very strong, many are deferring their purchases because they are convinced that prices will fall.
Already, the cost of many lithium-based chemistries have fallen by around half in the last 12 months as new products are rolled out, and further falls are expected as new big factories are completed in the US, Asia and Europe.
Nathan Dunn, the head of Australian operations, describes the battery storage market like a pyramid. At the top are the early adopters, and that market has been pretty much installed, he says, mostly by Tesla, LG Chem and Enphase, among others.
The second group is those led by the top tier, but is looking more closely at the economics. “We’ve just scratched the surface of that second tier,” Dunn says.
The third level is the broader market that doesn’t think they need energy storage, but would do it storage prices fell to a point where paybacks could be obtained in a short period of time.
Dunn says Enphase is doing well in the second tier, because its modular systems offer a low entry point. But he concedes that many are waiting for further price falls. “We’re not going to hit that target,” he says of the 60,000 number.
Things may change when the second generation of its AC battery is released early in 2018. Dunn says it may not include back up capacity when first released, but Enphase was looking at its options.
The desire for back-up has been accentuated in Australia in the last 12 months, given the grid-wide outages in South Australia, blackouts in other states due to storms, and the risk of load shedding in heatwaves.
But Dunn says the issue is overplayed, and the data shows that back-up is actually rarely required. Still, the team is looking at its options to work out what an be included in the Enphase 2.0.
Dunn says the Australian market accounts for 70 per cent of Enphase’s global storage sales (including New Zealand) but it has become “hyper competitive”, given the price falls and the entry of new market entrants.
Indeed, it has already claimed one victim, with Australian battery storage developer Redflow conceding that its zinc bromine flow batteries cannot match lithium-based products on price, and pitching for more expensive and higher quality systems is a tough sell.
It intends to remain a niche player, but will push its market focus on the commercial and business and off-grid sectors.
As expected, most (around 60 per cent) of Enphase’s installations have gone into NSW, where more than 140,000 solar households lost their premium feed in tariff at the start of the year.
The average installation has been three of its 1.2kWh batteries, which he says fits into the “retrofit” market, which generally feature smaller PV arrays of around 3kW.
Dunn says Enphase’s main pitch is on the modular nature of its product, the low cost of entry (one unit costs between $2,000 and $2,500 depending on installation costs), and the ease of installation. He expects the 2.0 product to be more competitive on a kW/h price with its competitors.
Some other points of note are the number of installers to have used the product (more than 500), and 40 per cent of installations were on solar systems using other inverters.
Dunn says the company has seen “pretty good” growth in micro-inverter sales in the frist quarter, helped by the rebound in rooftop solar installations, which has reached record levels in the first four months.
“We’re not sure it will be sustainable throughout the year, but it’s heartening to see more people thinking about renewables.”
Storage – still seems to be a lot of talk – reality is not living up to the hype. Still a lot of connection around amount of money to make that work, and what available.
Dunn wishes, however, that the general conversation around storage focus more on the behind the meter household and business market than the grid-scale market.
That’s because there is a huge resource to exploit – 1.65 million households – that could make a significant contribution to grid stability if most or all added battery storage.
“Large scale has its place but the broader conversation needs to swing back to what is happening in the residential sector. The focus should be on homeowners. These can be used to reduce impact on any challenge that grid has.”
(Note: The author has two Enphase battery storage units installed at his semi-rural property, and has only had to put on the back-up generator once in last 15 months).