SolarEdge Technologies Stock

SolarEdge Technologies, Inc. (SolarEdge) operates as a provider of an optimized inverter solution that changed the way power is harvested and managed in photovoltaic (also known as PV) systems.

The company’s direct current (‘DC’), optimized inverter system maximizes power generation while lowering the cost of energy produced by the PV system for improved return on investment, or ROI. Additional benefits of the DC optimized inverter system include comprehensive and advanced safety features, improved design flexibility, efficient integration (DC coupled) with SolarEdge storage solutions, and improved operation and maintenance, or O&M, with remote monitoring at the module-level. The typical SolarEdge DC optimized inverter system consists of inverters, Power Optimizers, a communication device, which enables access to a cloud-based Monitoring Platform, and in many cases, a battery and additional smart energy management solutions and devices, such as EV chargers and load controllers. As part of the company’s hardware sales, the company also provides the energy management software, which controls, manages and optimizes the energy production, storage and use of energy generated by the company’s systems. The company’s solutions address a broad range of solar market segments, from residential solar installations to commercial and small utility scale solar installations. Since the company began commercial shipments in 2010, the company has shipped approximately 52.6 gigawatts (‘GW’) of the company’s DC optimized inverter systems and the company’s products have been installed in solar PV systems in over 140 countries.

Since introducing the DC optimized inverter solution in 2010, SolarEdge has expanded its activity to other areas of smart energy technology, both through organic growth and through acquisitions. By leveraging world-class engineering capabilities and with a relentless focus on innovation, SolarEdge now offers energy solutions that include primarily the hardware technology used in residential, commercial, and small scale utility PV systems and also product offerings in the areas of energy storage systems, or ESS, including manufacturing of lithium-ion cells and batteries, smart trackers for solar panels, EV chargers, home and commercial energy management software, grid services and software platforms and applications that enable development of virtual power plants, or VPPs.

The company primarily sells its products indirectly to thousands of solar installers through large distributors and electrical equipment wholesalers and directly to large solar installers and engineering, procurement, and construction firms, or EPCs. The company’s customers include leading providers of solar PV systems to residential and commercial end users, key solar distributors, and electrical equipment wholesalers.

As of December 31, 2023, the company shipped in the aggregate approximately 125.1 million Power Optimizers and 5.6 million inverters. More than 3.7 million PV installations, many of which may include multiple inverters, are connected to and monitored through the company’s cloud-based Monitoring Platform. The company’s development strategy is to identify software and hardware features, products, and systems that improve the effectiveness of the company’s solutions for its customers.

Product Offering

The company’s primary segment is its solar business, which includes the following products:

SolarEdge Power Optimizer

The company’s Power Optimizer which forms an integral part of the company’s DC optimized inverter system is a highly reliable and efficient DC-to-DC converter which is connected by installers to each PV module or embedded by PV module manufacturers into their modules as part of the manufacturing process. The company’s Power Optimizer increases energy output from the PV module to which it is connected by continuously tracking the Maximum Power Point or MPP of each module and controlling its production point. The Power Optimizer’s ability to track the MPP of each PV module and its ability to increase or decrease its output voltage enables the inverter’s input voltage to remain fixed under a large variety of string configurations. This feature enhances the flexibility in PV system designs, enabling use of different string lengths in a single PV system connected to the same inverter, use of PV modules situated on multiple orientations connected to the same inverter, and using varied PV module types in the same string. In addition, the company’s Power Optimizers monitor the performance of each PV module and communicate this data to the company’s inverter using the company’s proprietary power line communication. In turn, the inverter transmits this information to the company’s monitoring server. Each Power Optimizer is equipped with the company’s proprietary safety mechanism, which automatically reduces the output voltage of each PV module to 1 volt unless the Power Optimizer receives a fail-safe signal from a functioning inverter. As a result, if the inverter is shut down (e.g., for system maintenance, due to malfunction, in the event of a fire or otherwise), the system is designed to reduce the DC voltage to a safe level.

The company’s Power Optimizers are designed to withstand high temperatures and harsh environmental conditions and contain multiple bypass features that localize failures and enable continued system operation in the vast majority of cases of Power Optimizer failure.

SolarEdge Inverter

The company’s DC-to-AC inverters which form an integral part of the company’s DC optimized inverter systems, contain sophisticated digital control technology with efficient power conversion architecture resulting in superior solar power harvesting and high reliability, and are designed to work exclusively with the company’s DC Power Optimizers. A proprietary power line communication receiver is integrated into each inverter, receiving data from the company’s Power Optimizers, storing this data and transmitting it to the company’s monitoring server when an internet connection exists. Since each string which is equipped with the company’s Power Optimizers provides fixed input voltage to the company’s inverter, the inverter is able to operate at its highest efficient at all times and therefore is more cost effective, energy efficient and reliable.

Like the company’s Power Optimizers, the company’s inverters are designed to withstand harsh environmental conditions. The company offers single-phase inverters designed to address the residential market (3 kilowatt (‘kW’) to 11.4 kW) three-phase inverters designed to address the residential and commercial markets (4 kW to 120 kW), and three-phase inverters designed to address the ground mount market (300kW to 330kW). In 2023, SolarEdge released the 330kW inverter coupled with new H-Series Power Optimizers for distributed and centralized inverter configurations. This inverter is designed for small-scale utility installations, agriculture or Agri-PV sites that harvest crops and solar energy on the same farmland, and Community Solar installations which bring smart energy savings to households, businesses and public organizations.

Storage Solutions

The SolarEdge Home Battery 400V, the company’s DC-coupled, 10kWh, single phase battery integrates with the company’s SolarEdge Home Hub family of inverters. When connected with the company’s SolarEdge Home Backup Interface (BUI), the SolarEdge Home Battery provides homeowners the ability to power their homes even when the grid is off for anywhere from several hours to many days, depending on use of loads and available sunlight during the outage. The battery also works in tandem with the SolarEdge ONE energy optimization system to optimize the use of solar energy in places with different types of import and export tariffs scenarios (such as time of use, or TOU and dynamic rates).

With the SolarEdge backup solution, power is stored in a battery and can be used during a power outage to power essential devices, such as refrigerators, communication devices, lighting, and AC outlets for anywhere from several hours to many days, depending on use of loads and available sunlight during the outage.

EV Chargers

SolarEdge sells EV chargers for residential applications which allow the homeowner to redirect excess PV energy to power their electric vehicles. This enables consumer to increase their self-consumption of clean energy. The SolarEdge ONE smart energy optimization system can be programmed to automatically charge the vehicle using the most advantageous and economical times and rates.

Smart Energy Products

As the solar energy industry has evolved, SolarEdge has developed innovative solutions to further enhance smart energy technology, including inverters that include compatibility with batteries for increased self-consumption for backup, backup interfaces devices, smart meters, smart energy management devices (sockets, hot water controllers, wireless relay) and smart PV modules. This product expansion has enabled the company to increase average the revenue per installation, or ARPI.

Smart Trackers

The company’s SolarGik smart PV tracker is optimized for installations on constrained and sloped terrains, eliminating the need for costly grading and construction. The company’s trackers come with advanced software that is designed to optimize production, predict weather changes, maximize bifacial gains and respond to remote commands. The tracker solutions are light weight, which allows them to be installed not only in regular ground mount projects, but also on rooftops, greenhouses, carports and agricultural fields.

Smart Energy Management

The company has developed smart energy management software and capabilities that are offered with the company’s hardware solutions and enable system owners to store solar energy at cost-effective times, and also control the timing of their PV energy consumption in order to increase their energy independence, take advantage of lower time-of-use rates, reduce electricity bills, and improve overall system ROI.

In 2023, the company launched the SolarEdge Home smart energy ecosystem which enables homeowners to control and optimize their energy production, consumption and storage with mySolarEdge app. SolarEdge Home manages the home’s production and usage 24 hours a day, 7 days a week through the SolarEdge ONE energy optimization system which analyzes a variety of external and internal data to minimize electricity costs and maximize savings. In addition to SolarEdge Power Optimizers, inverters and batteries, SolarEdge Home has capabilities enabling integration with SolarEdge Home batteries, EV chargers, load controls and third party devices, to monitor and optimize the home energy production and usage. The features are thus far available in the United States, in Germany and are being released elsewhere around the world over time.

In addition, in April 2023, the company completed the acquisition of all outstanding shares of Hark Systems Ltd. (‘Hark’), a U.K.-based energy IoT company for the commercial and industrial (‘C&I’) sector. Hark's platform is designed to enable commercial and industrial customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection of anomalies in assets’ energy consumption, and optimization of energy usage and carbon emissions through load orchestration and storage control.

SolarEdge Software Solutions

The company offers a variety of professional software tools to support the complete PV planning, installation, monitoring and maintenance processes of the company’s DC optimized inverter solutions:

Monitoring Platform. The SolarEdge monitoring platform is a cloud-based monitoring platform which collects power, voltage, current and system data sent from SolarEdge inverters and Power Optimizers and allows users to view the data for their SolarEdge site/s at the module level, string level, inverter level and system level from most browsers and from most smart phones and tablets. The monitoring software continuously analyzes data and flags potential problems. The monitoring software includes features which are used on a routine basis by integrators, installers, maintenance staff, and system owners to improve a solar PV system’s performance.

MySolarEdge app. The mySolarEdge application enables system owners to track their real-time system production and household energy consumption, view their inverter and battery status for quick troubleshooting, and control the battery's back-up capabilities, all from their mobile phones.

Designer platform. The company’s designer platform is a proprietary web-based tool that helps solar professionals plan, build and validate residential and commercial systems from inception to installation.

Mapper application. The mapper application provides SolarEdge installers with an efficient, streamlined process for registering the physical layout of new PV sites installed with SolarEdge DC optimized inverter systems in the SolarEdge Monitoring Platform. Installers can use the Mapper application to scan SolarEdge Power Optimizer and SolarEdge inverter barcodes, creating a virtual map of the PV site in the monitoring platform which can later help facilitate remote diagnostics thereby enabling enhanced customer support and reducing maintenance costs for installers and SolarEdge system owners.

SetApp application. The SetApp application is used to activate and configure SolarEdge inverters during commissioning directly through a smartphone, in order to simplify and expedite installations.

Grid Services

As PV and storage continue to proliferate around the world, energy production is transitioning from a centralized system to a distributed network model, where energy is produced close to the location in which it is consumed and stored. This model creates an opportunity for new interconnected and decentralized energy networks offering improved grid reliability and stability, new energy service and reduction of grid infrastructure costs. SolarEdge grid services deliver near real-time aggregative control and data reporting, enabling the pooling of distributed energy resources - photovoltaic systems, battery storage and electric vehicle chargers — in the cloud for the creation of virtual power plants (VPP). The SolarEdge grid services and VPP solution provide management platforms to enable near real-time, aggregated control of available energy resources to meet ever-changing supply needs and demand. The company’s distributed energy resources management system or DERMS application and application program interfaces (APIs) are used by utilities for countering peak demand events and participating in various electricity markets. In 2023, SolarEdge continued to sell grid services in the U.S., Europe, and Australia, including services provided to independent system operators, energy retailers, national installers, and others.

Products from Non-Solar Businesses

The SolarEdge Energy Storage segment provides energy storage solutions, which include battery cells, modules, racks and containerized battery systems (BESS). The proprietary technology of the company’s cells and batteries is manufactured and assembled in the company’s own facilities in South Korea, which have production capacity of 2GWh.

The company’s lithium-ion technology packs high energy density into small footprints and supports high c-rate power throughputs, without compromising the calendar and cycle life of the battery.

SolarEdge’s ESS solutions are used in different fields, such as stationary energy storage (EV charging, utility, commercial or industrial), energy storage in transportation (trains, trams and marine-based transportation), different engineering, procurement and construction projects in the grid and C&I energy space, and more.

Product Roadmap

The company’s products in the solar segment reflect the innovation focus and capabilities of the company’s technology departments, as well as the importance the company placea on creating value for its customers. The company’s core solar product roadmap is divided into five categories: Power Optimizers, inverters, software which supports the company’s DC optimized inverter systems, batteries for PV applications, and smart energy management.

Power Optimizers

The company sells its third and fourth generations of Power Optimizers (P-Series and S-Series, respectively) which were designed for fully automated assembly and are based on the company’s third and fourth generation ASICs, respectively. The company has launched H1300, a Gen 4 based power optimizer, as a part of the SolarEdge 330kW inverter solution. This is the company’s first optimizer equipped with high frequency DC power line communications technology which allows communication with larger numbers of optimizers for ground mount applications, as well as improved remote software upgrade capabilities, allowing larger installations to support Ground Mount applications, as well as improved remote upgrade. The company is in the process of launching its fifth generation S1400 Series Power Optimizers. A key element of the company’s reliability strategy, and a significant differentiator relative to the company’s competitors, is the company’s use of proprietary ASICs to control, among other things, the company’s Power Optimizer’s power conversion, safety features, and PV module monitoring. Instead of using large numbers of discrete components, the company’s Power Optimizer uses a single proprietary ASIC, thus reducing the total number of components in an electrical circuit and thereby improving reliability.

Each new ASIC generation reduces the number of components required for any given functionality, adds more functions to the Power Optimizer, and meaningfully improves the efficiency of the Power Optimizer. The efficiency improvement reduces the energy losses which in turn reduces the amount of heat dissipation. This enables design of a more cost-effective and usually smaller enclosure and also keeps the electronics cooler, thereby improving the Power Optimizer’s reliability. The company’s research and development teams continuously work on further improving the company’s ASICs and releasing new generations of this improved technology.

Inverters

The company’s inverter roadmap includes both new products, as well as additional capabilities for existing inverters. The company’s inverter roadmap is intended to serve four purposes: (i) expand addressable markets by developing new and larger inverters designed specifically for larger commercial installations and utility-scale projects; (ii) improve the electronics to increase the total power throughput while minimally changing the existing enclosure, thereby reducing the actual cost per watt and increasing economies of scale; (iii) improve ease of installation by integrating additional functionality required in certain installations in order to reduce costs of additional hardware and subcontractors’ labor costs; and (iv) improve the residential inverter's functionality to serve as a hub for home energy management, integrating, controlling and optimizing the main home energy sources and loads.

Software

The company continues to expand its software offering with the introduction of new tools and features. This includes both professional web-based software and system owner applications such as fleet management, the site designer tool, the mySolarEdge consumer applications, all of which are offered to the company’s install base as complimentary to the sales of the company’s hardware solutions.

The company’s cloud-based Monitoring Platform is continuously growing by the amount of data aggregated. The company is continuously developing tools to accommodate the company’s growth and further enhance the company’s service offering. The company plans to continue developing algorithms that detect and pinpoint problems that can affect power production in field systems. The company further plans to add more capabilities through the company’s public API to allow users to build and integrate the company’s system into their own systems and build and share useful applications based on monitoring data gathered by the company’s software.

Batteries for PV Applications

The company’s residential storage solution, launched in 2021, is designed to integrate with the company’s single-phase and three-phase inverters to provide optimal energy management, maximum efficiency, longer backup times and ease of use for the homeowners. The company expects to continue to expand its storage solutions to cover more applications, improve battery management, efficiency and integration with energy management systems.

Smart Energy Management

The company is developing new features and capabilities for the smart energy management solutions, which are constantly evolving, such as the company’s SolarEdge Home Local Controller, which will enable the homeowner to run and manage their most energy-intensive devices on excess solar energy. The company is also introducing smart energy management and fleet management to the commercial segment. The company also plans on expanding the availability of the company’s smart energy products, including smart energy management devices, to new geographies and use cases.

New Products or Product Categories

The company continuously evaluates opportunities to expand its product offerings and services to the company’s customers. The company may from time to time develop new products or services that are a natural extension of the company’s existing business, or may engage in acquisitions of businesses or product lines with the potential to strengthen the company’s market position, enable the company to enter attractive markets, expand its technological capabilities, or provide synergistic opportunities.

Sales and Marketing Strategy

The company’s solar business strategy is to focus on penetrating new geographic regions and increasing the company’s market share. More specifically, the company focuses on markets where electricity prices, irradiance and government policies make solar PV installations economically viable. The company’s solar products have been installed in over 140 countries.

The company targets its sales and marketing efforts to the largest distributors, electrical equipment wholesalers, EPC contractors and installers in each of the countries where the company operates. The company’s products are carried and actively sold by most of the top solar PV distributors, as well as the largest electrical distribution companies. As of December 31, 2023, based on the number of installer accounts on the company’s monitoring portal, over 65,000 installers around the world have installed SolarEdge solar PV systems.

Additionally, the company has a number of programs focused on educating installers and other industry professionals about the company’s technology, and the company uses a combination of road shows, webinars, and partner trainings to educate them how best to design, sell, and implement the company’s technology in their projects.

Customers

The company derives a significant portion of its revenues from key solar distributors, electrical equipment wholesalers and large installers in the U.S. and worldwide. In 2023, two of the company’s customers, Memodo GmbH and Krannich Solar GmbH & Co. KG, represented 24.0% of the company’s revenues.

Training and Customer Support

The company offers its installer base a comprehensive package of customer support and training services which include pre-sales support, ongoing trainings, and technical support before, during, and after installation. The company also provides customized support programs to large installers and distributors to help prioritize and track support issues, thereby enabling short cycle times for issue resolution.

In 2023, the company revamped its first level certification, SolarEdge Fundamentals Training, a comprehensive training course for installers, with up-to-date installation methodologies and practices. During 2023, the company’s training portal (Edge Academy) hosted over 222,000 learners.

Additionally, in 2023, the company enhanced its installer’s performance enablement by adding over 50 product-specific courses, as well as increasing accessibility by creating a professional installation toolkit. During 2023, over 19,000 installers completed the company’s certification programs.

In addition to the above, the company supports its commercial system customers with design consulting throughout their sales process and installation.

The company’s technical support organization includes local expert teams, tech centers, an online service portal and live chat service. The company’s toll-free call and live chat centers are open Monday through Friday at least from 9:00 a.m. to 6:00 p.m. in every region in which the company sells its products. In addition, customers can open and track support cases 24/7 utilizing the company’s online portal. All support cases are monitored via a customer relationship management system in order to provide service, track closure of all customer issues and further improve the company’s customer service. The company’s call centers have access to its cloud-based monitoring platform database, which enables real-time remote diagnostics.

Customer service and satisfaction continues to be a key component of the company’s business offering and the company considers it integral to its continued success. The company maintains high levels of customer engagement through the company’s call centers in California, Australia, Japan, Israel, India, Bulgaria, Brazil, Taiwan, Thailand, South Africa, the Philippines and Poland. In addition to the company’s call centers, it has field service engineers located in the geographies where the company is active, and support the company’s customers with commissioning of large projects, introduction of new technologies and features and on-the-job training of new installers.

Manufacturing

The company contracts to have its solar products manufactured by two of the world’s leading global electronics manufacturing service providers, Jabil Circuit, Inc. (‘Jabil’) and Flex Ltd. (‘Flex’).

Intellectual Property

As of December 31, 2023, SolarEdge had 602 issued patents worldwide and 528 patent applications pending for examination. A majority of the company’s patents relate to DC power optimization and DC to AC conversion for alternative energy power systems, power system monitoring and control, battery technology and management systems. The company’s issued patents are scheduled to expire between 2024 and 2042.

Competition

The company’s DC optimized inverter system competes principally with products from traditional inverter manufacturers, such as SMA Solar Technology AG, Sungrow Power Supply Co., Ltd. and Huawei Technologies Co. Ltd. In the North American residential market, the company competes with traditional inverter manufacturers, such as Tesla Motors Inc., as well as microinverter manufacturers, such as Enphase Energy, Inc.

The company’s competitors include global manufacturers such as LG Energy Solutions, Samsung SDI, CATL, BYD, etc.

The company’s residential lithium-ion batteries for PV applications compete with global manufacturers of both lithium-ion and other residential battery storage solutions such as Tesla, LG Energy solutions, BYD, and Enphase Energy.

History

SolarEdge Technologies, Inc. was founded in 2006. The company was incorporated in Delaware in 2006.