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Summary

  • The smart solar modules are adopting module-level power electronics, which are the microinverter and power optimizer currently available, to maximize the power output of a solar system.
  • The smart solar module market looks promising and its penetration rate of the total PV module will grow steadily.
  • A healthy ecosystem of the smart module is formed and the PV module manufacturers are interested.
  • Both benefits and drawbacks of the smart module are evident.
  • The prospects of the solar smart module looks good though it still takes time to have all interested parties buy in.

The ultimate goal of the solar photovoltaic (PV) power generation is to achieve grid parity while providing an infinite of energy. There are usually three ways to lower the levelized cost of energy (LCOE) of PV power, i.e., reducing the cost of products, improving the efficiency of the products and decreasing the power loss during operation. Reducing PV module manufacturing cost is the direct and obvious way to lower the cost of PV power, which has been exerted to a greater extent by PV manufacturers. The importance of improving solar cell conversion efficiency that decreases the LCOE, which I described in my last article, has been acknowledged by PV manufacturers that have developed practical and effective approaches together with the equipment suppliers and are making steady progress. How to reduce the loss of power output resulting from the PV module power mismatch is imperative. Now the smart module, which could minimize the loss of a PV system power output due to the shadowing from clouds, dust or other objects, is one of the options and has attracted more and more interests from PV module manufacturers.

Smart solar modules are entitled by adopting module-level power electronics (MLPE), no matter embedded or attached to the module, which offers the module-level maximum power point tracking (MPPT), user-friendly monitoring and enhanced safety. The common MLPE applied in today's PV market is the microinverter and power optimizer. The microinverter converts direct current (DC) from a solar module to alternating current (AC) and the power optimizer is a DC to DC converter that maximizes the energy harvest from solar modules. A microinverter, basically including a power optimizer, could be attached or integrated to the module (A module with a microinverter is sometimes also called as AC module, and in this article it is generally labeled as smart module). The power optimizer also could be applied in two ways, either integrated or attached to the PV module. There are other definitions of smart module that exclude the module frame attached type, but I would rather count it in as it is the important compromise to retrofit the existing module or system by providing the same functionalities during this early stage of smart module penetration.

The smart module market

The smart module market could be estimated by the microinverter and power optimizer shipment. Currently, the main smart module market is related to the distributed solar PV market in the United States. The year 2013 penetration rate of smart module exceeds 50% in US residential market, and closes to 20% in commercial market. The market outside US is also growing, e.g., Canada, Europe regions, Australia, etc. The outlook of smart module market size and its correspondent penetration rate of the total PV module will have substantially growth in the coming years, shown as in the below chart. A total of about 50 GW of smart modules is expected to be installed by 2020.

(click to enlarge)

Global smart module market size and penetration rate

The ecosystem of smart module

The smart module business introduces the legitimate semiconductor companies, who previously have a smaller total accessible market in the PV industry, into the playground. A lot of microinverter and power optimizer start-ups are emerging and playing a role of the upstream supplier to module manufacturers. The following table shows what sorts of providers are doing in the value chain of smart module.

Solution/Product

Provider

Microinverter & Power Optimizer

Smart Module

Product

Solution

Semiconductor Companies

Microinverter & Power Optimizer Companies

Module Manufacturers

The semiconductor giants have shown great enthusiasm for developing smart module solutions and promoting both application-specific integrated circuit and solutions based on universal devices. Texas Instruments (NASDAQ:TXN) launched C2000 solar microinverter development kits in May this year. Together with SolarMagic, a subsidiary brand inheriting from National Semiconductor Corporation after the acquisition, Texas Instruments could provide complete hardware and software for high-performance solar power systems. So do other semiconductor companies, like STMicroelectronics (NYSE:STM), Infineon (OTCQX:IFNNY), etc., which offer total solutions for the microinverters and power optimizers. Here are a bunch of examples.

Semiconductor Company

Solutions Available

Power Optimizer

Microinverter

Texas Instruments

C2000 (Development kits)

SolarMagic

STMicroelectronics

STEVAL-ISV003V1 (Evaluation board)

SPV1020

Infineon

OptiMOS, CoolMOS, thinQ! + XMC4000

OptiMOS + XMC4000

Comparing with those billion-dollar semiconductor companies, the microinverter and power optimizer firms are much diverse in terms of business scale and market competition. The flagship of the microinverter industry is Enphase Energy (NASDAQ:ENPH) that has shipped cumulatively more than 5 million units representing over 1.3GW (DC) by Q1 2014. Most of others are start-ups with short history, and the potential representatives include Tigo Energy, Altenergy Power Systems (APS), SolarEdge, etc. Besides these new entrants, traditional inverter market dominators, like SMA and Power-One (acquired by ABB), are also joining the party. Following is the list of the main microinverter and power optimizer players.

Company

Microinverter

Power Optimizer

Enphase

Tigo

APS

SolarEdge

SMA

Power-One (NYSE:ABB)

Solarbridge

Enecsys

Renesola

Darfon

As for PV module makers, they have been seeking to differentiate their products in an increasingly commoditized business. The low cost and high conversion efficiency are the common competitive edges, and now the smart modules are attracting more and more interests from the PV module manufacturers that are expanding their efforts to help lower the LCOE of PV power generation. Smart modules are not rare in the market now and more and more PV module manufacturers have shown their brand new smart modules in recent PV exhibitions. Trina Solar (NYSE:TSL) is leading the trend that its Trinasmart, which integrates Tigo's power optimizer, is officially open for purchase on the company website and the first commercial installation (113kW) of Trinasmart has been implemented in US early this year, while other companies' smart modules could only be seen during the PV shows. The follows are a few smart module examples.

PV module makers

Smart module

Solutions provided by

Trina

Trinasmart, Integrated power optimizer

Tigo

Yingli (NYSE:YGE)

Integrated power optimizer

SolarEdge

JA Solar (NASDAQ:JASO)

Integrated power optimizer

Tigo

Canadian Solar (NASDAQ:CSIQ)

AC module

-

Hanwha SolarOne (NASDAQ:HSOL)

AC module/ Integrated power optimizer

Darfon/Tigo

The benefits and disadvantages of smart module

The smart module offers the module-level maximum power point tracking (MPPT), so it improves energy yields. The microinverter and power optimizer manufacturers claim that their approaches allow better energy harvesting up to 20-30%. Ease of maintenance is the another advantage in which a single module failure is easily located and fixed as all operations are at module level.

The key evident drawback of smart module is the additional cost, which is 20-40 cents per Watt to the initial investment cost of a PV system. Though, theoretically, the smart module has lower LCOE, not all of the PV module manufacturers buy it. The microinverter and power optimizer manufacturers have provided a lot of test data in comparison of energy yields between the smart and standard PV modules, but more field tests in large scale and with longer time of period may be needed to demonstrate the convincible benefits of the smart module.

The perspective of the smart module from the capital market

Lastly, it is interesting to note the stock price of Enphase, which the only representative of the microinverter and power optimizer manufacturers being public.

(click to enlarge)

By Yahoo! Finance

The year-to-date (YTD) gains (as of submitting this article) of Enphase, SunPower (NASDAQ:SPWR), Guggenheim Solar ETF (NYSEARCA:TAN) and Trina are compared in the above chart. The gain of Enphase is the highest around 55%, followed by SunPower's 15% and TAN's 10%, and Trina has lost about 20% so far this year.

It looks Enphase has outperformed the whole solar PV industry, but what is more meaningful is that the microinverter and power optimizer together with the smart module has been an important part of the value chain of the PV industry and the smart module market is favored to grow into the mainstream one.

Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.

Source: The Smart Solar Module Is On The Way To Mainstream