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SolarEdge Is Dominating A High-Growth Industry

The solar market has been quite flat in recent years despite the craze around solar power. While the technology that supports solar has gone a notch higher, the fierce competition in the industry has made it even more challenging for solar companies to thrive profitably.

What’s more, the existing disagreements between China and the US have only worsened the situation for forward-looking solar companies. However, despite being rocky times for solar, SolarEdge has experienced growth within the competitive industry.

Just like its own name, the company has achieved an edge in the niche by specialising in solar energy components and accessories. As such, SolarEdge is experiencing a growing demand for solar systems without having to face the risks prevalent in the solar panel making industry.

Currently, SolarEdge supplies most of the world’s biggest solar panel manufacturers instead of being directly involved in the more commoditised solar panels manufacturing industry. The company’s impressive Q1 is a confirmation that the company is solid and strategically positioned moving into the future.

Continuous Growth

Despite the turbulent times in the solar industry, SolarEdge has continued to post strong quarterly results. The company’s revenue grew 29% YOY in Q1, with revenues of $253 million being generated by solar power products alone.

In addition, SolarEdge expects the performance of its Q2 to be even stronger owing to the existing favourable fundamentals.

At a time when some of the biggest and well-established solar companies like SunPower and First Solar are struggling to stay afloat, SolarEdge continues to defy the expectations of many.

The solar accessory and component space is undoubtedly one of the most potential solar segments. The company has done a remarkable job of taking advantage of this growth segment and invested more in some of the core products like solar inverters and optimisers.

As solar continues to grow in popularity all across the globe, demand for these solar accessories and components is bound to increase. And being a forward-thinking solar company, SolarEdge has done well in growing its popularity within the industry that has seen it top the competition ahead of renowned players like Enphase.

Diversification

As the aggressive pricing competition within the solar panel industry continues to take most manufacturers aback, SolarEdge is soaring higher as it benefits from this competition.

Cheaper solar systems are ultimately translated into cheaper commercial, residential and utility-scale solar energy projects. Since SolarEdge offers a variety of quality solar products to these projects, the downward pricing of the end product—the solar panels, only causes an increase in the demand for SolarEdge products.

However, the solar accessories and solar components market is expected to suffer volatility issues in the future given that it’s still a relatively young niche. SolarEdge’s plans to diversify into other clean energy areas will only become solid and more attractive.

As a result, SolarEdge’s unrivaled efforts to diversify are coming as exciting news for solar investors. The company already boasts presence in some high-growth sectors including energy storage and electric vehicle charging.

Already, SolarEdge is incorporating lithium-ion technology in its groundbreaking Kokam. The solar company has also acquired S.M.R.E. in a bit to gain a strong foothold in the rapidly growing E-mobility market.

The move to venture into the high growth sectors outside the solar solutions umbrella is likely to cause the company less volatility in the future.

Risks Are Inevitable

Several companies are preparing to capitalise on the growth of the solar accessories and component market. In fact, SolarEdge’s fierce competitor Enphase saw its valuation rocket after an impressive Q1.

Even though SolarEdge has been gaining more popularity in recent years, Enphase remains a huge competitive threat. And considering how relatively young this industry is, it’s unclear which accessory/component technologies will ultimately win.

Moreover, bigger companies could enter the market and force smaller firms like SolarEdge out of business. As I write this post, China’s technology giant Huawei is moving into the market at SolarEdge’s detriment.

Consequently, SolarEdge has filed a patent-infringement lawsuit against the Chinese company. And with such actions, there’s no doubt that the competition in the solar accessories/components

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