California-based Enphase will launch its first U.S.-based clean energy hardware manufacturing thanks to tax credits included in the Inflation Reduction Act.
Enphase leadership said this week that the not-yet-finalized tax credits coupled with booming demand made U.S. manufacturing the right move at this time. The company joins a growing list of clean energy companies that have announced expanded domestic production at least in part due to incentives in the landmark climate legislation.
Enphase is a leading supplier of inverters for residential and small commercial solar; inverters are the crucial equipment needed to convert solar panels’ direct current output into alternating current for use in the home or for exporting to the grid. Enphase bucked conventional wisdom by miniaturizing them so they can snap onto each rooftop panel, hence the term microinverter. It grew that business to a $40 billion market capitalization, and also sells battery packs for home energy storage.
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When the Inflation Reduction Act became law in August, it offered good news for Enphase on multiple levels. First, it increased and extended tax credits for solar installations, and more rooftop solar means more demand for microinverters. It also created a tax credit specifically for domestically produced microinverters at 11 cents per watt (AC) of microinverter capacity. That provides a new financial boost for domestic manufacturing, said Enphase spokesperson Andrew Newbold. He also noted that localizing production helps streamline supply chains.
“We’re trying to align where we’re manufacturing products with where demand is or where we see demand coming,” he said. “We’re bringing those jobs here for the products that we’re using here.”
Until now, Enphase hired contract manufacturers like Flex and Salcomp in locations across Mexico, India and China to make its products. This approach keeps capital investments low compared to building its own factories, Newbold said. “We can turn on and off lines at will without having stranded assets,” he noted. “We can diversify our manufacturing so we can get the best deals and make sure we’re serving the right markets.”
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