SolarEdge $590 million capital raise “expands the war chest,” said ROTH

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SolarEdge Technologies, a major player in the PV inverter space, recently priced an offering of 2 million shares at $295, raising nearly $600 million total gross proceeds. In an industry note, Philip Shen, managing director, ROTH Capital Partners, described the offering as a well-timed move to expand the company’s “war chest.”

The offering comes as SolarEdge is trading about 15% below its all-time high. ROTH estimates total liquidity for the company may reach as high as $2 billion. With this war chest, SolarEdge said it can fund general corporate purposes and support new acquisitions. The company said it does not have any active commitments to acquisitions at this time. The raise creates about 3.4% equity dilution, estimates ROTH, but the firm said SolarEdge is well positioned for flexibility going forward. ROTH reiterated its buy rating and raised its price target for SEDG from $300 to $380.

SolarEdge has a market cap of about $17 billion, posting nearly $2 billion in revenues in 2021, and $1.45 billion in 2020. ROTH estimates growth may bring the company to $2.66 billion in revenues this year. The firm said SolarEdge is set to benefit from global solar demand acceleration, particularly in the European Union.

ROTH said some investors believed the capital raise was designed for additional battery capacity expansion, but the firm said it believes the company could have used bridge financing to do so.

SolarEdge’s major competitor in US markets, Enphase, recently made an acquisition of its own. The microinverter and battery provider purchased SolarLeadFactory, a residential solar lead generation business. The lead generation feature is set to add to Enphase’s digital platform for installers that includes design, permitting, installation, monitoring, and maintenance interfaces for solar PV and batteries. Soft costs like customer acquisition are a big hurdle for solar installers, so bringing lead generation in-house may be an attempt by Enphase to create competitive cost advantages.

New products and services

SolarEdge has also made significant additions to its business in recent months. Last October, the company released a residential battery system: the Energy Bank battery and Energy Hub inverter. SolarEdge said the DC-coupled residential energy storage battery provides 9.7 kWh of backup power. It can be connected in parallel with eight additional batteries, delivering up to 87 kWh of backup capacity. It has a round-trip efficiency of 94.5%, said the company. It said its DC-coupled technology requires one power conversion, rather than the three conversions that are needed with  AC-coupled technology.

The SolarEdge Energy Bank battery.
Image: SolarEdge

The Energy Hub inverter ranges from 7.6kW to 11.4kW PV power and 10.3 kW backup power, with 200% DC oversizing to deliver higher energy yield for the home. The company said the backup power inverters simplify installations by reducing the need for main panel upgrades. The devices can be connected wirelessly, and can link up with the SolarEdge Home EV charger.

The equipment can be monitored and managed from the company’s mobile app. The software helps prioritize loads based on homeowner preferences, and applies algorithms that aid economical decisions, while accounting for external factors like weather events.

This January, the company partnered with Texas-based energy provider PearlX to create a virtual power plant (VPP) service. PearlX will purchase hardware and cloud-based grid services technology from SolarEdge, and the inverter provider will offer design and engineering support. While not a significant part of SolarEdge’s operations yet, VPPs offer an example of one of the many ways the company can expand its services and offer value in an increasingly distributed energy environment.

Described by PearlX as a “win-win-win,” each VPP provides load-serving and resiliency benefits to consumers, royalty and income streams for its multi-family real estate partners, and flexibility and capacity services to the Texas energy market, enabling utilities to leverage and control a previously untapped pool of available distributed energy resources to support grid stabilization.

With an expanded “war chest,” more partnerships, product offerings, or acquisitions may follow for SolarEdge.

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