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Summary:

Picking winners and losers is always a dicey exercise, but Lux Research took that plunge and issued a report this week, which points to likely revenue winners and IPO candidates over the coming year. The names that popped out include Amonix, Enphase Energy and Abound Solar.

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Picking winners and losers is always an interesting and dicey exercise. Lux Research took that plunge and issued a report this week that pointed to likely winners in revenues and IPO candidates over the coming year, as well as some companies that they issued “caution” on. The winners names that popped out included Amonix, Enphase Energy and Abound Solar — the cautions were for Solyndra and Nanosolar.

Lux’s Jason Eckstein, author of the report, argued that a new shakeout is coming as government subsidies in countries such as Germany and France are set to decline. These subsidies, the feed-in tariffs, are supposed to fall gradually as production scale and technologies improve and presumably the prices for them should fall as well. That puts pressure on manufacturers to lower the prices of their goods. Plus, the market is getting new entrants who believe they’ve got something the dominant players don’t.

Eckstein anointed Amonix, Enphase and Abound as breakout stars in their class and, as a result, are likely to go public and reward their investors some nice returns. Kleiner Perkins-backed Amonix is a high-concentrating PV panel maker based in Seal Beach, Calif., that seems to have emerged from hibernation to win some utility-scale contracts. The company has been around since 1989, and it closed a B round of $129.4 million earlier this year. Last month, news came about Amonix’s biggest deal announced to date: a 30-megawatt project in Colorado by Cogentrix Energy, which signed a power sales agreement with Public Service Co.

Enphase got the nod because it was early to the market of microinverters and has “high sales volumes,” according to Lux. Microinverters, unlike centralized inverters, are added to each solar panel to convert direct current to alternating current for feeding the grid. The Petaluma, Calif.-based startup, another Kleiner Perkins pick, is likely to dash across the IPO line quicker than others, Eckstein said. The company’s use of contract manufacturers is a smart move because it eliminates the need to raise a lot of money to build and operate factories, he added.

Lux isn’t alone is feeling bullish about the microinverter technology. In a report released last month, IMS Research said microinverters and their cousin technology the DC-DC power optimizers are likely to generate more than $1.5 billion in revenue over the next five years worldwide.

We all know that First Solar has been super successful. Startups want the same thing. Lux selected Abound Solar from the lot as a rising star in making cadmium-telluride solar panels. Abound, based in Loveland, Colo., and backed by DCM, last raised venture capital in 2008 ($104 million), opened its first factory in 2009 and won a $400 million federal loan guarantee to expand manufacturing in 2010. Its panels can achieve about 10 percent efficiency. First Solar can do 11.2 percent efficiency.

Eckstein also didn’t forget the biggest army in the war for solar market dominance: companies making crystalline silicon solar panels and their suppliers. Not surprisingly, he noted the rise of Chinese solar panel makers, some of whom have their own plants to make polysilicon, ingots and wafers, the materials necessary to make solar cells and then panels. Yingli Green Energy and Trina Solar are examples. He also gave a shout out to newer players such as Samsung Electronics and LG Electronics.

Despite the high amount of buzz about thin film solar players Nanosolar and Solyndra, the Lux report issued cautions on these startups. Nanosolar received low marks for both technical value and business execution, while Solyndra drew low marks for technical value. Solyndra withdrew its IPO plans earlier this year. The Lux report says “The space is becoming bifurcated as start-ups such as Solyndra and Nanosolar fail to execute on their ramp-ups and become long-shots.”

The solar market is still young and relies heavily on government subsidies to grow. That, by definition, means it will be in flux and not so predictable. Already, forecasts for 2011 solar power project installations vary widely, from nearly 13 gigawatts to almost 19 gigawatts.

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  1. Excellent and insightful piece by Lux. Thanks for highlighting it.

    Both inverter and module spaces are intriguing and this roadmap instructive. As you and Lux note, it will be interesting to see if Abound can become a strong second player in Cd-Te. With 653 exhibitors selling modules at the recent Intersolar Munich conference (http://d-bits.com/a-tale-of-two-conferences/) a roadmap and evaluation system like this report offers is becoming a critical assessment tool.

    Other areas that Lux highlighted, but purposefully did not go into great depth, are in DC-DC converters. This appears to be a very hot emerging category.

    From the report, “A surge of startups have emerged that manufacture DC to DC converters … we have excluded companies like Tigo, ARDA, and eIQ (from discussion in the report) … However, we have considered their roles in terms of partnerships”

    Regards, David

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