Consolidation in the Solar Energy Industry

1. One of the biggest electricity infrastructure suppliers in the world is throwing up its hands and giving up on solar energy. ABB is unloading the solar inverter business, formerly known as Power-One, that it acquired in 2013 for $1.03 billion, which included $266 million in acquired cash. 

2. The company isn't just taking a loss on the deal, it's reportedly paying Fimer $470 million to take the business off its hands.


INVERTERS BUSINESS
1. Very few companies have managed to generate long-term value in the solar industry, and one of the most volatile segments of the market has been the inverters that ABB was making. 

2. he devices that turn direct current (DC) to alternating current (AC) used in the electric system are a necessity in any solar project, but they've also been a very difficult business to be in. 

3. Inverters have been a tough segment to keep up with as component preferences change and upstarts improve on existing technology. And there's really only one company that's managed to stay on top since it began.


CONSOLIDATION
1. KACO New Energy sold its central inverter business to OCI Power and its string inverter business to Siemens earlier this year.

2. Schneider Electric said it's exiting the utility-scale solar inverter business in favor of a commercial and industrial platform it's building with Siemens. 


SUCCESSFUL COMPANIES
1. SolarEdge has arguably been the most successful in generating value because it became a favorite power optimizer supplier. From there, it has branched into products like inverters and energy storage. Despite the fact that power optimizers are starting to slip in market share, the company has benefited from growth in inverter sales, which hit 131,000 units in the first quarter.


THOUGHTS
1. One is that being a component supplier in the solar market is rarely a way to build long-term value. Installers, solar panel manufacturers, and end customers themselves change their preferences, and that can impact the supply chain all the way down to inverter manufacturers.

Bigger isn't always better in solar energy. Power-One thought that it would get a boost from ABB's size and connections in the power supply business, but that's not at all what happened. It began losing to more nimble, lower-cost suppliers, and it's often those scrappy upstarts that you want to bet on in the solar industry.

(Source: Yahoo Finance)