Businessmodel of SolarEdge Technologies

Customer Segments

SolarEdge Technologies serves a range of customers across multiple sectors and jurisdictions. In 2015 the Company sold products to approximately 210 direct customers in 39 countries worldwide, and as of 30th June 2015, around 9,782 indirect customers had registered with the Company’s cloud-based monitoring platform.

SolarEdge Technologies’s solutions are targeted at installers of solar technology. Its solutions can be largely categorised as follows:

• Residential, relating to on-grid solar panel systems and inverters for use in residential properties;
• Commercial, relating to on-grid solar panel systems and inverters for use in commercial properties; and
• Self-use, relating to coupled storage solutions that can be used to increase energy independence for homeowners. The Company’s principal customers comprise solar distributors and electrical equipment wholesalers, and module manufacturers that offer photovoltaic modules with SolarEdge Technologies’s power optimiser embedded into their modules. Among its largest customers are SolarCity, SunRun and Vivint Solar, which provide solar power systems to residential and commercial end users.

While Europe has historically been SolarEdge Technologies’s largest market, growth across the US solar energy market has seen the US become the Company’s principal source of sales.  In 2015, sales in the US accounted for 73.3% of the Company’s total annual revenue. Outside the US, SolarEdge Technnologies focuses on markets where electricity prices and government policies make solar panel installations economically viable. To date, the Company’s products have been installed in Australia, Belgium, Canada, China, France, Germany, Israel, Italy, Japan, the Netherlands, Singapore and the UK.

Value Propositions

SolarEdge Technologies provides value to its clients through the quality and reliability of its products, the accessibility of its products and its commitment to innovation. The Company is one of the leaders in its industry, commanding a respected reputation. Its products are available through multiple channels across numerous jurisdictions, and it commits a significant portion of its operating funds to research and development activities, with a view to providing the best possible products to its customers.

Channels

SolarEdge Technologies operates a website at www.solaredge.com where customers can find information on the Company’s various products and services. The Company primarily makes sales directly through its own sales team. It currently has a presence in the US, Australia, Canada, China, France, Germany, Israel, Italy, Japan, the Netherlands, Turkey and the UK.

SolarEdge Technologies also sells a significant portion of its products through third party distributors, which in turn sell to local installers. The Company does not maintain exclusive arrangements with these distributors, many of which also sell products on behalf of competing solar technology companies. These distributors and large installers are able to terminate their relationships with SolarEdge Technologies at any time.

SolarEdge Technologies also utilises third-party distribution centres in the US and Europe. Some finished products are shipped to customers directly from the Company’s contract manufacturers or are shipped to third party distribution centres before being sent on to end customers.

Customer Relationships

SolarEdge Technologies continues to provide personal care to its customers after sale in the form of technical support services. The Company offers its installer base a range of customer support and training services, including pre-sales support, training programs, and technical support before, during, and after installation.

It also provides support programs to photovoltaic module manufacturers, large installers and distributors. SolarEdge Technologies additionally offers hands-on and on-demand video sessions and online product and training materials, and allows customers to open and track technical support cases 24 hours a day through its online portal.

SolarEdge Technologies also organises road shows and webinars to show its customers how best to sell and implement its technology, and keeps customers updated with company developments through its Facebook, Twitter, Google+, and Linkedin accounts.

Key Activities

SolarEdge Technologies develops, markets and sells solar power harvesting and photovoltaic monitoring products and solutions. The Company’s product portfolio principally comprises power optimisers, photovoltaic inverters and a Web portal for module-level monitoring and fault detection.

The Company’s SolarEdge power optimiser is a direct current/alternating current converter that is connected by installers to each photovoltaic module or embedded by module manufacturers into third-party products.

The SolarEdge direct current/alternating current photovoltaic inverter operates in conjunction with the Company’s SolarEdge power optimisers. SolarEdge Technologies’s photovoltaic monitoring portal is a web-based application that enable customers to monitor the performance of their solar power systems.

Key Partners

SolarEdge Technologies’s partners principally comprise manufacturing partners, supply chain partners and distribution partners.

SolarEdge Technologies does not own its own production facilities and currently outsources all of its manufacturing operations to third-party manufacturing partners. which enables the Company to access advanced manufacturing equipment, processes, skills and capacity at relatively low cost. The Company has outsourcing agreements with electronics manufacturers Jabil
Circuit and Flextronics Industrial.

The manufacturing process is also assisted by SolarEdge Technologies’s supply chain partners, from which the Company receives tools and resources. The Company has recently agreed a deal with Greece-based photovoltaics project developer Enolia Solar Systems to provide solar power harvesting equipment.

SolarEdge Technologies also has a number of tie-ups with regional distributors that extend the Company’s own logistics networks. For example, in recent years the Company has entered into distribution partnerships with Italian distributor Tecno Spot and German distributor BayWa.r.e.

Key Resources

SolarEdge Technologies’s key resources are its technology and intellectual property, its manufacturing and distribution partners, its IT infrastructure and software platform, and its personnel – in particular those working within the research and development, sales and support teams.

Searches of records held by the US Patent and trademark Office identified a number of patent applications filed in the name of SolarEdge Technologies. These include applications entitled ‘Dual compressive connector’, ‘Multi-level inverter with flying capacitor topology’ and ‘Dual use photovoltaic system’.

Cost Structure

SolarEdge Technologies incurs costs in relation to the research and development of its products and solutions, the employment of contract manufacturers, the acquisition of supplies, the distribution and storage of its products, the retention of its personnel, and the maintenance of its IT infrastructure.

As of 30th June 2015, the Company had 440 full-time employees, which accrue costs in the form of salaries and benefits, and operates sales and administrative offices across multiple jurisdictions, representing costs in the form of rent and utilities.

Revenue Streams

SolarEdge Technologies generates revenue through the sale of direct current optimised inverter systems for solar photovoltaic installations. This includes power optimisers, inverters and the Company’s cloud-based monitoring software products. The sale of inverters and optimisers, however, account for the vast majority of the Company’s annual revenue. SolarEdge Technologies’s revenues are affected by changes in the volume and average selling prices of its products, which are in turn driven by supply and demand, fluctuations in between large and small customers, seasonality and competitive product offerings.

In 2015 SolarEdge Technologies generated $325.1 million in annual revenue, up significantly from the $133.2 million recorded in 2014. The Company attributed this 144% rise in revenue to an increase in the number of systems sold worldwide, particularly growth in the US market. In 2015 sales of inverters accounted for $157 million in annual revenue, while sales of optimisers accounted for $158.5 million.