VentureBeat

To a layman, electricity seems like a fairly straightforward proposition: It flows like water through wires and into gadgets, end of story. But the real story is a bit more complex, which is why Enphase Energy, a company that makes a device called micro-inverters for solar panels, has raised a new $15 million financing.

An inverter converts direct current (DC), which is what solar panels produce, into alternating current (AC), the type of electricity you’re usually using. Making a small, efficient inverter is particularly hard, and Enphase is one of the few companies that claims to be able to produce them. Adding to their obscurity, micro-inverters are designed to be reliable, and thoroughly hidden away.

But attaching a micro-inverter to each solar panel in an installation can eke out some five to 25 percent more electricity, according to Enphase. Because there’s on each panel, they can be used to pinpoint problems, which standard inverters can’t. And as a final advantage, using micro-inverters is also cheaper than installing a standard centralized inverters, at least according to Paul Nahi, the company’s CEO.

Enphase launched its product in June, and Nahi says it has since shipped out thousands, with a backlog for tens of thousands more by year’s end. He expects the company to sell hundreds of thousands of micro-inverters next year, with production ramping into the millions afterward, if the market for solar panels continues to do well.

You can see Enphase’s visualization tools below, the same as what a home-owner who had micro-inverters installed would have access to. The company currently sells into the home and commercial markets, but ultimately plans on getting into the utility market as well.

Rockport Capital led the $15 million financing, with Applied Materials joining as a strategic investor, and previous backer Third Point Ventures returning. Along with its $6.5 million second round, Enphase has taken $28 million to date; Nahi says it will likely seek another equity financing in the future if it continues to scale as planned.

Another company has emerged claiming it has a better way to tracking and manage the power that solar cells produce, just a few days after we reported the investment received by competing measurement company Fat Spaniel.

Better measurement tools are crucial to the emerging solar industry, which is struggling to become more efficient, so that it is cost-competitive with other sources of energy. Again, the high-tech companies of Silicon Valley are kicking in to push this sector forward. Both Enphase and Fat Spaniel are based in the SF Bay Area.

Enphase Energy, of Petaluma, Calif, says it has invented a micro-inverter that can be directly attached to individual cells in a solar array. Solar cells produce direct current electricity, which must be converted into alternating current before it can be fed into the electricity grid — a process that loses some of the energy produced.

Larger, centralized inverters handle the process, and provide the data for companies like Fat Spaniel to do their measurements. By attaching a miniature version to individual cells, Enphase says it can boost efficiency and provide highly specific measurement and performance analytics for solar arrays.

For the moment, it’s hard to say exactly how large a competitive advantage this gives Enphase. The company isn’t releasing any information about pricing or efficiency gains, although a representative told us that it has some very satisfied beta-testing partners.

However, a micro-inverter that is both highly efficient and cheap could potentially disrupt the business model of other companies, both those that manufacture conversion systems for solar installations and measurement firms that track the performance of arrays. Enphase will make its product announcements in the second quarter of this year.

The company took $6.5 million in the latest round of funding, provided by Third Point Ventures and an unnamed large, publicly-traded technology company. Enphase earlier $6.5 million in its first round from undisclosed investors, making for a total of $13 million.