The POWER Interview: IRA's Impact on Solar's Evolution
The Solar Energy Industries Association (SEIA) and Wood Mackenzie’s recent report on solar power installations said the U.S. installed a record 32.4 GW of new solar generation capacity in 2023, including 22.5 GW of new utility-scale capacity. That’s a 37% jump from the previous record, set in 2021, and a 51% increase from 2022.
The report released March 6 said total installed solar power generation capacity in the U.S. now stands at 177 GW. Abigail Ross Hopper, SEIA’s president and CEO, said, “If we stay the course with our federal clean energy policies, total solar deployment will quadruple over the next 10 years. The Inflation Reduction Act [IRA] is supercharging solar deployment and having a material impact on our economy, helping America’s solar module manufacturing base grow 89% in 2023.”
The IRA’s impact on renewable energy is undeniable, certainly for solar power, but equipment manufacturers still grapple with some of the legislation’s details. Sean Burke, CEO and co-founder of Enteligent, a California-based developer of smart solar power optimization and solar electric vehicle (EV) charging technologies, provided POWER with some of what he called the main points still on the minds of equipment makers as they navigate the solar power marketplace.
“The current IRA incentives do not treat all inverter technologies equally. It prioritizes microinverters at 11 cents per watt, despite being less energy efficient when compared to the DC [direct current]-coupled PV hybrid inverter systems, and this only benefits a few suppliers who already dominate the marketplace. This severely limits competition,” said Burke. He noted, though, that “The proposed guidance extends the same 11 cents-per-watt incentive to a DC-optimized inverter system if the optimizers and inverter are sold as a full system solution and comply with the ‘Made in the USA’ criteria. This move makes rooftop solar more affordable by increasing competition and bringing the production of more solar components back to the U.S.”
Burke added, “These proposed guidelines are critical to the success of solar inverter companies, but only if they understand the legislation and how to maximize their full benefit. There is a lot of confusion in the marketplace about who/what qualifies for incentives, what is considered ‘Made in the USA,’ and who can benefit from the tax incentive transference process.”
Burke dove deeper into his company’s work, and the impact of the IRA on the solar power sector, as he answered questions from POWER.
POWER: Please tell us about Enteligent and the power electronics you are developing for the solar industry.
Burke: Enteligent is a California-based developer of smart solar power optimization and solar EV charging technologies. Our products dramatically increase solar energy utilization, which improves returns on energy investments and enables a paradigm shift in how we maximize energy usage for the upcoming electrification revolution.
Traditionally, the solar industry had to convert solar energy from DC to AC (alternating current) for grid integration, resulting in substantial energy losses during the conversion process. This loss manifests as heat, leading to component deterioration and decreased reliability. By avoiding these conversions, we not only conserve energy but also enhance product reliability. Additionally, this approach reduces overall costs, making clean energy more affordable and expediting its widespread adoption. This is the rationale behind our two DC-coupled products, the NMax with Rapid Shutdown and the TLCEV charger.
Enteligent’s NMax photovoltaic module power optimizers use smart digital technology to dynamically adjust for optimization and provide panel-level monitoring data that generates increased rooftop yield, improved energy harvesting, and heightened system reliability. In fact, they result in an average of 10% higher electricity production from a typical rooftop solar installation.
The product line also provides rapid shutdown capabilities, which is mandatory for all rooftop solar installations and ensures efficient power optimization. The modules also excel in communicating detailed panel-level data to the inverter, which empowers panel-level monitoring that delivers comprehensive solar generation statistics for individual panels. This capability allows installers to validate proper panel functioning, aids service providers in diagnosing and troubleshooting issues, and ensures operators achieve maximum solar array performance.
POWER: Are there other companies selling optimizers?
Burke: Enteligent is currently the sole provider of rapid shutdown modules featuring optimization capabilities over standard wiring, eliminating the need for specialized wireless equipment and the associated complexity. In the context of solar panel performance, power optimizers play a crucial role in maximizing your solar investment and harnessing the full potential of available energy. Through systematic comparisons, we have demonstrated that NMax provides between 25% and 38% more power during shady conditions when compared to plain rapid shutdown modules or standalone panels.
Another company has introduced an optimizer that requires the installation and use of their proprietary wireless equipment, while ours is technology agnostic. And, the market leader for string inverters includes optimizers with all of their systems, but that’s not a good solution for all the other inverter companies.
POWER: Can you share a few examples of how Enteligent takes a more holistic approach to delivering solar solutions?
Burke: The Enteligent team brings fresh thinking to the decarbonization challenge by applying a system-wide approach and proven best practices from the demanding high-tech industry to increase output across the solar and EV markets. Our background comes from the computing industry, where emphasis is placed on constant performance enhancements, efficiency, and direct current system design. We also have experience in building products, specializing in the development of high-efficiency products like LED lighting and HVAC (heating, ventilation, air conditioning) systems, both of which predominantly incorporate DC components.
Recognizing the inherent efficiency and reliability advantages of utilizing new technology in its native DC format, we have shifted our focus accordingly. Instead of taking a narrow product-by-product approach, we analyze the interplay between various components in a system to identify optimal strategies for enhancing energy output and performance.
POWER: How has the introduction of the Inflation Reduction Act impacted the industry and how will the proposed guidance to the Advanced Manufacturing Tax Credit (45X MPTC) change things?
Burke: The IRA is primarily focused on incentivizing the U.S. manufacturing of clean energy products by providing a significant tax credit. However, current IRA incentives do not treat all inverter technologies equally. It prioritizes microinverters at 11 cents per watt, despite being less energy efficient when compared to the DC-coupled PV (photovoltaic) hybrid inverter systems. U.S.-built residential and commercial inverters are incentivized much less. This difference in incentive amounts benefits microinverter suppliers more than energy-efficient hybrid inverters, restricting competition by allowing just a few suppliers to dominate the marketplace.
Proposed guidance to the IRA’s 45X MPTC equalizes the tax benefits for solar inverter and microinverter suppliers by extending the 11 cents-per-watt incentive to a DC-optimized inverter system. String inverter systems that include optimizers will be granted a full 11 cents per watt. This extends across residential- and commercial-level string inverter systems. For example, a 15kW inverter solution will give the manufacturer more than $1,650 in tax credit, which can translate to a $4,000 lower reduction in cost for the consumer.
Solar inverter companies that don’t take steps to maximize the benefits will be at a complete disadvantage. It’s critical that, as an industry, we understand what the legislation means and how we maximize it to our collective advantage.
POWER: What impact will the proposed guidance for the IRA 45X MPTC have on the solar industry?
Burke: The updated guidance is a catalyst for leveling the playing field and bringing solar technology production back to the U.S., making solar more affordable.
Fostering competition gives solar installers and end users more choices and offers building owners and solar installers access to PV string inverters that provide features and performance that are the same or better than those offered by the two dominant industry players.
The 45X MPTC will also encourage more solar components to be manufactured in the U.S. so that solar inverter companies can qualify for the full incentive. Combining these significant tax credits, when measured against the high tariff cost of imported solar products, will accomplish the government’s goal and vastly change the solar industry landscape.
POWER: How does the proposed guidance affect Enteligent?
Burke: Enteligent’s NMAX Optimizer is the only plug-and-play PLC optimizer currently available to the solar inverter market, making it a necessary addition to solar inverters to qualify for full advantage of the generous IRA tax credits. It also allows them to provide a solution that provides more advanced functionality than other alternatives on the market at a competitive price point without requiring a proprietary communications network.
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).