Power-One rides alternative energy wave
Power-One is reinventing itself.
The Camarillo-based company designs and manufactures power conversion products. It rose to prominence and went public amid the telecommunications boom of the late 1990s, and its products now show up in Cisco technology that forms the backbone of the Internet.
But these days Power-One is jumping into the renewable energy market. Early last year, it introduced a line of inverters that make grid-ready the power generated by solar panels and small-scale wind turbines. It has already won a contract to supply a solar installation in Spain that will be the world’s second largest.
In its third-quarter earnings report, Power-One said revenue from the renewable energy products has jumped to nearly $20 million, or 14 percent of total revenue of $140 million. “We expect it to be $100 million in 2009,” Linda Heller, Power-One’s chief financial officer, said in an interview with the Business Times.
The company has also announced plans to enter the large-scale wind-power market next year. While Power-One’s solar products can service both massive commercial installations and homeowners’ rooftop systems, its current wind products are small-scale only.
Although Heller couldn’t release details about the company’s plans, she said its new wind-power product line “will be a full range. We’re looking to be as competitive on our wind line as we are on our solar line,” she said.
The foray into large-scale wind comes as part of a deep rethinking of Power-One. Since the beginning of 2008, Richard Thompson replaced William Yeates as chief executive and Heller replaced Jeffrey Kyle as chief financial officer.
The company has incurred losses for the last seven fiscal years, according to its most recent annual report, and has an accumulated deficit of $456.2 million. At the same time, its shares have been caught up in the economy’s downturn and dipped below $1, down from the $5.75 range a year ago. Even in good times, Heller said, the power industry only grows by about 3 to 5 percent a year.
“The traditional power business is going with the economy,” Heller said. “A lot of our customers are down. We’re not surprised by the results we’re seeing there.”
But the purchase of Magnetek’s power electronics group in 2006 is looking like a smarter move all the time. That purchase included a set of little-known solar inverters made in an Italian factory.
“This was a little fledgling business [Magnetek] had going, kind of on the side,” Heller said. But with some tweaking from Power-One, the inverters have eked out efficiencies of more than 96 percent, an accomplishment in the industry. Solar companies live and die by percentage points of efficiency.
“We’ve been doing very well winning big contracts,” Heller said, referring to one with Spanish firm Isolux Corsan, which is building the largest photovoltaic installation in Spain and the second largest solar installation in the world.
“For us in the U.S., we don’t see the demand like you would if you lived in Europe,” Heller said. “Germany is the largest solar market in the world, and they don’t get that much sunshine. But they have been very aggressive about renewable energy.
“Most of the growth we’ve seen has come from Europe because the U.S. is behind,” Heller continued, “which is a great continued growth opportunity.”
Heller said the wind-power market provides even more reason for optimism than the domestic solar market. For starters, Heller said, wind power is already at what’s called grid parity – that is, the point at which renewable energy is as cheap or cheaper than conventional power. Solar isn’t there yet.
“The wind industry is actually farther along in the U.S. than solar,” Heller said.
Part of the challenge will be breaking into the game. Wind turbine companies are often vertically integrated, and although new turbine makers are coming online, winning contracts with known firms is critical.
“The idea is to offer a product that would encourage all turbine manufacturers to take a look,” Heller said. “Clearly, there are new players who will come on board. We’d love to get in with them. But I wouldn’t say we’re willing to accept that we couldn’t get in the door with more established firms.”
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