Microinverter and battery storage supplier Enphase Energy has unveiled a restructuring plan to align its workforce and cost structure with current market conditions and strategic priorities.

The plan is in response to ongoing economic challenges in the solar industry.

Enphase will reduce its global workforce by approximately 17%, affecting around 500 employees and contractors.

The company will focus its contract manufacturing in four existing locations: two in the U.S., one in India, and one in China. Operations in Guadalajara, Mexico, will cease.

Despite the changes, Enphase’s global capacity for microinverters will remain steady at approximately 7.25 million units per quarter, with about 5 million units of capacity in the U.S., it said in a regulatory filing.

The company estimates restructuring and asset impairment charges of $17 million to $20 million, with approximately $14 million expected in the fourth quarter of 2024.

Enphase cites several reasons for its restructuring, pointing to continued economic challenges in the solar industry since 2023 as a key factor. The company has seen a reduction in U.S. residential solar demand, attributed largely to high interest rates, making financing more expensive for consumers.

In Europe, demand has declined due to recent policy changes and adjustments in utility rates, further complicating the market landscape.

Cash flow issues affecting large solar equipment companies and installers have created financial strain across the sector, intensifying the need for Enphase to adapt its operational strategy.

Outlook

Enphase plans to support its workforce by offering merit-based salary increases in 2025, maintaining its established promotion process, and continuing annual evergreen stock grants.

On the product development front, Enphase is advancing with its three-phase battery designed for the European market, the IQ® Balcony Solar system, new IQ® EV chargers, and the IQ® Portable Energy System.

Enphase also plans to launch a fourth-generation battery system tailored for the U.S. market and GaN-powered IQ9™ Series Microinverters for three-phase commercial applications.

The company reported a revenue of $380.9 million in the third quarter of 2024, a 31% drop from $551.08 million a year ago. The company faced weakening demand in Europe, where revenue fell by 15%.

Enphase Energy’s net income for the second quarter of 2024 dropped 71.4% to $58.8 million.

Last year, Mercom reported that inverter costs increased by over 10% as manufacturers struggled to meet demand due to the limited availability of semiconductors, crucial components for inverter manufacturing.