‘We will be good for the distant future’: Enphase on domestic content and the value of residential storage

The company’s results have also reflected the winder industry trends. In Q1 2025, the company shipped nearly 1.53 million microinverters, including 1.21 million made in the US. These shipments amount to 688.5MWdc, down from 878MW in Q4 2024. Additionally, IQ Batteries shipments reached 170.1MWh, with 44.1MWh produced domestically.

The company’s Q2 2025 financial results showed revenue of US$362.2 million, a GAAP gross margin of 46.9% and a non-GAAP gross margin of 48.6%, with net IRA benefits. Additionally, the company reported shipping approximately 1.53 million microinverters and 190.9MWh of its IQ batteries during the quarter.

Before releasing these financial results, Enphase announced the initial shipment of its IQ Battery 5P units from US manufacturing facilities.

The 5P units meet the new federal threshold for solar and storage tax credits (45% US-sourced materials, rising to 55% by 2027).

The IQ Battery 5P is an AC-coupled system with a total usable energy of 5.0kWh. It features six built-in grid-forming microinverters, each capable of delivering up to 3.84kVA continuously. The system utilises lithium iron phosphate (LFP) battery cells.

Belur explains the company’s current position and how it is meeting domestic content thresholds. US-based companies like it will be hoping the increasing focus of domestic content within clean energy tax credits after Trump’s One Big Beautiful Bill (OBBB) should spur more demand for domestically manufactured-technologies.

Energy-Storage.news: Regarding the IQ battery, 5P units meeting the domestic content threshold, what steps were taken to achieve that threshold?

Raghu Belur: The big thing for us, and we started this with microinverters first, is that we moved a lot of that supply chain outside of China, and it was part of ‘geo-diversity,’ de-risking all of that as a public company. You want to be geographically diverse in your supply chain. So, we have an approved vendor list (AVL) with multiple components. Similarly, we have different manufacturing locations that are all fungible. So, we have one in China, the smallest, and one in India, and two of the biggest are here in the United States.

We started that process with microinverters quite a few years ago and then moved on to batteries. Of course, there was some recognition of the geopolitical friction and concerns that we needed to diversify broadly. But the push to manufacture here came very early, and a lot of it was due to the Inflation Reduction Act (IRA) and its incentives.

We also had to bring in all the manufacturing for the chassis, enclosure, and cover kit locally. The battery management system (BMS) was local. We did not localise thermal management, but once we did, that kicked our threshold up to well above the threshold requirements, and we will be good for the distant future.

What challenges might other companies face in getting this amount of domestic content in a battery?

It takes a lot of effort, but in our case, we use a classic Silicon Valley model. We don’t have our own factory; we use contract manufacturing. Flex is our well-known contract manufacturing partner, and we have one more. What we do is work with them very closely and collaboratively. They procure the land, they procure the building, they procure the people.

So, we have capital investments in that. But in general, because we don’t procure land or buildings, we’re not burdened by utilisation or all the capital investments that have to be made. We are a very capital-light model, but we work very, very closely with our vendors.

We do something called Copy Exact. When we move a line from one location to another, we follow a very stringent process of copying exactly what was done elsewhere. It’s well-choreographed in that sense.

So, to answer your question, it’s complex, but the combination of the fact that we partner with our contract manufacturing partners, plus we have a very stringent copy exact and qualification process. The first time we did it, when we moved to Mexico, was hard, but subsequently, we have done it multiple times, and it’s become easier and faster and quicker. I don’t want to comment about others, but it’s a process we’ve honed.

What do you think the future of residential storage might look like compared to large-scale utility storage?

I think both are vitally important. I don’t think we should underestimate the criticality of the need for energy storage in the residential segment, because the world is moving to where you want to produce your own energy, store your own energy, and manage your own energy.

The distributed energy resource (DER) has incredible locational value. The distribution infrastructure is quite stressed because of the electrification that’s taking place. People are buying EVs, heat pumps, induction ovens, etc., and electric hot water heaters. It just makes sense to go electric rather than rely on natural gas.

As the demand for electricity goes up, the stress on the grid goes up at a much faster rate. Generating locally, using locally, and storing locally make the most sense. So, the need for an energy system in the home cannot be understated.