According to Allied Market Research, the solar energy market is projected to reach 222.3 billion dollars by 2026, growing at a compound annual growth rate of 20.5% from 2021 to 2026. In the last decade, solar has experienced an annual growth rate of 42% with more than 230,000 Americans working at more than 10,000 solar companies in the U.S. alone.
Balance of system is a fundamental part of any solar plant because it encompasses all components of photovoltaic devices including wiring, switches, a mounting system, solar inverters, battery bank or battery charger, accounting for 70% of the cost of a battery based solar system. It is used on over 50% of all U.S. solar capacity installed in 2020, growing at a 30% compound annual growth rate between 2018 and 2020. However, the complex conventional balance of system requires lots of time and labor who are licensed electricians to install.
Shoals solves this problem by becoming the first company in the industry to commercialize plug and play electrical balance of system (EBOS) systems using simple push connectors instead of traditional wire crimps. Its EBOS encompasses all of the components necessary to carry the electric current produced by solar panels to an inverter and the power grid. Thus, Shoals quickly dominates the market for EBOS solutions in the U.S. by offering highly specialized, patented but easy to use products in a burgeoning industry.
First, Shoals sells mission-critical products that are insensitive to price competition. Failure of EBOS components can lead to great revenue loss, equipment damage and ultimately injury or death. Therefore, customers are more likely to prioritize reliability regardless of price.
Second, Shoals has intellectual property over key components of a solar project and a trade secrets portfolio. Shoals’ patents cover its unique products and means of communicating the performance of solar panels. Their exclusive features raise energy efficiency, increase electricity output and significantly reduce the cost to construct a solar energy project. These patents prevent competitors from producing a safe and reliable plug and play solution with push connectors, which is a prerequisite for the labor savings and other advantages that its EBOS systems deliver. Additionally, Shoals’ portfolio of trade secrets, protected by non-disclosure agreements and commercial contracts, safeguard its special manufacturing processes and installation methods.
Third, Shoals develops a proprietary manufacturing process that is among the most reliable in the industry. Most electrical failures in solar energy can result in serious consequences including death. Shoals has a differentiated manufacturing process of cable products that can greatly reduce the risk of electrical failure and allow superior impact resistance and thermal stability in different environmental conditions. Moreover, Shoals’ products are customs solutions that require a highly consultative sales process. Each of Shoals’ projects is unique, requiring deep subject matter expertise to specify and optimize each system.
Fourth, Shoals’ low cost manufacturing requires negligible investment for expansion. Shoals’ current production capacity for the EBOS system is significantly greater than current sales volume. The scalability and low capital requirements of the business create ample growth opportunities, especially when most of the international market still uses conventional EBOS solutions.
The third quarter of 2021 achieves a record revenue of 59.8 million dollars with an increase of 14% year over year. System solutions contribute 65% to Shoals’ revenues as a result of higher components sales. This quarter also registers record backlog and awarded orders, growing 101% year over year to around 271 million dollars.
Shoals not only produces impactful innovations for an ever growing industry but also strongly commits to sustainable development goals. As businesses and consumers both pay increasing attention to environmental, social and governance, Shoals will maintain its leading position in the industry.
