Operator: The next question will come from Mark Strouse of JPMorgan. Please go ahead.
Mark Strouse: Yes, good afternoon. Thanks for taking our questions. Kind of a follow-up to Phil’s question there. Just wondering if you can dig a bit more into the Netherlands. You mentioned that, I think, you said it’s still weak, but it’s getting a little bit better every week. When you’re talking to your customers in the field, what are their expectations as far as timing of certainty with the policy over there? And then I have a follow-up. Thanks.
Badri Kothandaraman: Yes. So basically, Netherlands, I have to tell you a story in Netherlands. Essentially what happened is about three to four — actually six months ago is what I would say, six months ago, the end consumer demand started to go down. And it was kicked off by one of the energy companies charging an export penalty for solar. The company’s name is Vandebron. So that caused a lot of fear in customers. The customers are facing — they are certainly worried about an export penalty for solar. And also in Netherlands, there is — the situation about net metering hasn’t been very clear. When is it going to end, is it going to continue? And that is — meetings and net metering are actually underway as we speak right now with the new government.
So we’ll — all of us will hear about that soon. So what we did, we kicked off the new year. January second week, we had a solar mixed event in Netherlands where we hosted 800 installers. They all came from across the country. We also hosted a bunch of energy providers. And we also hosted even the transmission, transmission line operators. And we then basically had all of them talk and we all agree that Netherlands needs a comprehensive solution that consists of solar plus batteries with energy management software. And that will help unlock the full potential of the market. Netherlands has got roughly about 8 million homes. Today, 2.4 million homes have solar. And the worry is those solar reducing homes will cause excessive export and that will be unmanaged.
But with intelligent energy management, with the addition of batteries and this can turn into a very quickly, it can turn into a very positive because every home will have solar plus a 10-kilowatt hour battery with energy management software and the payback is still fund between six and eight years. So we painted that picture and we had general alignment with all of the stakeholders. Now we are following through on all of those with webinars with actual execution with our solar graph tool, for example. So that homeowners can basically understand the value proposition a lot better. In addition, the situation on net metering is starting to get — will start to get clear in the next few weeks. So what I’d say in Netherlands is that once again, I think we saw the bottom.
The bottom I think that in that was the bottom. And then now with the — with what we talked about, solar plus batteries, we are also seeing more attach rate of batteries in Netherlands now. So we predict a pickup in both solar and batteries. Of course, we don’t have a crystal ball. We could be wrong. We do think the net metering decision will come and that will be a big deal. We do have general alignment with the energy providers that as long as there is dynamic tariff, there would be no export penalty. And — but we don’t need batteries to manage dynamic tariffs. So I gave you a long answer. But in short, I think the — once again, the bottom I think is behind us. Not you should see a steady uptick there.
Mark Strouse: Okay. That’s very helpful, Badri. Thank you. And then just a real quick follow-up. I know you don’t break out exactly the country-by-country. Given the puts and takes between France and Netherlands and Germany, all of these new countries that you’re entering into, any generic guidelines that you can provide, the street as far as kind of your major countries, let’s just say, Netherlands, France, Germany, what they might represent of your business today?
Badri Kothandaraman: We don’t usually break that out. But in the order of significance, at least for 2023, overall revenue, it has been Netherlands followed by France followed by Germany. That’s how it has been. You obviously heard the situation on Netherlands. I think like what I said, it will soon bounce back. We — as far as France is concerned, we see steady demand in France. Utility rates are increasing in France. So therefore, I mean, already increased last year expected to increase again this year. So we think that’s a general positive. France is actually growing. France is flat right now with all of this, and we expect it to grow given the normal seasonality. The Germany is tricky. Germany, for us, has been hit by a lot of the inventory problems, destocking there.
We do have some strong partners. We do have a lot of other distributors buying in various regions in Europe and shipping product into Germany. But one trend we are seeing is that our activations, which is every week, we monitor how many systems got connected to the cloud and whether they have Solar Plus storage, et cetera. So we are doing quite well that our activations are increasing quarter-on-quarter. So our theory there, installers are a little more conservative, they are holding on to very less inventory, but they are doing — they are basically installing more Enphase. And so we’ll see how that play out, how that plays out. The next two markets that we care about a lot are Italy and U.K. Italy is basically, it’s got about roughly a gigawatt of solar and with about 70%, 80% attach of batteries.
Grid tied batteries, single-phase market and we just introduced our IQ8 microinverter there and we launched our batteries as well in December, we expect to start shipping batteries into Italy immediately this quarter. In U.K., one more big market, 800 megawatts of solar, attach rate of 80% for storage. And once again there, we just entered the market in September, and we expect to continuously grow there. So those are the five big markets for us in Europe. And then the little ones are, of course, Spain, Austria, Switzerland, we are working on improving both microinverters and batteries, there, Greece, Poland, and we’ll enter into all of the other countries in Europe. These countries, we already have batteries. In Sweden and Denmark, regard them.
Sweden and Denmark, the battery attached in Sweden and Denmark is particularly nice in the last few weeks and months. So we’re optimistic that Sweden and Denmark represents a nice opportunity as well. Do you want to add anything, Raghu?
Raghu Belur: Yes. I think the trend, if you look at as Badri mentioned, the addition, all of these markets transitioning from some have already transitioned solar to solar plus battery means the energy management software becomes a very critical element of it to deliver whatever the use case homeowner desires. But dynamic tariffs, as Badri mentioned in Netherlands, really can prove — requires sophisticated software to manage a day-ahead tariff and hourly day-ahead tariff but it can bring tremendous amount of value to the homeowners. For example, in a dynamic tariff environment, you could have negative pricing. I mean you have negative pricing, you get paid to charge your battery and charge your EV and turn on your heat book.
In addition, in a lot of these markets, you’re seeing grid services programs also come into effect that pay you a lot of money. For example, again, in the Netherlands market because of all the solar that’s there, it’s a 19-gigawatt grid and there’s 19-gigawatts of solar and then there’s another eight, nine gigawatts of wind. There are imbalance issues but there is an imbalanced market that you can participate in and get paid for either charging your battery or discharging your battery. Similarly, in some of the other markets, there is frequency regulation markets that you can participate in and provide good value to the homeowner because their battery is now basically generating money for you. Same thing, capacity markets in U.K. are also good markets to participate in our grid services.
So you’re seeing this move from solar plus battery plus energy management plus grid services is a very compelling movement for value creation for the homeowner. And this trend here, we are going to see happening more and more and happening worldwide.
Operator: The next question comes from Praneeth Satish of Wells Fargo. Please go ahead.
Praneeth Satish: Thanks. Good evening. So the metric gave for battery sell-through 140-megawatt hours, it’s quite high. I guess as we look to the second half of this year, when you got NEM 3.0 fully under swing and the Netherlands bounces back, do you expect battery shipments to increase sequentially each quarter and do you think it’s possible we get to 200-megawatt hours of battery shipments by the end of this year?
Badri Kothandaraman: I don’t have a crystal ball, but generally, yes.
