We are partnering with aggregators and utilities to enable grid services in “The introduction of HEMS software based forecasting and optimization logic of our HEMS solution to other geographies where such programs are oered. Grid services programs enable not only allows us to optimally product areas. We believe this AI-based logic will fuel all of our future product homeowners with IQ Batteries to participate by discharging their batteries, control equipment in the home, but releases and will signicantly dierentiate us in the market. This optimization thereby reducing their demand on the grid, and receive compensation also further extends the capability engine will be applied as well to support dynamic taris in dierent European in the form of incentives or rebates. As a result, utilities can reduce their of our systems to participate in grid markets as well as NEM 3.0 in California. dependency on expensive, polluting power plants that traditionally address services programs.” peak power demand. In Europe, Australia, and other regions, we are seeing The introduction of HEMS software not only allows us to optimally control more opportunities to tap into additional value pools in the dierent energy equipment in the home, but also further extends the capability of our systems markets like imbalance or ancillary services. Extending our grid services to to participate in grid services programs. Where most grid services programs generate additional benets for homeowners and partners will be important today only allow utilities to leverage specic resources in the home, HEMS for us in 2024 and beyond. software can provide a coordinated response to utility requests, creating a larger and more reliable participation for the utility and more incentive “We leverage our extensive Our Ensemble technology supports the use of generators. These devices fulll value with less disruption for the homeowner. We are laying the foundation knowledge of our large eet’s long- a need when solar energy is insucient, especially during the winter and in for becoming the intelligent site management behind the meter and being term performance and apply the places such as the Northeast region of the United States. During extended the technical aggregator across portfolios of sites. We will utilize our core latest data science and machine outages in the winter season, battery storage may not last, and generators strengths of having a deep understanding of the assets behind the meter and learning (ML) algorithms to it.” become invaluable. When combined with an Ensemble system, generators are our AI-based forecasting and optimization engine. used infrequently, which makes them a good option to enhance resilience in clean energy systems. We made our storage system able to accept generator We have discussed our strategy for all the AC-coupled elements of an Enphase inputs without the need for an external automatic transfer switch (ATS). home energy management system: microinverters, batteries, EV chargers, A generator appears in the Enphase App and oers a seamless customer generators, HEMS software, and grid services. experience. The combination of full home electrication, EVs, increasing energy prices, and complex tari structures makes it essential that all DERs and major loads in the home are managed optimally. This means coordinating the charging and discharging of residential batteries, the charging and discharging of EVs and major home loads such as heat pumps, air conditioners, pool pumps, and domestic hot water heaters to ensure that the cost of electricity imported from the grid is minimized and the value of electricity exported to the grid is maximized. Optimizing energy ows in the home requires accurate forecasting of energy production, home energy consumption, and taris. We leverage our extensive knowledge of our large eet’s long-term performance and apply the latest data science and machine learning (ML) algorithms to it. In geographies where there is a large dierence in taris between importing and exporting electricity, the dierence between basic and optimal energy management can amount to $1,000 annually per home or more. Ensemble technology aords us ultimate exibility in managing DERs and major loads in the home. Our solar and battery systems can work together to maximize savings, carbon oset, and resilience. Our acquisition of GreenCom Networks supports our eorts to provide a premier HEMS solution, bringing extensive experience integrating a diverse set of devices such as solar inverters, battery systems, EV chargers, and heat pumps. In 2023, GreenCom’s software was integrated seamlessly in Ensemble to manage these devices intelligently. In addition, we started extending the Articial Intelligence (AI)- Enphase’s HEMS software integrates with third-party devices and uses AI to enhance savings 30 ENPHASE CEO LETTER TO SHAREHOLDERS 2023 31