When Power-One Inc. decided to get into the alternative energy business about six years ago, it quickly rode the solar boom in Europe to become the second largest company in that field.

But as the market in Europe has begun to power down, the Camarillo manufacturer of photovoltaic inverters, which convert energy from solar panels to electrical power for homes and office buildings, has turned its attention to India and other countries to amp up business.

India is fast becoming a crowded market, however, with other American and European companies looking to take advantage of the country’s high-growth potential. But because Power-One doesn’t make the solar panels used to capture energy from sunlight, the company doesn’t have to worry about competition from the Chinese solar panel industry.

Kevin Trosian, Power-One’s vice president of finance and investor relations, said the company has already made significant inroads in India and expects sales to continue to grow.

The company announced in January that it has installed its inverters in one of India’s largest solar installations, news that follows Power-One’s strong sales in the country last year.

“India is one of the key countries that we’re looking at,” Trosian said. “It’s one of the fastest-growing photovoltaic markets in the world. They have a higher demand for energy than they’ve previously seen and it’s going to be harder for them to meet the demand.”

Power-One has introduced several products that cater to India’s needs. Because many Indians live in rural areas, the country needs cost-effective large utility inverters that convert energy for the power grid that can then be distributed long distances. The company’s Aurora line of inverters consists of big electronic boxes that connect to rural solar installations. The inverters convert the energy captured by solar panels to electricity that can be sent to consumers.

Greg Sheppard, senior director at market research firm IHS iSuppli’s San Francisco office, said Power-One’s history of identifying important markets early on signals that it has a high chance of success in India.

“Their reputation is as being very aggressive at rolling out new products and tracking the market around the world,” Sheppard said. “India is starting to ramp up and Power-One is on the ground floor.”

Going solar

Power-One, which was founded nearly 40 years ago, started with a focus on developing converters that take the power from an outlet and adapt it for use in consumer appliances and electronics.

But in 2006, the company acquired solar inverter manufacturer Power Electronics Group from energy company Magnetek Inc. in Menomonee Falls, Wis. Power-One then began to invest heavily in the solar industry and in just four years had captured the second largest market share for solar inverters. Today, Power-One has a 12 percent market share while SMA Solar Technology in Niestetal, Germany, has a 31 percent share, according to IHS iSuppli.

How did Power-One grow its solar business so quickly?

The company invested in the right countries at the right time, said M.J. Shiao, a solar markets analyst for research firm Greentech Media in Boston.

For the last few years, Power-One has focused primarily on Europe, which was an early adopter of solar energy and has been the fastest-growing solar market for many years. The region has had generous incentives for solar companies and clear policies to increase use of alternative energy. Italy was very important for the company.

“Power-One’s investments in Italy really paid off,” Shiao said. “The Italian market grew from a pretty small industry to the second largest regional solar market after Germany. A lot of Power-One’s growth came from that investment.”

But Europe has adopted solar technology so quickly that many countries have now put holds on their incentive programs to slow production. As a result, the market for inverters has shrunk significantly.

Industrywide, inverter revenue was down 15 percent in 2011 because of a decline in prices and stalling in several large European markets, according to IHS iSuppli.

The slowdown in Europe also contributed to a decline in financial results for Power-One last year. On Feb. 2, the company reported annual net income of $136 million on revenue of $1.02 billion, compared with net income of $148 million on revenue of $1.05 billion in 2010.

The company also sold fewer inverters in 2011 because of market saturation in the early part of the year, Shiao said. In 2010, demand for inverters grew so quickly that there was an inverter shortage. So companies such as Power-One ramped up production for 2011, creating an oversupply of products and hurting sales.

“You had a lot of inverters sitting in warehouses,” Shiao said. “It took a while for that inventory to clear.”

Looking elsewhere

In addition to India, Power-One has set its sights on the United States to replace slowing sales in Europe. The company, which employs more than 3,200 people worldwide, opened a Phoenix manufacturing facility in 2010 to cater to domestic clients. Sales in North America and Asia-Pacific increased to 25 percent of total revenue for the fourth quarter from 17 percent of revenue in the third quarter.

But despite the domestic potential, industry insiders say that India and Asia-Pacific are where Power-One can make the biggest impact. The U.S. market has complex federal and state incentive programs that can be difficult to navigate and competition is significant.

India is also competitive. But Power-One’s Trosian said the company has an advantage on Chinese inverter companies looking to do business in India because China is newer to the industry. Chinese companies are still focused primarily on solar panels, a product that Power-One does not sell, and are just now starting to develop inverters. As such, it will take a while before Chinese companies catch up to more established inverter competitors.

“What we’ve seen is that the Indian market is looking for high-quality products and history of quality and bankability,” Trosian. “We have massive installations worldwide so our products have been tested in the field.”

But even as Power-One looks to new regions for growth, IHS iSuppli’s Sheppard noted that this could still be a slow year for inverter sales. The demand for solar power has increased, but sales in India, China and the United States are unlikely to make up for contractions in Europe

“For 2012, we’re predicting kind of a rocky year,” he said. “Europe has started to cut back on their incentives, but new markets that are still ramping up are not big enough to counteract what’s going on in Europe.”