Solar Electric Power

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 180 solar electric power companies in the US operate solar electric power generation facilities that use energy from the sun to produce electricity, which is provided to electric power transmission systems or electric power distribution systems. Utility-scale solar is generally defined as a facility with generation capacity of one megawatt (MW) or more, which is sold to utilities or wholesale electricity buyers.

Dependence on Geographical and Seasonal Factors

Production and capacity factors are affected by geographical and seasonal considerations.

Reliance on Government Incentives

Because the cost of solar power exceeds the cost of power furnished by the electric utility grid in most locations, the industry relies on government incentives, mandates, and policies that support investment in alternative energy sources.

Industry size & Structure

The average solar power generator employs about 16 workers and generates about $12 million annually.

    • The solar power generator industry consists of about 200 firms that employ about 3,100 workers and generate about $2 billion annually.
    • The industry is highly concentrated; the top 20 companies account for 88% of industry revenue.
    • Large firms include First Solar, EcoPlexus, Avantus, and AES Corporation.
                                Industry Forecast
                                Solar Electric Power Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 7, 2023 - US Solar Industry Awaits IRS Clarifications
                                • While the Inflation Reduction Act (IRA) is expected to unleash a wave of domestic solar manufacturing capacity investment that many never thought possible, full implementation will take time, according to Utility Dive. Since the IRA was signed, 18 new solar manufacturing projects have been announced, according to the Department of Energy’s Solar Energy Technologies Office (SETO). However, some manufacturers and financiers are waiting for the IRS to finalize implementation details about the law’s tax credits, such as the percentage of domestic content required for a product to qualify for the full credit. Striking the right balance will be critical, according to solar trade group Solar Energy Manufacturing for America Coalition (SEMA). If the IRS standard for US content is too stringent, it could stifle investment. However, an ambitious domestic content requirement could spur development of production capacity for components further up the solar supply chain.
                                • In speaking to Wall Street analysts in late February, executives with the Edison Electric Institute (EEI) – a trade group representing investor-owned utilities – said it was working with lawmakers in Washington to hammer out energy permitting reform, according to Utility Dive. Sen. Joe Manchin’s Energy Independence and Security Act of 2022 failed to pass congress in late 2022 when the Senate voted not to include it as part of the National Defense Authorization Act. The EEI is in talks with Sen. Manchin and House Republicans and Democrats. In December, Manchin warned that failing to reform the utility permitting process would lead to unmet energy transmission needs, stranding billions of dollars in investments just as the Inflation Reduction Act was poised to unleash a surge in clean energy development.
                                • US efforts to foster a domestic solar equipment supply chain could run into trouble from a proposed plan by China to limit exports of some solar equipment, according to The Wall Street Journal. China may add the technology to make ingots and wafers used in solar panels to a group of products that are subject to export restrictions. China presently controls nearly all of the global manufacturing capacity for solar ingot and wafer production and a significant portion of the market for the equipment used to manufacture them. China’s market control is particularly tight for the large panels holding a dominant market share. If the controls go into effect, Chinese solar manufacturers would have to secure an export license from the local provisional government. China has not indicated when it would make a final decision on the restrictions.
                                • Investments in solar companies and projects by venture capitalists (VCs) reached $7 billion in 2022, which is up 50% over 2021 levels, according to Utility’s Dive’s citing of Mercom Capital Group data. Mercom suggests strong investor interest in solar could boost investments even higher in 2023, but elevated interest rates could dampen VCs’ hunger for deals. Investors mostly avoided investing in solar for many years because China dominates the market. However, investor interest has increased as the Inflation Reduction Act incentivizes the energy transition to renewables. Because there are not many public solar companies in which to invest, VC is a key avenue for investors to gain exposure to the market.
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