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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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.

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.

Dependence on Geographical and Seasonal Factors

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

Industry size & Structure

The average solar power generator employs about 15 workers and generates about $10 million annually.

    • The solar power generator industry consists of about 180 firms that employ about 2,800 workers and generate almost $2 billion annually.
    • The industry is highly concentrated; the top 20 companies account for 88% of industry revenue.
    • Large firms include First Solar, EcoPlexus, 8minute Solar Energy, and sPower.
                                Industry Forecast
                                Solar Electric Power Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 3, 2022 - Pandemic-Related Clean Energy Investments Rise
                                • According to an April 2022 report by the International Energy Agency (IEA), global clean energy spending planned by governments in response to COVID-19 increased 50% over the past five months. The IEA said there is a wide disparity between regions, with developed economies far outspending developing ones. The agency suggests more international cooperation on clean energy development is needed to reach the goal of zero emissions by 2050. However, the IEA also said Russia’s invasion of Ukraine is prompting governments to redouble their efforts to reduce their fossil fuel dependency.
                                • Early in the pandemic, electricity demand fell as commercial and industrial consumption dropped. Electricity demand rose 2.2% in 2021, and the US Energy Information Administration (EIA) projects retail electricity sales will remain relatively unchanged in 2022. The EIA estimates electric power generation capacity from renewables – including wind and solar – accounted for 20% of total US generating capacity in 2021 and has forecasted it will rise to 22% in 2022 and to 23% in 2023. The EIA also estimates the electric power sector added 14 gigawatts (GW) of utility-scale solar generating capacity in 2021 and will add another 20 GW in 2022 and 24 GW in 2023. Most planned solar additions will be in Texas (6.1 GW, or 28% of the national total) and California (4 GW).
                                • Solar installations of 3,937 MW in Q4 2021 were down 14% compared to Q4 2020, according to the American Clean Power Association’s latest Clean Power Quarterly Market Report. In Q4, clean energy project owners and developers reported that 13.2 GW of project capacity was delayed due to supply chain disruptions and trade barriers. Nearly half of the reported delays were for solar projects. The delays and inflation are pushing renewable energy development costs higher. Despite delays and rising costs, the pipeline of new projects is robust. Of the 6,988 MW of clean power that started construction in Q4 2021, 62% were for solar. Texas leads the nation with the largest amount of solar capacity in the development pipeline, followed by California, Indiana, and Nevada.
                                • Materials shortages and supply chain restraints stemming from disruptions earlier in the pandemic are pushing up the costs of solar energy installations. Solar installers are seeing price hikes for key inputs, including polysilicon, steel, aluminum, copper, and semiconductors. Russia’s invasion of Ukraine and the ensuing sanctions by Western nations have pushed base metal prices higher. Supply chain issues caused by the pandemic, including higher costs for key commodities, can reduce the return on invested capital in renewable energy projects. The solar industry’s dependence on imports has made it vulnerable to supply shortages and higher transportation costs.
                                • In early February, the Biden administration extended by four years tariffs first imposed on imported solar cells and modules by former President Trump in 2018, according to The Wall Street Journal. However, the extension included doubling the amount of solar cells that can be imported before the levies kick in. The move was applauded by solar installers who wanted the tariffs removed or reduced to make solar power more price competitive with alternatives. US-based makers of solar modules say lifting the tariffs makes it extremely difficult for them to compete with foreign manufacturers, primarily ones in China. According to IHS Markit, US manufacturers only account for about 2% of solar modules used in US rooftop and utility-scale installations. China holds about two-thirds of the US market, and countries in Southeast Asia control about 15%.
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