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 380 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 13 workers and generates about $5 million annually.

    • The solar power generator industry consists of about 380 firms that employ about 4,800 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

                                Jul 8, 2024 - Report: Rising Renewables Costs Underscore Need for Energy Diversity
                                • While there wasn’t much change in the levelized costs for new solar and wind energy projects between 2023 and 2024, costs have risen significantly since 2021, according to a June report by financial advisory firm Lazard. Higher interest rates and other pressures have pushed up the cost of renewables development, making existing gas-fired generation more competitive. Between 2021 and 2024, the levelized cost of energy (LCOE) for standalone solar rose from $36 per megawatt-hour (MWh) to $61/MWh. Over the same period, the LCOE for standalone wind projects increased from $38/MWh to $50/MWh. The LCOE for new combined-cycle natural gas turbine power rose from $60/MWh in 2021 to $76/MWh in 2024. Costs for developing wind and solar projects with attached energy storage capability have grown even more. Lazard suggests that energy diversity that includes fossil fuels is needed, given the intermittent availability and rising costs of renewables.
                                • Local and state opposition to renewable energy projects is a growing and widespread problem, according to a recent report by Columbia University’s Sabin Center for Climate Change Law and reporting by Utility Dive. The report showed that since May 2023, there have been 55 new local restrictions on renewables development. Since 1995, nearly 400 local restrictions have been severe enough to block renewables projects in more than 40 states. The scope of the restrictions varies, but the study identified several types of limits, including temporary moratoria, outright bans, and extreme setback requirements and height limitations. The only states with no contesting of renewables are Alaska, Tennessee, and Utah, while Michigan, New York, Ohio, and Virginia each have more than 18 restrictions.
                                • The AI boom is expected to trigger a significant uptick in demand for electricity after a decade of flat consumption growth, according to CNBC. The accelerating power needs of data centers, AI, and an electrifying automobile fleet could boost electricity demand by as much as 20% by 2030, according to a forecast by Wells Fargo. Data centers could account for as much as 8% of total US electricity consumption by 2030, according to Goldman Sachs. Energy sector observers suggest that renewables cannot ramp up quickly enough to meet the growing hunger for power and that natural gas-fired plants will help shore up the electricity supply. Because they’re not reliant on weather, natural gas and nuclear power are better able to respond quickly to sudden surges in electricity demand. Goldman Sachs forecasts that natural gas will supply 60% of power demand growth from data centers and AI, and renewables will power 40%.
                                • In May, amid rising demand for electricity, the Federal Energy Regulatory Commission (FERC) approved two new rules aimed at streamlining the process of building the large transmission lines that are needed to bring more power to the US grid, according to The Wall Street Journal. The first rule will require power producers and transmitters to apply a 20-year scope in their forecasts for electricity supply and demand shifts. The planning rule also urges utilities to implement grid-enhancement technologies, including power flow control devices and sensors, which can make transmission on existing lines more efficient. The second rule deals with permitting changes for new transmission lines to clear bottlenecks that have kept new renewable energy sources from hooking up to the grid. In 2023, the backlog of new power projects waiting to connect to the grid – mainly wind, solar, and battery storage – grew by 30% compared to 2022, according to Lawrence Berkeley National Laboratory. The new transmission line rule favors projects that benefit electricity consumers and adjusts cost allocation for projects spanning multiple states.
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