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 250 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 $8 million annually.

    • The solar power generator industry consists of about 250 firms that employ about 3,200 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

                                Jan 9, 2024 - Utility-Scale Solar Installations Slow
                                • Amid ongoing supply chain issues and other challenges, utility-scale solar power installations were flat in the third quarter of 2023, according to a recent report by the Solar Energy Industries Association (SEIA) and consultancy Wood Mackenzie. However, the 4 gigawatts (GW) of utility-scale solar installed in Q3 2023 was up 58% compared to Q3 2022. The report said that some major markets are experiencing headwinds related to interconnection, permitting, and siting of solar projects, which is slowing development. The report’s authors also noted that slowdowns in solar installations were expected to worsen beginning in 2026 as key challenges, including impediments to interconnection, grow more severe. High financing costs, interconnection logjams, and transformer shortages led Q3 2023 to see the lowest level of new solar contracts signed in a quarter since 2018.
                                • A renewable energy transmission line start-up recently announced a fresh round of funding from European investors that the company hopes will help it break the bottleneck of bringing solar and wind energy to large cities from remote generation sites, according to The Wall Street Journal. Local opposition has been a major hurdle to the permitting of transmission lines required to bring renewable energy to population centers. Meanwhile, the wait for renewable projects to connect to the grid keeps growing. In December 2023, start-up firm EnergyRe raised $1.2 billion from European investors to help bring more renewable energy to market, primarily by focusing on projects that face the fewest potential permitting roadblocks. An EnergyRe project in New York is moving ahead as transmission lines will run mainly through state-owned land. Another transmission line that will bring power from Iowa to Chicago will run along railroad tracks.
                                • Costs for the development of utility-scale solar projects increased by 9 cents per watt in the first quarter of 2023 compared to the same period in 2022, according to an October report by the National Renewable Energy Laboratory (NREL). Lower prices for modules and certain other costs were not enough to offset higher inverter and labor costs. Utility-scale solar projects are coping with rapidly rising costs associated with network upgrades needed to meet interconnection requirements.
                                • High interest rates have hurt the shares of some publicly traded renewable energy firms and clean energy-focused investment funds, according to The Wall Street Journal. As of late October, several clean energy firms’ shares were down significantly compared to the start of the year relative to benchmarking by S&P Dow Jones Indices. Utility-scale solar and wind projects are capital-intensive and are sensitive to interest rates. Even with tax incentives put in place by the Inflation Reduction Act, high interest rates have made debt – and renewable energy projects - more expensive, which has made some investors cautious. However, some Wall Street watchers suggest the clean energy sector’s doldrums are likely to be short-lived amid the long-term potential for growth.
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