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
Recent Developments
Mar 8, 2024 - 2024 Set Record for Solar Capacity Additions
- The US installed a record 32 gigawatts of new solar generation capacity in 2024, according to a March report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. Solar installations in 2024 increased 51% over 2022, marking the first time capacity additions surpassed 30 GW in a single year. Solar energy also accounted for 53% of all new electricity-generating capacity added in 2023. The SEIA’s CEO said the incentives included in the Inflation Reduction Act have helped unleash solar investments. While solar additions are expected to continue, the pace of growth will slow as much of the capacity added in 2023 was due to projects that were delayed in 2022 due to trade restrictions and supply chain disruptions.
- The solar sector could be poised for consolidation amid some challenging market conditions that pose headwinds for smaller players, according to Semaphor. Solar M&A activity was muted in 2023 by uncertainty about how tax credits through the Inflation Reduction Act would impact project valuations, but the credits’ impact has since become more apparent. High interest rates, solar equipment shortages, and rising costs of remaining on grid operators’ years-long interconnection queues may prompt some cash-strapped project owners to seek an exit. However, some industry watchers expect consolidation to mainly consist of small deals, likely involving acquisitions of specific solar projects rather than entire companies.
- Grids expect strong electricity load growth in the coming years amid increased investments in manufacturing, data centers, and the electrification of transportation and buildings, according to construction consultancy and investment banking firm FMI. Load growth, including that powered by renewables, is expected to see an average annual growth of 5% after remaining closer to 0% over the past decade. Total US spending for power projects is forecast to increase by 11% in 2024, according to FMI. Power spending growth will slow to 2% in 2025, 3% in 2026, and 2% in 2027.
- 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.
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