Generous government incentives helped industry companies drastically boost revenue
Los Angeles, CA (PRWEB) April 30, 2013
The Solar Panel Manufacturing industry has experienced a rapid rise and fall in the five years to 2013. “Government incentives for downstream customers fueled strong growth early in the period,” according to IBISWorld industry analyst David Yang. “Tax credits lowered the cost of solar panels for customers, making them more affordable for consumers and businesses.” But as silicon prices fell, international manufacturers were able to pump out large quantities of low-priced solar panels, increasing external competition for the US industry. Consequently, solar panel prices plummeted in 2011 and revenue deteriorated, falling a rates in the double digits in 2011 and 2012. The downward trend is expected to continue through 2013, as solar panel prices further decline. Unfortunately the period of growth in the early half of the past five years was not enough to offset the more recent strong declines, so revenue has dropped at an annualized rate of 6.2% during the past five years.
Between 2008 and 2010, industry operators benefited from federal government tax credits, which allowed manufacturers to expand production and develop new products. Additionally, renewable portfolio standards strengthened demand for industry products from the Solar Power industry (IBISWorld report 22111e). The manufacturing industry also benefited from European government incentives for solar power, which bolstered exports. “These trends reversed in 2011, though,” says Yang, “when the global market became saturated with cheap solar panels, mostly from China. As a result, solar panel prices deteriorated, causing revenue to collapse.” This was further exacerbated by the European debt crisis, which reduced international demand for US-manufactured solar panels. Low solar panel prices also cut into industry profitability, causing firms to exit the Solar Panel Manufacturing industry.
In the next five years, this industry will further decline and unprofitable firms will exit. Government incentives will slightly mitigate falling revenue and trade tariffs will slightly reduce competition from imports. Nonetheless, domestic firms will have difficulty competing on manufacturing costs against their Chinese counterparts. Consequently, industry firms are anticipated to restructure operations to focus on solar power plant design and construction or high-efficiency panels that are superior in quality to imported solar panels. On average, industry revenue is forecast to decline even faster than the previous five years as manufacturers shut down and exit this industry. As companies have exited, market share concentration has shown signs of decline during the past five years, with SolarWorld and First Solar continuing to restructure and downsize domestic manufacturing operators. For example, First Solar is almost entirely focused on power plant engineering, design and construction services. In the next five years, the domestic manufacturing industry is anticipated to continue to decline due to international competition. Consequently, market share concentration is forecast to fall. For more information, visit IBISWorld’s Solar Panel Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures solar panels and solar cells and sells these products to solar panel installers and downstream residential, commercial and utility customers. This industry does not include American firms that manufacture solar panels abroad.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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