Dim Outlook: Solar Panel Manufacturing in the US Industry Market Research Report from IBISWorld has Been Updated

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The sun will not continue to shine as favorably on operators as it has during the five years to 2013 for the Solar Panel Manufacturing industry, with government subsidies coming to an end and increasing competition from low-cost products from Asia and domestic products with advanced technologies. For these reasons, industry research firm IBISWorld has updated a report on the Solar Panel Manufacturing industry in its growing industry report collection.

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Generous government incentives helped industry companies drastically boost revenue

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.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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