Rising demand for renewable power and higher electricity prices will bolster industry growth.
Los Angeles, CA (PRWEB) June 03, 2013
Over the past five years, the Renewable Power industry has expanded, despite a slowdown in overall electricity consumption during the recession. Government utility regulatory agencies set higher prices in 2009 to make up for slowing consumption, which helped the industry avoid a contraction over the year. However, a sharp decline in demand for hydroelectric power in 2010 due to mild weather conditions caused revenue to fall 4.0%. “Industry operators also faced growing competition from natural gas- and coal-generated electricity, mostly as a result of falling domestic natural gas and coal prices,” says IBISWorld industry analyst David Yang. “Nevertheless, the industry grew over the past five years due to stable electricity consumption from consumers.” In the five years to 2013, revenue is expected to increase at an annualized rate of 2.4% to $30.7 billion.
The Renewable Power industry is expected to grow strongly over 2013, due to strengthening industrial output and increasing electricity consumption. Over the year, industrial capacity utilization, which measures how close manufacturers are to full output production levels, is estimated to reach prerecession levels. Demand for renewable power is also estimated to rise 5.1% for the year. As a result, IBISWorld expects industry revenue to increase 2.1% in 2013. “Industry profitability has risen over the past five years as a result of steadily growing electricity prices,” adds Yang. “In the five years to 2013, electricity prices are estimated to increase an average 2.8% per year on the heels of consistent price increases from government regulatory agencies.” The cost of renewable electricity generation is relatively low; therefore, higher prices lead to higher profitability. Consequently, profit is expected to grow in 2013.
The industry has a moderate level of concentration; because electricity is regulated at the provincial level, it is difficult for any one firm to navigate the varying regulations and dominate the national market. However, within each province, market share concentration is very high. For example, major players Hydro-Quebec and BC Hydro account for over 95.0% of electricity generation in Quebec and British Columbia, respectively. Additionally, revenue is heavily concentrated among hydroelectric power generators. As a result, all major players are hydroelectric power producers. Over the past five years, market share concentration has remained relatively stable, due to the slow pace of power plant construction.
Over the next five years, revenue is projected to grow even faster than the previous five years, due to strengthening demand for renewable power. Industry profitability will also grow due to higher electricity prices and falling external competition. Natural gas and coal prices are both projected to increase in the coming years, which will limit price competition for this industry. These trends allow renewable power generators to sell electricity to utilities at higher prices, thereby bolstering profitability. For more information, visit IBISWorld’s Renewable Power in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry generates power by harnessing resources that are replenished naturally. Industry facilities include hydro, solar, wind, geothermal, biomass and other types of power plants that utilize renewable energy. Renewable power typically emits fewer pollutants than fossil-fuel power generators.
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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