Los Angeles, CA (PRWEB) January 07, 2013
The Solar Farm Developers industry has been exploding over the past five years. Demand for construction of utility-scale solar power projects has skyrocketed thanks in large part to substantial government assistance, says IBISWorld industry analyst Antonio Danova. The Solar Investment Tax Credit (ITC) was extended in 2008 to remain in place through 2016. The ITC boosts demand for solar farms by encouraging private investment into solar technologies, giving purchasers a 30.0% tax credit on the cost of a solar panel. Additionally, many states have implemented renewable portfolio standards (RPSs), which require a portion of electricity generation to be from a renewable resource, increasing demand for solar generation, to the benefit of solar farm developers. As a result, industry revenue is expected to catapult 91.8% per year on average to about $6.8 billion over the five years to 2013.
With heavy demand for solar energy, developers have benefited significantly from rising profit margins, continues Danova. In general, solar panel prices have been declining sharply in recent years due to a glut in the market for silicon in light of excess supply of the commodity. Falling prices for silicon led to overproduction of solar panels during the recession, when utility-scale solar project development had not quite taken off. The falling price of the input also created a substantial decline in the capital costs associated with developing and constructing a new solar farm, helping boost profit margins for many industry firms. However, the exceedingly saturated solar market will lead to an expected slowdown in solar power generation over the next five years, a trend that may hinder industry performance. The Solar Farm Developers industry has a low level of market share concentration. The largest firm is First Solar Inc. This low concentration is mostly due to the variety of solar power technologies, making it difficult for a single firm to dominate across the industry. However, in individual product segments, concentration is considerably higher. For instance, major player First Solar is estimated to account for nearly all revenue in the thin-film solar farm development market. BrightSource Energy and Sunpower dominate the crystalline silicon and concentrating solar power markets, respectively. Although industry growth has provided opportunities for firms to enter this industry over the past five years, market share concentration increased as larger firms expanded operations. The growing prevalence of very large-scale solar farm projects has also benefited large firms, as they have the capability to undertake such as project.
Industry revenue is expected to contract over the next five years as a result of a less solar power generation. Additionally, technological advancements in solar panel construction will lead to a greater supply of low-cost panels, making solar panels more accessible for individual consumers. This may diminish some demand for solar power generation from utilities. Moreover, IBISWorld expects the largest decline to occur after 2016, when the Solar ITC is set to expire. An end to tax credits and other incentives will significantly lower demand for development of new solar farms. Industry revenue is expected to fall in the five years to 2018. For more information, visit IBISWorld’s Solar Farm Developers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry installs or constructs solar power grid systems known as solar farms. The work performed within the industry may include new work, reconstruction, rehabilitation and repairs.
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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