Stringent government regulations and a lack of suitable locations have hindered growth
Los Angeles, CA (PRWEB) April 29, 2013
Severe droughts led to less water flowing into the Hydroelectric Power industry during the past five years, limiting its ability to create electricity. "Many firms in the industry are government agencies that also oversee water-management operations," IBISWorld industry analyst Deonta Smith says. These firms focused their attention on mitigating the effects of droughts by scaling back hydroelectricity operations. In turn, investment in hydroelectric infrastructure slowed, and plans for upgrades to increase efficiency and output were delayed as combating the droughts took center stage. As a result, industry revenue is expected to fall at an annualized rate of 1.3% to $6.3 billion in the five years to 2013.
"Although hydroelectricity is a renewable energy source and is perceived as environmentally friendly, state governments have scrutinized it considerably due to the potential damage it could cause to river resources," Smith says. Establishing new hydroelectric facilities has been difficult for players in the Hydroelectric Power industry because of stringent state and federal regulations along with a lack of suitable locations where there is enough water and a steep-enough incline to produce electricity. Furthermore, the recession caused financing for large capital-intensive projects to dry up and, in turn, made it hard for industry firms to find money to break ground. Nonetheless, industry players have remained busy, and plans for upgrades are already in the works, with industry players upgrading facilities during 2013 as demand for electricity climbs. These upgrades are expected to boost industry revenue 0.6% in 2013.
The US Hydroelectric Power industry has a moderate level of concentration. The four largest industry participants include US Army Corps of Engineers, Bureau of Reclamation, New York Power Authority and Pacific Gas and Electric Company. Moderate industry concentration reflects the historical development of the industry in which the federal government and, to a lesser extent, state governments built and operated major hydroelectric facilities. These entities continue to be major players in this industry.
Sustained economic growth during the next five years will contribute to more robust demand for electricity generation and transmission, and investments will be used to increase the efficiency of existing facilities. Additionally, in response to increased government environmental regulation and a lack of suitable locations for large projects, industry players will look to establish smaller hydroelectric facilities to expand their presence in the hydroelectric space. Other types of renewable energy generators that operate in this industry will benefit as well, due to favorable government regulations promoting clean energy. As a result of these positive trends, industry revenue is forecast to increase in the five years to 2018. For more information, visit IBISWorld’s Hydroelectric Power in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry operate facilities that use water to generate hydroelectric and renewable electricity (other than wind power and solar power). Industry players also use renewable energy sources including wood, municipal waste, landfill gas, biomass and geothermal energy to generate electricity.
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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