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WWW.IBISWORLD.COM
Darryle Ulama
16 International Trade
31 Key Statistics
Industry Definition
17 Business Locations
31 Industry Data
Main Activities
Similar Industries
19 Competitive Landscape
Additional Resources
31 Annual Change
3 Industry at a Glance
31 Key Ratios
4 Industry Performance
22 Barriers to Entry
Executive Summary
23 Industry Globalization
Current Performance
24 Major Companies
Industry Outlook
27 Operating Conditions
13 Products & Markets
27 Capital Intensity
13 Supply Chain
28 Revenue Volatility
14 Demand Determinants
15 Major Markets
30 Industry Assistance
WWW.IBISWORLD.COM
Main Activities
Similar Industries
Additional Resources
WWW.IBISWORLD.COM
Industry at a Glance
Solar Power in 2014
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
$491.9m 70.0%
7.6%
$65.0m 91
$83.6m
Market Share
NextEra Energy
Inc. 1 2.0%
160
80
70
80
Index
% change
120
40
60
50
0
40
Year 06
08
10
Revenue
12
14
16
18
20
40
Year 06
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 24
35%
Price of semiconductor
and electronic
components
Electric power
consumption
World price of
steaming coal
65%
Photovoltaic power
p. 4
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Industry Structure
Growth
Very High
Regulation Level
Technology Change
Heavy
Medium
Capital Intensity
High
Barriers to Entry
Industry Assistance
High
Industry Globalization
Medium
Concentration Level
Low
Competition Level
Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31
High
WWW.IBISWORLD.COM
Industry Performance
Continued
WWW.IBISWORLD.COM
Industry Performance
4200
80
70
Index
60
50
40
Year 06
08
10
12
14
16
18
20
4100
4000
3900
3800
3700
3600
Year 06
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Strong government
support
Industry revenue
160
120
% change
Current
Performance
80
40
0
40
Year 06
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Strong government
support
continued
Innovative financing
mechanisms
RPS
WWW.IBISWORLD.COM
Industry Performance
Dawn of solar
Declining
prices of solar
panels have been a
significant contributor to
industry growth
WWW.IBISWORLD.COM
Industry Performance
Industry
Outlook
More
WWW.IBISWORLD.COM
Industry Performance
In favor of PV
Favorable market
conditions
Falling
WWW.IBISWORLD.COM
Industry Performance
Industry output is growing much more
rapidly than the economy as a whole
Solar Power
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
10
Quantity Growth
Aluminum Manufacturing
Steel Framing
Nuclear Power
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
WWW.IBISWORLD.COM
Industry Performance
industry
is G
rowing
WWW.IBISWORLD.COM
Supply Chain
33131
23812
33441c
35%
65%
Photovoltaic power
Total $491.9m
The products and services provided by
the industry depend on the firm and
the location of the project. Different
locations might require different types
of technology, depending on the
amount of sunlight available
(measured as sunlight density).
According to SEAI, in the second
quarter of 2013 (latest available data),
cumulative operating photovoltaic
(PV) installations totaled 8,858
megawatts; according to the US
Department of Energy, operating
concentrating solar power plants
currently generate more than 800
megawatts, with four additional
projects underway.
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Demand
Determinants
WWW.IBISWORLD.COM
Major Markets
30%
36%
Industrial users
Utilities
34%
Total $491.9m
Commercial sector
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Major Markets
continued
Industrial users
Industrial users enjoy lower prices than
households and, to a lesser extent,
commercial users of electricity. In part, this
reflects large-scale purchase of power by
industrial users. These users typically use
International Trade
WWW.IBISWORLD.COM
West
New
England
AK
0.0
Great
Lakes
WA
ND
MT
0.3
Rocky
Mountains
ID
OR
0.8
West NV
5.9
0.1
SD
0.0
WY
0.0
MN
0.0
0.0
Plains
CO
0.0
0.0
0.0
0.1
KY
67.1
OK
0.0
AZ
NM
2.9
0.1
Southwest
TX
0.5
HI
1.6
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.1
1.2
0.0
7.6
1.0
0.2
NC
0.7
SC
Southeast
MS
AL
0.0
0.0
GA
0.0
0.0
LA
0.0
FL
2.3
0.0
0.3
0.0
0.0
TN
AR
WV VA
0.0
0.1
CA
West
OH
0.0
MO
KS
3.5
0.0
0.3
0.4
IN
IL
0.0
UT
PA
0.0
0.0
0.0
1 2
3
NY
2.0
5 4
MI
0.3
IA
NE
0.0
WI
ME
MidAtlantic
9 DC
0.1
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
Business Locations
WWW.IBISWORLD.COM
19
Competitive Landscape
in
this industry is L ow
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Access to financing
Firms in this industry that have access to
financing will fare better than others
because of the large capital cost for solar
generation technologies.
WWW.IBISWORLD.COM
20
Competitive Landscape
Profit
Earnings before interest and taxes (EBIT)
are high in this industry, accounting for
about 17.0% of industry revenue in 2014.
Profit margin is generally a critical factor
when industry operators consider the
viability of a potential project. If the
project is risky or could prove to be
unprofitable, then it is usually not
executed. Strong government incentives
in the form of tax breaks and grants,
along with declining silicon input costs
and greater operational efficiency, have
led to significant profit margin growth
among industry operators. Although the
emergent industry remains risky,
renewable energy sources such as solar
have accumulated strong public support,
and investors are flocking to support
companies in solar generation and solar
technology. As a result, industry profit
has grown since 2009, when margins
accounted for about 11.5% of revenue.
Depreciation
As a capital-intensive emerging
industry, solar power generators
report substantial depreciation, which
is expected to represent 29.0% of
industry revenue in 2014. A large
outlay of capital is required for solar
power infrastructure and the selling of
power to a customer. Solar power
generation firms purchase the
technology used in the project as an
upfront cost. Often, the viability of a
project is dependent on the cost of the
technology and whether the customer
will buy enough of the energy to make
it a profitable venture in the long run.
Due decreasing solar panel costs,
buoyed by falling semiconductor
prices, and investment in research and
development, depreciation as a share
of revenue has decreased from 2009,
when it accounted for 39.0% of
industry revenue.
Industry Costs
(2014)
100
80
Percentage of revenue
Cost Structure
Benchmarks
continued
20.1
17.0
9.2
13.2
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
19.3
60
45.9
40
20
29.0
8.0
4.7
11.5
0.6
2.3
2.0
17.2
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
21
Competitive Landscape
Cost Structure
Benchmarks
continued
Wages
Salaries and wages absorb a substantial
share of industry revenue, reflecting the
industrys growth phase. Accounting for
about 13.2% of industry revenue in 2014,
these costs have decreased over the past
five years, due mainly to the explosive
revenue growth that has outpaced wage
increases. Although wages as a share of
revenue has decreased since 2009,
they remain a significant segment of
the industrys cost structure, as a
highly skilled labor force is required in
solar power generation. Wages as a
share of revenue is expected to
decrease slightly in the next five years,
as the industry approaches maturity
and the steady flow of new workers
standardizes wage costs.
Purchases
Representing 19.3% of industry revenue in
2014, general purchases relate to services
such as maintenance and items such as
spare parts; other expenses include
administrative and transport costs. These
costs have grown over the past five years
because firms have been aggressively
campaigning to gain customers.
Furthermore, because many industry
operators moved to the United States from
Europe, where solar markets are more
established, they need to purchase a wide
variety of materials to resume operation.
These costs do not fall under the category of
depreciation and include set-up costs once a
project is underway. These costs are set to
increase in the five years to 2019, as firms
continue to enter the industry from abroad.
Basis of Competition
in
this industry is
Mediumand the
trend is I ncreasing
WWW.IBISWORLD.COM
22
Competitive Landscape
Basis of Competition
continued
Barriers to Entry
in this industry
are H
ighand
Decreasing
Level
Medium
Low
Growth
High
Medium
Heavy
High
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
23
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in
this industry is
Mediumand the
trend is S
teady
WWW.IBISWORLD.COM
Major Companies
NextEra Energy Inc. | Other Companies
Major players
(Market share)
88.0%
Other
Player Performance
NextEra Energy Inc.
Market share: 12.0%
SOURCE: WWW.IBISWORLD.COM
Revenue
($ million)
(% change)
Net Income
($ million)
(% change)
2009
4.7
N/C
0.8
N/C
2010
7.7
63.8
1.6
100.0
2011
9.2
19.5
2.0
25.0
2012
17.1
85.9
3.9
95.0
2013
35.3
106.4
8.5
117.9
2014
59.0
67.1
13.6
60.0
*Estimates
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Other Companies
Sempra Energy
Estimated market share: 4.9%
WWW.IBISWORLD.COM
Major Companies
Other Companies
continued
SunEdison Inc.
Estimated market share: 3.3%
WWW.IBISWORLD.COM
Operating Conditions
of capital
intensity is H
igh
Capital intensity
Economy
Utilities
Solar Power
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Steel Framing
Aluminum Manufacturing
Capital Intensive
Labor Intensive
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Operating Conditions
Level
The level
of
Technology Change
is M
edium
Revenue Volatility
Level
The level
of
Volatility is
Very High
Volatility vs Growth
1000
Technology
& Systems
Hazardous
Rollercoaster
100
Solar Power
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
WWW.IBISWORLD.COM
Operating Conditions
Revenue Volatility
continued
Regulation is
Heavyand the
trend is S
teady
WWW.IBISWORLD.COM
Operating Conditions
Industry Assistance
Level & Trend
he level of Industry
T
Assistance is H
igh
and the trend
is I ncreasing
WWW.IBISWORLD.COM
Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Revenue
($m)
19.3
19.0
22.8
33.7
34.6
46.4
68.7
160.7
258.5
491.9
586.2
638.0
672.7
696.0
710.0
10/10
1248/1324
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Revenue
(%)
-1.6
20.0
47.8
2.7
34.1
48.1
133.9
60.9
90.3
19.2
8.8
5.4
3.5
2.0
1/10
2/1324
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
IVA/Revenue
(%)
89.12
91.05
91.67
83.98
84.68
75.22
77.73
64.47
63.95
59.22
54.86
63.12
60.50
61.03
61.06
2/10
132/1324
Industry
Value Added Establish($m)
ments
17.2
53
17.3
57
20.9
60
28.3
63
29.3
67
34.9
70
53.4
73
103.6
80
165.3
87
291.3
95
321.6
101
402.7
107
407.0
116
424.8
122
433.5
126
10/10
10/10
1166/1324 1187/1323
Wages
Enterprises Employment Exports Imports
($m)
51
100
--7.3
55
120
--7.5
58
140
--9.4
61
190
--11.6
65
250
--11.9
68
295
--12.5
71
340
--19.6
78
385
--35.0
85
420
--50.0
91
486
--65.0
98
532
--73.7
105
560
--78.7
111
587
--83.0
115
629
--88.7
117
667
--93.5
8/10
10/10
N/A
N/A
10/10
1144/1323 1313/1324
N/A
N/A 1270/1324
Industry
Value Added
(%)
0.6
20.8
35.4
3.5
19.1
53.0
94.0
59.6
76.2
10.4
25.2
1.1
4.4
2.0
1/10
4/1324
Enterprises Employment
(%)
(%)
7.8
20.0
5.5
16.7
5.2
35.7
6.6
31.6
4.6
18.0
4.4
15.3
9.9
13.2
9.0
9.1
7.1
15.7
7.7
9.5
7.1
5.3
5.7
4.8
3.6
7.2
1.7
6.0
1/10
1/10
77/1323
25/1324
Establishments
(%)
7.5
5.3
5.0
6.3
4.5
4.3
9.6
8.8
9.2
6.3
5.9
8.4
5.2
3.3
1/10
50/1323
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
193.00
158.33
162.86
177.37
138.40
157.29
202.06
417.40
615.48
1,012.14
1,101.88
1,139.29
1,146.00
1,106.52
1,064.47
5/10
115/1324
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages/Revenue
(%)
37.82
39.47
41.23
34.42
34.39
26.94
28.53
21.78
19.34
13.21
12.57
12.34
12.34
12.74
13.17
5/10
892/1324
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Employees
per Est.
1.89
2.11
2.33
3.02
3.73
4.21
4.66
4.81
4.83
5.12
5.27
5.23
5.06
5.16
5.29
9/10
967/1323
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
2.7
25.3
23.4
2.6
5.0
56.8
78.6
42.9
30.0
13.4
6.8
5.5
6.9
5.4
1/10
9/1324
Electric Power
Consumption
(Billion kilowatt hours)
3,811.0
3,817.0
3,890.0
3,865.0
3,724.0
3,886.0
3,883.0
3,823.0
3,845.0
3,904.0
3,951.0
4,001.0
4,047.0
4,101.0
4,152.3
N/A
N/A
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Average Wage
($)
73,000.00
62,500.00
67,142.86
61,052.63
47,600.00
42,372.88
57,647.06
90,909.09
119,047.62
133,744.86
138,533.83
140,535.71
141,396.93
141,017.49
140,179.91
1/10
33/1324
Electric Power
Consumption
(%)
0.2
1.9
-0.6
-3.6
4.4
-0.1
-1.5
0.6
1.5
1.2
1.3
1.1
1.3
1.3
N/A
N/A
Share of the
Economy
(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
10/10
1166/1324
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
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