NEW YORK — Since first being introduced in 2006, solar tax credits have been extended through 2016 and caps on subsidies to residential customers have been removed. Despite economic challenges, these policies have underpinned moderate growth in solar water heater installations in the U.S. over the past five years, according to a report from industry research firm IBISWorld.

Edward Rivera, IBISWorld industry analyst, said, “Most of industry revenue comes from residential installations; therefore, the health of the housing market plays a large role in determining the fate of solar water heater installers.” The industry has benefited in recent years from a rise in housing starts and increased home renovations. “This resulted in more solar water heaters installed in new construction projects,” said Rivera.

According to the report, the industry is highly fragmented, with low barriers to entry and a prevalence of independent operators that service local markets. Participation in the industry is expected to expand in the coming five years as construction companies increasingly offer solar water heater installation services. Revenue is also expected to grow at a faster pace through 2019, though it’s uncertain whether the federal policies that have been so favorable to the industry in recent years will continue. Regardless, technological advancements in solar water heaters and rising demand from the corporate sector are expected to drive the most demand for industry services.

For more information, visit IBISWorld’s Solar Water Heater Installation in the US industry report page.

Publication date: 1/19/2015

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