NEW YORK — The solar power market in the United States has experienced clear skies over the five years to 2014, according to a report by IBISWorld, propelled by favorable government incentives in the form of renewable portfolio standard (RPS) laws, which require local utilities to generate a percentage of their total energy portfolio from renewable sources, and tax incentives and grants, which encourage investments in solar power. In addition, costs have continued to fall. Due to these trends, industry revenue has grown at an annualized rate of 70 percent to $491.9 million in the five years to 2014, including anticipated growth of 90.3 percent in 2014 alone.
In the next five years to 2019, industry growth is expected to continue, but at a slower rate, says the report. Government support will continue to help the industry compete with other energy sources, at least in the first half of the next five years. State mandates for renewable energy and lower costs will continue to translate into high revenue growth. Solar PV power generation is also anticipated to achieve grid parity during this time period, where the cost of solar-generated electricity is equal to or less than the retail rate of grid power. These trends suggest that the industry will become more viable in the next five years, reducing its dependence on government assistance.
The solar power industry has a low level of concentration, notes the report. There is currently only one major player, NextEra Energy Inc., with a market share of 12 percent, but this will likely change in the near future. In a climate of high growth, companies are more willing to expand their operations to gain market share, and many companies are finalizing solar projects that will increase their solar-generating capacity. However, industry concentration remains low because of the lack of economies of scale in the industry. While individual solar power facilities are getting larger, there appears to be little movement toward owning facilities across many areas. Over the five years to 2014, market share concentration has increased, albeit marginally, as many players enter the industry to benefit from the growing opportunities and existing operators scale their solar energy production. Market share concentration is expected to continue to increase in the five years to 2019.
For more information on IBISWorld’s “Solar Power in the US” report, click here.
Publication date: 5/19/2014