Solar Power Generation
Description
Companies in this industry operate power generation facilities that use energy from the sun to produce electric energy. Major companies include diversified electric utilities and independent producers Berkshire Hathaway Energy, NextEra Energy, Pacific Gas and Electric, Southern California Edison, and TerraForm Power (all based in the US); as well as Beijing Enterprise Holdings Limited (Hong Kong), Enerparc (Germany), Lightsource BP (UK), and SPIC (China).
China leads the world in installed solar energy capacity, followed by the European Union, the US, Brazil, and India, according to Investopedia. China is the top producer of solar energy with about 105 gigawatts (GW) of photovoltaic (PV) capacity in 2022.
The US solar power generation industry includes more than 200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $2 billion that provide a small but growing amount of the nation's electricity. Overall, solar energy accounted for about 10% of primary energy consumption by energy source in the US in 2023, according to the US Energy Information Administration (EIA).
COMPETITIVE LANDSCAPE
As with other power sources, demand for solar power is driven by residential, commercial, and industrial electricity demand, which increases with population and economic growth. Additionally, growing concern over environmental and geopolitical issues surrounding fossil fuels has boosted interest in renewable energy sources such as solar.
The profitability of individual companies is determined by government regulations and incentives, as well as technological factors. Large companies have an advantage in their ability to secure the financing necessary to build solar power generation facilities. Small companies can compete by attracting venture capital and using government subsidies. The US industry is highly concentrated: the 50 largest firms generate more than 95% of total revenue.
The competitive environment for solar power generation is complex, as the independent power producers and utilities that offer solar power often do so as part of a larger power portfolio; coal and natural gas continue to dominate the power generation market. As a technology, solar competes with other forms of renewable energy, such as wind power, for investment dollars.
PRODUCTS, OPERATIONS & TECHNOLOGY
The major services offered by solar producers are largely composed of electricity generation at about 99% of the industry revenue. Other services offered by solar producers include electricity generation (except waste energy production) and non-hazardous waste energy services. Solar producers use two technologies to convert energy from the sun into electricity: photovoltaic (PV) power and concentrated solar power (CSP). PV cells convert solar energy directly into electricity, while CSP devices concentrate energy from the sun's rays to heat a receiver to high temperatures. This heat is transformed first into mechanical energy (by turbines or other engines) and then into electricity.
PV devices have solar cells made from semiconducting materials such as silicon. Most solar panels on the market in 2024 produce between 350 and 450 watts of power, according to EnergySage. These cells are combined into packaged, weather-proof modules, thousands of which are connected to form a solar plant array. PV devices convert sunlight directly into electricity, but an inverter must be used to convert the direct current (DC) produced by the solar cells into alternating current (AC) used by the utility grid; some amount of energy is lost during this process.
CSP plants utilize heat from solar thermal collectors. Power plant-grade collectors typically take the form of parabolic troughs, solar dishes, or solar towers. The collectors use long, parabolic reflectors that tilt with the sun as it moves across the sky. The reflectors focus sun rays on a receiver pipe filled with fluid. The heated fluid is used to produce steam, which in turn powers turbines just as in a fossil fuel or nuclear-powered system.
In recent years, the economics of large-scale solar power generation have turned decidedly in favor of PV technology. CSP systems once were less expensive than PV, but the cost of PV devices has dropped considerably. PV panels also produce power more efficiently. CSP systems require mechanical generators, which necessitate cooling systems. PV systems can be installed more quickly and require less space than a CSP plant, minimizing their environmental impact.
In addition to running central generation solar plants, some solar power producers also use distributed generation. Distributed generation places the power generation equipment close to where the power is used, as with PV panels installed on the roof of a business or home. With net metering, utilities measure both power consumption and generation, charging customers for usage and crediting them for any excess that is generated and fed back into the grid. Using another distributed generation model, aggregated distribution, providers gather electricity from several small to mid-size arrays and sell it in large-scale amounts.
China leads the world in installed solar energy capacity, followed by the European Union, the US, Brazil, and India, according to Investopedia. China is the top producer of solar energy with about 105 gigawatts (GW) of photovoltaic (PV) capacity in 2022.
The US solar power generation industry includes more than 200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $2 billion that provide a small but growing amount of the nation's electricity. Overall, solar energy accounted for about 10% of primary energy consumption by energy source in the US in 2023, according to the US Energy Information Administration (EIA).
COMPETITIVE LANDSCAPE
As with other power sources, demand for solar power is driven by residential, commercial, and industrial electricity demand, which increases with population and economic growth. Additionally, growing concern over environmental and geopolitical issues surrounding fossil fuels has boosted interest in renewable energy sources such as solar.
The profitability of individual companies is determined by government regulations and incentives, as well as technological factors. Large companies have an advantage in their ability to secure the financing necessary to build solar power generation facilities. Small companies can compete by attracting venture capital and using government subsidies. The US industry is highly concentrated: the 50 largest firms generate more than 95% of total revenue.
The competitive environment for solar power generation is complex, as the independent power producers and utilities that offer solar power often do so as part of a larger power portfolio; coal and natural gas continue to dominate the power generation market. As a technology, solar competes with other forms of renewable energy, such as wind power, for investment dollars.
PRODUCTS, OPERATIONS & TECHNOLOGY
The major services offered by solar producers are largely composed of electricity generation at about 99% of the industry revenue. Other services offered by solar producers include electricity generation (except waste energy production) and non-hazardous waste energy services. Solar producers use two technologies to convert energy from the sun into electricity: photovoltaic (PV) power and concentrated solar power (CSP). PV cells convert solar energy directly into electricity, while CSP devices concentrate energy from the sun's rays to heat a receiver to high temperatures. This heat is transformed first into mechanical energy (by turbines or other engines) and then into electricity.
PV devices have solar cells made from semiconducting materials such as silicon. Most solar panels on the market in 2024 produce between 350 and 450 watts of power, according to EnergySage. These cells are combined into packaged, weather-proof modules, thousands of which are connected to form a solar plant array. PV devices convert sunlight directly into electricity, but an inverter must be used to convert the direct current (DC) produced by the solar cells into alternating current (AC) used by the utility grid; some amount of energy is lost during this process.
CSP plants utilize heat from solar thermal collectors. Power plant-grade collectors typically take the form of parabolic troughs, solar dishes, or solar towers. The collectors use long, parabolic reflectors that tilt with the sun as it moves across the sky. The reflectors focus sun rays on a receiver pipe filled with fluid. The heated fluid is used to produce steam, which in turn powers turbines just as in a fossil fuel or nuclear-powered system.
In recent years, the economics of large-scale solar power generation have turned decidedly in favor of PV technology. CSP systems once were less expensive than PV, but the cost of PV devices has dropped considerably. PV panels also produce power more efficiently. CSP systems require mechanical generators, which necessitate cooling systems. PV systems can be installed more quickly and require less space than a CSP plant, minimizing their environmental impact.
In addition to running central generation solar plants, some solar power producers also use distributed generation. Distributed generation places the power generation equipment close to where the power is used, as with PV panels installed on the roof of a business or home. With net metering, utilities measure both power consumption and generation, charging customers for usage and crediting them for any excess that is generated and fed back into the grid. Using another distributed generation model, aggregated distribution, providers gather electricity from several small to mid-size arrays and sell it in large-scale amounts.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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