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Solar Power Industry and Competitive Analysis

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vattana cheth

on 22 March 2015

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Transcript of Solar Power Industry and Competitive Analysis

Abstract
Industry Economic Traits
Competitive Forces
Drivers of Change and Impact
Strongest/Weakest competitive positions
Competitive Moves
Competitive success or failure
Industry Profitability
What is Solar Energy
How is Solar energy produced?
Stakeholders
Drivers and Constraints of Change
Solar price per watt
Solar energy produced in the US
Government
Net imports of electricity
Global solar thermal energy
Total US energy consumption
US Solar Revenue
Investment in Renewable Energy
Economic Sustainability
Solar maps and energy storage
Demographic Change
Crude oil price
Uncertainties
Costs surrounding oil consumption and natural gas consumption
Global unrest
Government reactions to energy changes
Investments in alternative energy
Future of solar power deals and rate of tech expansion and innovation
Baseline Forecast
Expansion in the next 15 years
Infrastructure will be in infantile stages
Solar may not completely displace all other forms of energy
US government currently subsidizes projects in the oil industry
Government will begin pulling subsidies once they realize the stagnation of oil
Big oil will still be necessary as solar power can't completely displace nonrenewable sources
Large strides in technological capability
By 2029, solar energy will up 25% if total renewable energy in Arizona and New Mexico
Infrastructure not very effective
Increased sensibility of solar energy
What are the Economic Traits
GOAL!
Solar Energy
Industry & Competitive Analysis

Justin Ghadery, Lionel Yu, Shane Jones, Gary Davis, Tolga Tarhan & Vattana Cheth
Scenario 1: Abundant Sunshine
Most optimistic
Solar power transforming energy market
Nonrenewable supplies have dwindled
Costs of solar panels greatly reduced
Big oil adapting to reductions in government subsidies
Businesses form partnerships with solar companies to advance technological capabilities
Transportation industry evolves
Business Implication:
Triple-bottom line sustainability is the rule, not the exception
Changes lead to some growth, although not tremendous
Government subsidizing solar, but not discontinuing oil subsidies
Oil supply substantially increases
Chance of solar replacing non-renewable is struck down; only a substitute
US has respectable solar sector
Business Implication:
More businesses investing in solar and more consumers buying panels
Scenario 3: Overcast
Constriction on Solar power industry
Oil is still major in 2029
No major technology breakthrough
High cost of development and implementation of solar panels
Negligible Government subsidy


Business Implication:
Opportunity for solar business with an increasing national awareness to environmental pollution; focus on eco-friendly choices
Scenario 4: Thunderstorms
Almost a complete shift away from solar
US reverts back to fossil fuel-powered infrastructure
International tensions lead to increased crude consumption for military
US domestic solar industry can't compete with foreign companies
Unrealized return on solar investments
Lack of government support and private investment
Business Implication:
Solar companies seek joint ventures and environmentalists make an appeal to impact investors to invest in solar
Scenario 2: Partly Cloudy

Alternative Scenarios
Manufacturing Companies
Companies like Ford, GE, and HP
Goal is to reduce costs
Businesses will have to assume the forefront of the solar movement
Manufacturing companies have the most to gain from slowly adopting to solar technology and moving away from oil consumption
Big Oil Companies & Organizations
Includes companies like BP, Exxon Mobil, Shell and organizations like OPEC
Around 80% of the global oil market
Starting to shift focus on alternative energy investments but many still stick to the status quo
Utility Companies
Regional
Intermediary to get power from the source to the consumer
Have a stake in alternative energy since they're beginning to be negatively affected by decreasing costs of solar panels
If solar penetration reaches 2.5% of electricity, shareholder earnings can fall by approx. 4% (Lawrence Berkeley National Lab)
Innovators
Also considered "early adopters"
Innovators are attracted by growing social and political trends
Clean Energy Cash Back Policy: businesses and households installing on-site renewable energy technologies will receive guaranteed payments from their energy suppliers based on how much power they generate
Gaining momentum
Business Implication
Solar industry will provide around half a million jobs by 2030
More jobs in research and development will be available
Largest challenge faced by business will be moving stored solar power from areas of high solar radiation to areas with less
Objective:
To analyze the future of solar power in the US by examining the current state of the solar industry domestically and abroad
Government
Help companies and consumers overcome the high initial cost of solar power
Set benchmarks for alternative energy standards
Example: California
Renewables portfolio standard: requires utility companies and electricity providers to get at least one third of total procurement by 2020

Solar
By the year of 2001
- Solar technology adoption
- Cost reduction
Price in 1977: $76.67
Price in 1991: $10
Price in 2013: $0.74
Module prices have fallen 80% since 2008
Government supported programs of Solar Power industry
Experts' Concerns about the cost of solar power
Source: Process Industry Forum
Stakeholders are entities that have a big impact or are largely impacted by solar
Primary stakeholders are:
Manufacturing companies
Big oil companies
Utility companies
The economy
Innovators
Government
Economy
Opportunity to grow and mature as energy moves to alternatives
Energy World Journal: experts use Granger-causality tests and determine that renewable energy consumption, economic growth, and the status of the labor force have a significant impact on economic and natural capital
Solar Price Per Watt
Can be either a driver or constraint
If price continues to decrease, then a driver. If prices come back up, a constraint
Spike Narayan, IBM: solar cost will need to reach $1/watt in order for utility companies to invest
US Solar Revenue
Data suggests that more firms are taking the opportunity to research and develop new technologies
Optimistic curve: US gains control of the global solar market
Pessimistic future: flatter projection line
To be a driver, there has to be a growth of some sort
Investment in Renewable Energy
Determines whether or not the industry can weather the headwinds of foreign competition in terms of per unit cost of production
Premise of the driver demonstrates the necessity for funding or risk becoming stagnant
USDA already provides grants for rural homes to install solar panels; more needs to be done
Market Size
:
$491M annual revenue
Scope of Competi
tive Rivalry:
Domestic U.S.
Market Growth
:
7% annual growth 2014-2019
Stage in Life Cycle
:
Growth Phase
Number of Companies in Industry
:
91
Customers:
Industrial/Utilities/Commercial sector
Degree of Vertical Integration:
Ease of Entry/Exit:
Difficult
Technology/Innovation:
Product Characteristics:
Scale Economies:
Capacity Utilization:
Industry Profitability:
Full transcript