Energy – Solar

The Energy – Solar sector has benefitted from favorable government incentives such as renewable portfolio standard (RPS) targets and tax credits. RPS legislation requires local utility companies to allocate a percentage of their total energy portfolio from renewable sources. Furthermore, solar equipment costs have declined over the last few years. Individual state mandates for renewable energy power and lower input costs could lead to sustainable revenue growth in the future. These trends suggest that this sector will become more viable in the next five years, as it lowers its dependence on government assistance.

 

Value of Closed Domestic M&A Transactions ($mm)

 

Sector Performance vs. National GDP

Historically, concentrating solar power (CSP) technology was more competitive in large-scale energy generation than photovoltaic (PV) panels, which required high acquisition and installation costs. Recently, declining semiconductor input costs combined with a surplus of solar panels in the world market have driven down the price of PV panels, encouraging consumers to favor PV installations. Furthermore, the outsourcing of solar panel factories to countries with lower production and labor costs will continue to keep prices for solar equipment low. Technological advances in solar panel manufacturing will continue to achieve greater efficiency in converting solar energy to electricity. Moving forward, PV solar power is anticipated to reach grid parity, which is when an alternative energy source is able to generate electricity at an equal or less cost than the retail rate of grid power.

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