Solar Power Industry

Q3 2022: Mergers and Acquisitions Trend Report

Industry Overview

• The Solar Power industry has seen considerable growth due to increased power storage capabilities and improved cost efficiency of renewables when compared to fossil fuels.
• The overall outlook for the Solar Power Industry is positive with significant ESG and cost-reduction tailwinds.
• Solar Power energy has strong momentum as the industry receives production tax credits and investment tax credits for domestic manufacturing across the entire solar value chain, which will help support domestic facilities and drive
  growth.

Key Industry Trends

• The Solar industry is overcoming rapid increase in costs due to supply chain challenges and changes in federal tariff policy. As a result, electricity service prices have gone up by approximately 15%. However, the cost savings that these systems provide has increased by an even higher percentage, and the recent extension of the 30% federal tax credit will help offset the recent industry-wide cost increases.
• Residential solar had its largest quarter ever at 1.36 GWdc, representing nearly 180,000 residential customers installing solar systems in one quarter. Customer sentiment for residential solar continues to be strong as power outage concerns mount and power prices increase across the U.S.
• Tax credits and incentives available for zero- or low-carbon technologies have the potential to accelerate electrification and help meet carbon output targets.

Recent M&A Transactions

Historical Performance

• Industry operators have benefited from attractive tax credits. The federal Investment Tax Credit (ITC) enabled Solar Power operators to write off taxes associated with building production facilities. The tax credit was 30% in 2019, 26% in 2020, and is scheduled to decline to 22% by 2023.
• Despite this trend, over the past six years, the Solar Power Industry revenue has increased at an annualized rate of 21.7% to $16.9 billion.
• Due to the falling prices of solar photovoltaic installations, Solar Power plants have been built at an accelerating rate over the past six years.

Future Industry Growth

• Growth in the Solar Power market is expected to continue as there is pressure to improve U.S. energy self-sufficiency, concerns regarding climate change, and strong government
  support for the emergent renewable energy market.
• Electric power consumption is expected to increase slightly, therefore it is expected to continue its shift toward renewable sources and away from fossil fuels.
• As a result of these trends, industry revenue is forecasted to rise at an annualized rate of 10.5% to $27.9 billion to 2027.