Demand for Solar Thermal Equipment Expected to Grow

The Solar Thermal Energy Equipment Manufacturing industry has surged during the five years to 2011. According to IBISWorld, the nation’s largest publisher of industry market research, revenue is expected to grow 35.1% per year to $185.3 million in the five-year period. Generous government incentives for solar thermal energy (STE) manufacturing and downstream solar power generation (the industry's customer) have buoyed revenue. Without government subsidies, solar power generation firms would have a hard time competing against traditional energy-generating sources. With incentives in place, downstream customers demand solar thermal equipment at an increasing pace. However, the recession caused industry revenue growth to slow down amid tightening credit conditions that hampered customer's ability to purchase STE equipment. Revenue is expected to bounce back as these government incentives continue to positively influence the industry. Industry revenue is anticipated to jump 19.9% from 2010 to 2011.

The industry is characterized by strong technological innovation. Industry firms continually try to come up with more efficient ways to create energy and store that heat for extended periods of time. In doing so, firms are essentially trying to lower the price of energy so that they can compete with other types of electricity generation. In particular, many firms are concentrating on energy storage to deliver energy around the clock. Amid growing competition from solar photovoltaic (PV) manufacturers (which are an external industry competitor), industry firms are positioning themselves to be more competitive by producing energy for 24 hours. For the most part, PV plants can only produce and sell energy during the day.

The next five years will likely be bright for the industry. Government incentives that favor the industry's customer (downstream solar producers) will continue, and the federal government will open up large plots of land for solar developers to begin generating solar power. Industry firms will continue to innovate and come up with more efficient ways to create energy and store that energy. Amid favorable incentives and strong innovation, the industry will be limited by growing competition from solar PV manufacturers and the expiration of a manufacturing tax credit incentive (expired in 2010). As a result, industry revenue is expected to grow at a slower rate over the next five years, at 8.1% annually to $273.1 million in the five years to 2016.

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