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Global Solar Power - Case Study Example

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The paper "Global Solar Power" presents that Global warming is more than just an environmental issue. It affects our lives and threatens our existence on earth. Its reality is much beyond any dispute or debate. It is a real threat facing humanity today…
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Global Solar Power
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Extract of sample "Global Solar Power"

Globalisation and Solar Power Industry Global warming is more than just an environmental issue. It affects our lives and threatens our existence on earth. Its reality is much beyond any dispute or debate. It is a real threat facing humanity today. And the only possible way to combat the effects of global warming is adapting more and more renewable sources of energy. In the recent times the alternative energy and power industry is the most after and economically feasible industry. Among all renewable sources of energy, solar power industry is the fastest growing and evolving. Every initiative is being taken to boost the industries related with solar power energy generation for example solar energy system, solar energy equipment and solar energy products. The Competitive Structure of the Solar Power Industry Viewed Globally Today An analysis of the competitive structure of an industry is crucial to understanding the industry standing and curve out its growth path. The most frequently used theoretical model to analyse the competitive advantage of any industry is the Five Forces Model of Porter. According to this model, competitiveness is judged on the basis of 5 parameters, Entry of Competitors, Threat of Substitutes, Bargaining power of Buyers and Sellers and Rivalry among the existing firms. Fig: Porter’s Five Force Model From the time of birth of the alternative power industry till today, it has been a fast journey. As mentioned earlier, Governments of various countries across the globe encourages the development of such industry on the ground to combat the evil effects of global warming. However over the past two years due to fluctuations in the supply and price of fossil fuel, alternative power especially solar energy has helped at maintaining a steady distribution of power. From a mitigator of green house gases, solar power has evolved to be a crucial form of energy for the world. This fact has been further driven hard by the fast depletion of some of the major oil reserves of the world like the Greater Burgan Area of Kuwait. Even a decade ago because of low rates of return on investment, the competition in the solar power industry used to be very low. However in the recent years with returns on investment averaging around 8 years, investment on solar energy has become cheaper and there is an increased threat of the entry of new players into the industry. Also the degree of rivalry between the existing players has relatively increased over the years. Solar energy has almost no threat of substitute. It is the most widely recognized form of alternative energy, more so in the countries that receive good amount of sunlight throughout the year. Though wind and tidal energy is also being harnessed at an increasing rate, it has to go a long way before it can actually give solar power a tough competition. Solar power industry is being encouraged in almost all parts of the world except for the polar and relatively cooler regions. Solar power industry is experiencing an expanding market. The primary market for solar power is primarily concentrated in the developed countries of the world while the secondary markets are more scattered among the developing countries. The rationale behind such grouping of markets is the fact that solar power generation set-up is expensive and the developing nations cannot afford the money or the research and development that just initiatives demand. This is much substantiated by the Kyoto Protocol of the UN. This is basically a treaty that urges all nations to cut down their level of carbon emission by a certain percentage from its 1990 level. Kyoto Protocol put more binding targets on developed nations in terms of time and percentage of carbon emission keeping in mind two facts, viz., their rate of carbon and green house gas and also their comfort level in meeting the expenditure that goes into adapting eco-friendly production procedures. This is an indirect way explains the growth of solar power industry in the developed nations. Over the past few years there has been a breakthrough in global solar photovoltaic market. The solar photovoltaic industry recorded a growth of 35 percent largely due to incentives driven markets of Japan and Germany. However silicon feedstock shortage and fear of removal of incentive programs have been major impediments to growth. Despite these lurking fears, due to ups and downs in the price and supply of domestic electricity, there has been no fall in the demand of solar power. The most propelling factor behind private investment in the solar power industry is Government incentives. However over the years companies have demonstrated increased interest in the solar power industry due to faster rate of return on investment and increased revenues. From a more logical point of view, Government incentives alone cannot ensure investment and production. At some point production will cease to take place despite Government incentives if there is no demand for the products in the market. Recent years have also seen an increase in the awareness among the masses and a consequent rise in the demand for solar power. The Competitive Structure of the Global Solar Power Industry over the Next Decade Globalization is making its impact felt on all spheres of business and in a decade’s time it is going to hit the global solar power industry as well. In the times to come it can be expected that there will take place integration between various renewable resources projects to benefit mutually and cut down on cost. Like for example recently, the Suzlon Energy, which happens to be world’s fifth largest wind turbine manufacturer, established the first ever wind farm site that will use solar energy to power its onsite operations. Given the fact that wind farms are generally located in remote regions, diesel motors are used to ensure uninterrupted power supply to the site offices. However such innovative initiative by Suzlon will ensure that power supply is met but not at the cost of environmental damage. It cuts down on carbon emissions by eliminating the need for diesel and oil consumption. This will also ensure long term cost savings. (Suzlon empowers wind project site with solar power, February 2009) The competitive structure of the solar power industry will have a turnaround in terms of foreign investment participation. With more potential entrants into the industry, the rivalry among the firms is going to increase and so will their bargaining power. The 2008 policy for grid connected solar power in India attracted industry leaders like Videocon Industries, Konark Group, HVV Solar Technologies, Resun Energy and Supernova Solar energy for investments. Dow Corning Corporation the last year invested several billion dollars in the solar technology industry so as to ensure steady supply critical materials. The joint venture between Dow Corning Corporation and Hemlock Semiconductor will help in the evolvement of a revitalized economy. It will not only ensure clean power technologies but also high paying jobs and hence faster economic growth. (Huge Dow Corning investments in solar industry, December 2008) Corporates are eyeing investment opportunities in solar power generation projects due to more than one reason. A solar power project plant of 1MW scale has the potential of generating 2 crore INR every year through the sale of electricity. Upon this carbon credits of 1200 every year ensures another 1 crore INR of additional revenue. Roughly a solar power project plant of 1 MW scale should ideally come to break-even within 6 years from its time of initiation. Thus the solar power industry represents tremendous opportunity in terms of both revenue, growth, and a cleaner environment. (New Policy Draws Pvt. Investment In Solar, November 2008) Solar power industry is not only attracting increased investments and expansion in the form of joint venture but there are also instances of start-ups venturing into the domain. Another global change that is taking place in the solar power industry is the implementation of renewable of energy law. Despite increased investments, Government support remains to be crucial for the growth of the solar industry. Governments of different countries through newer and attractive policies and programmes will be able to attract further investments. According to PricewaterhouseCoopers, policy twists and targeted fiscal incentives drive interest among the investors for the adoption of this eco-friendly power source in the countries of the world. (Raghav K., September 2008) Despite the fact that it is the developed nations of the world that are more keen on solar power generation, developing and less developed nations are also coming forward with a lot of interest and enthusiasm. In the last couple of years there have been major instances of solar power projects being initiated in the developing countries of Asia, Europe and America. Conclusion Compared to fossil fuels, solar power generation involves higher costs. A comparative study between solar power and grid power in America by a major Midwestern utility reveals that the average cost of producing solar power ($3.39/kilowatt-hour, 2006) is much higher than grid power ($0.083/ kilowatt-hour, 2006). Irrespective of this fact it is one of the fastest globally growing industry. Right from the threat of global warming to dependence on politically unstable foreign oil imports, there are many reasons behind the solar power boom of the recent times. If statistics are to be believed, the amount of sunlight our planet receives in an hour is sufficient enough to generate 100 percent of the energy needs of the world for a year. The competitiveness of the solar industry is experiencing a steep curve and in another 10 to 20 years time it should be able to compete with the price of oil. (Hassan R., n.d.) References Hassan R., (No date), A Research Report on Solar Power Investment: The Dawn of Solar Power, retrieved March 3, 2009, from http://www.altenews.com/Solar%20Power%20Research%20Report.pdf Huge Dow Corning Investments in Solar Industry, (December 2008), CIOL, retrieved March 3, 2009, from http://www.ciol.com/Semicon/Solar/PV/News-Reports/Huge-Dow-Corning-investments-in-solar-industry/171208113859/0/ New Policy Draws Pvt. Investment in Solar, (November 2008), Business Standard, retrieved March 3, 2009, from http://www.business-standard.com/india/storypage.php?autono=339630 Raghav K., (September 2008), Govt. Urged to Energize Solar Power Industry, retrieved March 3, 2009, from http://www.livemint.com/2008/09/29224315/Govt-urged-to-energize-solar-p.html Suzlon empowers wind project site with solar power, (February 2009), The Economic Times Bureau, retrieved March 3, 2009, from http://economictimes.indiatimes.com/News/News-By-Industry/ET-Cetera/Suzlon-empowers-wind-project-site-with-solar-power/articleshow/4154920.cms Read More
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