This answer is predominantly for the solar PV business opportunities.
Not all sectors of the solar industry are profitable
While the solar industry is already a medium sized industry (about $100 billion globally in revenues in 2014), and it is also one of the fastest growing industries worldwide, beware that many segments of the solar sector are not that profitable.
Why is this so?
While there are quite a few reasons behind the low profitability of many solar energy opportunities, the main reason has to do with the fact that the end product, either heat or power, is a commodity where little differentiation is offered by the providers. Add to this the fact that there is an oversupply in many parts of the solar PV value chain. These two are the main factors that have resulted in the poor profitability of the solar sector.
Attractive sectors
But this does not mean that there are no high-profit opportunities in solar.
As it the case in any industry, those who are able to offer differentiated solutions in the solar sector will find that they are able to make good profits too.
While such differentiation is possible indeed in any part of the solar PV value chain, the following are some sectors where such differentiation is easier:
- Solar modules and sub-components
- Trackers
- Monitoring systems
- EPC
- Offgrid products such as solar water pumps, solar lanterns/lights, and niche solar PV offgrid opportunities
- Inverters
- Mounting structures
- Rooftop solar power plants
While it is indeed true that many of the above segments have significant competition and hence there could be significant pressure on prices and profits, it is also true that each of the above segments present opportunities for product, packaging or service innovation.
As a result, those companies that are willing to go the extra yard and take the risk of innovating within these segments can reap good profits.
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