PEST Analysis: The Solar Energy Industry

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N EDISON PEST and Porter’s Five Forces Analysis PEST Analysis This section applies the PEST analysis framework in order to understand the macro environment and considers the renewable energy industry as a whole within the current political, economical, socio-cultural and technological landscape. Political / Legal Factors The future of the United States solar energy industry will be shaped not only by economic growth, but also by the rate of declining oil resources and the global realization of the consequences of human induced climate change. Political responses to this realization in the United States include; new policies, legislature, and tax incentives to both businesses and private households to promote growth and investment in the solar power industry. United States policy and legislature developments regarding solar energy include the SunShot Initiative, the American Recovery and Rehabilitation Act (ARRA) of 2009, and the Energy Improvement and Extension Act (EIA) of 2008. The SunShot Initiative was enacted in February 2011 and aims to “make the total cost of solar energy fully economically-viable for everyday use, so that all Americans can benefit from this clean renewable energy source.”1 The ARRA invested $114 million into the solar energy industry for the research and development of photovoltaic systems, solar power concentration and high penetration solar deployment.2 The ARRA and EIA created tax credits for homeowners and businesses for their investment in solar power.3 The implementation of these policy and legislature initiatives promote the growth and development of the solar energy industry and therefore positively impact Sun Edison. Economic Factors Economic factors that affect the solar energy industry are ... ... middle of paper ... ...cing crystalline silicon and vertically integrate their manufacturing process, therefore further weakening the bargaining power of suppliers. Threat of Substitutes The threat of substitutes to solar energy is very high. Solar energy is primarily used for the generation of electricity making the range of substitute products fairly large as many types of energy sources can also generate electricity. Solar energy’s largest substitutes are nuclear power and fossil fuels - coal, oil and natural gas. Even though these are not renewable energy sources they are considered substitutes for electricity production. Solar energy also faces many substitutes in the renewable energy industry. Wind, hydroelectric, bioenergy, and geothermal are all substitutes for solar energy in electricity generation. Intensity of Competitive Rivalry Sun Edison operates in the semiconductor

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