When thinking of starting a contracting business for solar panels, many economic issues and concerns play a factor in the decision making process. Having a concern for the environment and knowing that solar panels have a cost saving for both households and business seems to be reason enough to start a business. However, before making such a financial investment you should first take a look solar panels in the economy in terms of (i) GDP growth rate, (ii) interest rates, (iii) level of unemployment, (iv) business cycle, (v) fiscal policy, (vi) monetary policy, (vii) international trade, and (viii) demographic.
RELEVENT ECONOMIC PRINCIPLES
Looking into macroeconomics issues when considering starting a Solar Panel contracting business, we must identify the Gross Domestic Product (GDP) growth rate. The price of energy and how use it is a determining factor on its GDP growth rate. Solar Panels are a lower cost energy source needed in today’s economy. Having affordable energy helps the economy as its facilities economic growth. The shares of energy in the U.S. has decreased, but it is still a component of the overall economy and the world share of energy. (Institute for Energy Research, 2010) Solar Panels help with the growth of the economy and its economic growth is a major factor in terms of the world energy consumption. Economic growth has fluctuated in its energy demand specifically in recent years by 1.1 percent in 2009 and growing by 4.9 percent in 2010, and then growth of 3.8 percent in 2011 and 2.8 percent in 2012. (EIA U.S. Energy Information Administration, 2013) 1
Figure 25 above shows us the total GDP from 1990 – 2020 provided both historical data and projection to show how the trend of the use of solar energy. “The growth rate slows over the period, peaking at 4.0 percent between 2015 and 2020 and declining to 3.5 percent between 2020 and 2040. Global economic growth in the Reference case is led by the emerging economies. Real GDP growth from 2010 to 2040 averages 4.7 percent for the non-OECD region, compared with 2.1 percent for the OECD region (Figure 25).” (EIA U.S. Energy Information Administration, 2013) After 2020 economic growth will slow down as a results of the emerging economy specifically in China. The U.S. is more aware of the use and value of energy now. More consumers consider Solar Panels as an alternative source for energy and prices decrease and demand increase for Solar Panels.
Next we will look at business cycles in solar panels in the emerging solar industries and how it effect unemployment and inflation. With business cycle we will be able to determine where issues will occur in order to make a sound business decision and see where policy makers will be able to play a part. China considers solar energy a components as they one of the first countries to invest in solar energy and the development of Solar Panels. With the consistent decline in prices for solar panels in both the cost of manufacturing and the cost of installing we are enter into a new cycle of the solar panel industry. The low cost actually is what is driving the industry growth. The industry is now at a business cycle peak and great market to enter with such low prices with results in growth rate, competitive shifts, industry consolidation, vertical integration, economic and trade policy, viable future success scenarios, and maybe even the competitiveness of the U.S. economy as a whole. (Mattson, 2013) The shift in solar energy has fast development rate and other renewable energy source will not be able enter the market and have a competitive advantage over solar panels. The price of solar is its main winning factor outside of the fact it is better source more safe source of energy for the environment as it reduces polluting. When you compare the price of the current use of electricity against the cost of solar panels for electricity you see what drives growth, which is where the cost of solar...
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