Economic Study For Solar Panel Installing Business

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Economic Study for Solar Panel Installing Business This outline is an examination for all aspects that need to be considered before starting a business for installing solar panel. It delivers microeconomic elements such as supply and demand in the market, elasticity, estimated cost analysis and determinants of the supply and demand of solar panel market. Introduction As technological developments and scientific knowledge enhancements offer alternatives for renewable energy resources instead of coal and oil dependency which affects all kind of businesses’ profitability directly and indirectly by its unstable prices. Solar energy is one of the natural everlasting energy sources that it does not cause any environmental pollution like…show more content…
However, it is possible to expect a deep decline of installer solar capacity in 2017 due to upcoming expiration and reduction of the Investment Tax Credit. Based on the figure in Solar Industry Data Report done by SEIA, the demand table and demand curve are below. Table 1- Demand Table for Solar Panel Installation Figure 1- Demand Curve of Solar PV Installation As it is seen, there is an inverse relationship between the price per unit and the quantity of installed solar panel. The Elasticity of Demand in the Market Elasticity of demand refers to the sensitivity of the quantity demanded to price change. The slope of demand curve could help to measure the price elasticity of demand. Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price Based on the numbers on the demand table of solar-PV market, P1= $6 where Q1= 1,100 P2= $3 where Q2= 5,100 By using the midpoint formula between two values on the demand curve, The Price Elasticity of Demand = │- 1.9│= 1.9 As it seen above, the percentage change in quantity demanded is greater than the percentage change in price, the price elasticity is greater than 1 in absolute value. So, the demand is elastic for solar- PV installs. The Determinants of the Price Elasticity of Demand There are some variables which can influence the market demand. Expected Future Prices. As technological developments and government endorsements help to reduce the price, thus creates a bigger demand
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