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Solar Firms in Flux: Evolving Solar Energy Business Models and Regional Economic Implications

Authors: Maximilian Eisenburger*, University of Illinois (Dept Urban & Regional Planning)
Topics: Economic Geography, Energy
Keywords: renewable energy, solar energy, business models, production networks, firms
Session Type: Paper
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The renewable energy sector’s rapid growth in the United States over the last decade has been accompanied by policy uncertainties, changing market conditions, and several high-profile failures. The uneven performance of renewable energy firms amidst a growing market raises questions about the sources of this unevenness, and potential consequences for state and local governments adopting increasingly ambitious and targeted renewable energy policies. Through a comparative case study of two leading national residential solar energy firms and local solar businesses in two regions, this paper shows how interfirm differences in internal capabilities and financial imperatives motivate large firms to adopt distinctive strategies in the face of similar policy and market risks. Furthermore, these strategies suggest divergent outcomes for local solar firms and workers.

While one firm’s complex and capital-hungry product portfolio has led it to emphasize cost reductions, labor-replacing technological innovation, and intrafirm coordination, the other is outsourcing lower-profit activities to local partners and contractors while focusing on emerging energy services that promise higher margins. These strategies suggest divergent outcomes for local solar firms and workers, with the former providing greater benefits for knowledge workers and heightening competition with smaller local solar firms, while the latter broadens opportunities for small firms and less skilled workers. These results also demonstrate that prevailing firm-oriented theories of economic geography (such as GPN) can be enriched by considering the competing imperatives that may exist across a company’s product portfolio.

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