TODAY’S STUDY: JOBS BUILDING SUN

Solar Installation Labor Market Analysis
Barry Friedman, Philip Jordan and John Carrese, December 2011 (National Renewable Energy Laboratory)

Executive Summary

The potential economic benefits of the growing renewable energy sector have led to increased federal, state, and local investments in solar industries, including federal grants for expanded workforce training for U.S. solar installers. However, there remain gaps in the data required to understand the size and composition of the workforce needed to meet the demand for solar power. Through primary research on the U.S. solar installation employer base, this report seeks to address that gap, improving policymakers’ and other solar stakeholders’ understanding of both the evolving needs of these employers and the economic opportunity associated with solar market development. Included are labor market data covering current U.S. employment, expected industry growth, and employer skill preferences for solar installation-related occupations. This study offers an in-depth look at the solar installation sectors. A study published by the Solar Foundation in October 2011 provides a census of labor data across the entire solar value chain.

click to enlarge

The data in this report were gathered using a mixed-method (telephone and Web) questionnaire for solar photovoltaic (PV) and solar heating and cooling (SHC) technology installers throughout the United States in August 2010. Utilizing standard methodological approaches, the report represents the first statistically valid job count in the solar installation sector. The sample of respondents includes 1,425 unduplicated completed questionnaires from a census of solar installers and from a random sample of firms in construction industries. These responses were used to extrapolate data about solar installation workforce demand in the United States. It is the first study to use a random sample of the broader construction economic sectors to ensure their inclusion in the solar installation job count.

As of August 2010, the sector employed approximately 46,500 permanent solar workers, defined for this study as employees that spend at least 50% of their time on solar-related work. Three in four of these, or approximately 33,000 employees, are engaged in solar activity for more than 75% of their time. These estimates represent a range of approximately 32,000–38,000 full-time equivalent workers (FTEs). Because some workers do not work on solar installations on a full-time basis, estimates of the number of workers with varying degrees of solar focus always exceeds estimated FTEs. About half of the jobs identified in this study were derived from the random sample of the broader construction sectors, for which solar installation activity was not previously quantified. Solar installation firms also employ nearly 20,000 additional temporary and seasonal employees. These estimates represent gross jobs associated with the solar installation sector; measuring net jobs is a separate question beyond the scope of this report. Net job estimates would account for potential lost jobs through displacement from other fields.

click to enlarge

Other key findings include:

• In most regions of the United States, installation companies expressed strong interest in workers with real-world construction and electrical experience and knowledge. They place an emphasis on the importance of informal on-the-job or hands-on training.
• Most installation companies surveyed (about 8 in 10) were optimistic about the future.
• Companies prefer experienced workers and are having difficulty finding them. About half (52%) of firms reported “some” or “great” difficulty in finding entry-level candidates who have the appropriate skills and training; 59% reported difficulty finding non-entry-level employees. Although unemployment is high in most solar markets, in many cases workers seeking employment do not possess the skill sets or hands-on experience that employers seek. In some cases, they may lack sufficient knowledge of effective pathways to solar careers.
• Critical skills and desired experience include those associated with electrical and construction trades, customer service, and specialized solar knowledge.
• To be most effective, training programs need to understand local market trends and continue developing partnerships with local solar employers.
• For a variety of reasons, most notably increased competition, worker experience, and the expansion of large utility-scale PV installations, U.S. labor productivity is likely to improve in the future, suggesting caution about future projections of jobs needed based on current labor intensities.

click to enlarge

As with any early stage market, one would expect improvement in labor productivity over time, scale, and industry development. SEIA and GTM Research estimates a total of 878 MWdc of PV was installed in 2010 (SEIA/GTM 2011a. Based on global estimates of expected labor intensities (e.g., New Energy Finance 2009), the U.S. installation workforce is larger than would be expected to serve a market that size. Further, respondent data show that 64% of U.S. installers employ 10 or fewer people, and many of these small start-up firms would be expected to consolidate over time in the natural course of market development. Increasing competitive market forces and worker experience tend to improve labor productivity. In addition, given the fact that the United States is still early in market development, supply and distribution chains will likely become more efficient over time. The solar market may be over-staffed relative to the size of the market for various reasons. For example, there may be extra staff required to manage state, local, and utility regulations and requirements that tend to be inconsistent or cumbersome. In addition, human resources and extra staff time are required for any new business, especially one in a new industry, for such disparate organizational development tasks as building and training staff, conducting market research, business development, establishing credit, and raising capital. Labor intensity, as defined by jobs per installed megawatt, is also likely to decrease as large utility-scale plants currently planned move into construction and become a significantly larger portion of U.S. installed capacity. Finally, at least in the near-and-mid-terms, labor demand growth may be impinged by the expiration of recovery funds and programs aimed at solar markets, such as the cash grant in lieu of tax credit program administered by the U.S. Treasury Department, set to expire December 31, 2011.

click to enlarge

More than half of U.S. installation employers report difficulty in meeting their labor needs for both skilled and unskilled workers, particularly for installers and sales staff. In the face of very high unemployment in construction sectors of the U.S. economy, these findings underscore the opportunity to provide solar training to unemployed workers in these sectors, such as those with the foundational construction or electrical experience preferred by solar installation employers. The construction industry (NAICS 23) has consistently had the highest unemployment rate of all industries in the United States at 34%, expressed as a percentage of jobs in the industry—one in three of the 12–15 million unemployed workers. Unemployed workers can be found in many regions, but it is not yet clear that they are accessing the information or the training they need to fill the demand. Because of the current mortgage crisis, some workers who would otherwise be suited for solar installation jobs may lack the mobility that might be required to relocate to be in proximity to the available jobs. In other cases, solar installation wages may be insufficient to justify relocation to available jobs.

One of the critical roles of the emerging solar installation training infrastructure is to better understand local labor supply-demand dynamics. Training workers into nonexistent job markets, or providing training programs without sufficient regard to available local jobs and the needs of local employers, could be counter-productive. It is incumbent upon training programs to know their local markets and offer a conduit to local solar employers.

click to enlarge

Despite the generally optimistic outlook of solar installation employers and their difficulty in finding suitable workers, the jobs opportunity represented by solar industry growth should not be overestimated. Current labor intensities are not likely to remain constant. Rather, labor productivity is likely to improve as the market expands, and proportionally fewer workers per installed megawatt will be required as the market seeks to drive down costs, even as labor demand increases in absolute terms. For example, design, process, and technology improvements to streamline installation represent potential opportunities for improvements in labor productivity in future years.

Although the overall growth rate reported by solar employers is approximately five times higher than what is expected among similar traditional construction industries and nine times higher than the expected overall job growth rate nationwide, when applied to the very small solar industry, this high growth rate still signifies less than 10,000 new installation jobs per year. Additionally, there is still little or no job market in more than half of the states where the solar industry has yet to gain much traction at all. There is an ongoing need for training programs around the country to take a targeted approach to the dynamic needs of the labor market, both in terms of geography and specialized skills. For example, at the present time there is a need for specialized training in codes, permitting, and inspection for both code officials and installers, as well as for sales professionals or installers with sales skills.

click to enlarge

This report also provides employer preferences in regards to critical education, training, and skill sets for solar installation-related occupations. Electrical and construction skills and experience, customer service skills, and a general understanding of solar power are the most important skill sets for employees.

The information contained in this report provides a picture of a small but growing economic sector. For most occupations, employers are facing difficulties finding qualified applications to meet this new demand. Provided with this new information, training providers can assess priorities, evaluate how best to communicate employer needs to their students, and work with local employers and government agencies to equip and re-train workers to obtain the skills that are most important to potential employers.

click to enlarge

Conclusions

To be most effective, training programs need to understand local market trends, including occupational demand, employer preferences, and the size of their local markets. The labor market data contained in this report provide critical information to SITN and other stakeholders on the current employment market. These include the size of the labor market by region and by occupation, as well as employer challenges and skill preferences for solar installation-related occupations. At this early stage of market development, labor productivity is low but likely to improve in the future, suggesting caution about future labor demand projections based on current workforce estimates. Labor intensity will be reduced through competition and worker experience and as more large-scale PV projects move into construction. Labor demand may experience a temporary decline with the expiration of the S. 1603 grant program set to expire December 31, 2011.

Although U.S. solar installation employers are optimistic about the growth prospects of the labor market, more than half report difficulty in finding even entry-level workers. Yet, the construction industry has the highest unemployment rate of all economic sectors in the United States at 34% (EMSI 2010). Depending on the region, training providers that find ways to identify, recruit, and up-skill unemployed construction workers for solar may find that their construction experience is desirable to prospective employers, making solar an important option in their job search. Employer data collected for this report also indicate a strong preference for workers with some background knowledge or experience, most critically:

click to enlarge

• Hands-on construction experience
• Electrical knowledge or experience and knowledge of the National Electrical Code S.690
• Customer service/sales skills or experience
• An understanding of basic principles of solar power, which can be shown through completion of certification programs.

The growth rate expected by solar employers is significantly higher than what is expected among traditional construction industries and the expected overall job growth rate nationwide. On review of many of the existing solar training programs in the nation, it appears that more emphasis could be given to providing work experience or other fieldwork related to installations. Job projections reported by the solar industry suggest expectations for continued growth, with employers facing difficulties finding qualified workers to meet this new demand despite high levels of unemployment in construction sectors. Provided with this new and timely information, training providers can realistically assess their training priorities, how they should be communicating employer needs to their students, and how they can equip and re-train workers to obtain the skills that are most important to their potential employers. Finally, this report raises questions not yet answered; to name just a few, more detail on state and sub-state labor markets, detailed employer profile data by state, and data to further explore the gap between unemployed workers and difficulty hiring would be useful to continue to complete the picture of this growing renewable energy sector.