TODAY’S STUDY: SOLAR’S BOOM SPURS JOBS BOOM

National Solar Jobs Census 2013; The Annual Review of the U.S. Solar Workforce

January 2014 (The Solar Foundation)

Executive Summary

The National Solar Jobs Census 2013 is the fourth annual update of current employment and projected growth in the United States solar industry. Data for Census 2013 is derived from a statistically valid sampling and comprehensive survey of 15,437 employers throughout the nation, in industries ranging from manufacturing to construction and engineering to sales. The rapid pace of change in this industry has warranted annual updates that examine the size and scope of the solar labor force and employers’ perspectives on job growth and opportunities.

Since The Solar Foundation® first started tracking solar jobs, it has found that the industry has experienced steady and impressive job growth. Our research shows that solar industry employment has grown by an astonishing 53% - or nearly 50,000 new solar jobs - since we first started tracking them in 2010. Leading this growth are businesses in the installation sector, in which solar employment has grown by nearly 60% over the four-year period covered by the Census series, representing more than 25,000 jobs created in the sector since 2010. With leading market analyses predicting continued growth in annual installed solar capacity, it is likely that the national solar workforce will continue to experience similar growth.

U.S. solar companies continue hiring faster than the overall economy, and remain optimistic about future growth. As of November 2013, the solar industry has grown to 142,698 solar workers.

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This is an increase of almost 20% over our Census 2012 findings, 1 and represents a growth rate that is ten times faster than what the overall U.S. economy experienced during that same time period. Over the next 12 months, nearly 45% of solar establishments expect to add jobs, while fewer than 1.9% expect to cut workers, yielding an expected 15.6% growth in employment. This finding is especially relevant given that employment in the overall U.S. economy is projected to grow by only 1.4% over the next 12 months.

By comparing the job growth expectations from our multi-year research effort and from existing secondary sources, we can draw several important conclusions.

As of November 2013:

• Solar jobs increased nearly 20% since the Fall of 2012, which is ten times the national average job growth rate. There are 142,698 solar workers in the 3 United States, up from 119,016 in 2012. Not only did the industry exceed growth expectations, but the pace of hiring has quickened, at a rate 50% higher than last year, suggesting that the trajectory for growth is even stronger than previously thought.

• Solar is a major source of new U.S. jobs. Seventy-seven percent of the nearly 24,000 new solar workers since September 2012 are new jobs (rather than existing positions that have added solar responsibilities), representing 18,211 new jobs created. Viewed a different way, one in every 142 new jobs in the U.S. were created by the solar industry, and each day the solar industry creates 56 new jobs across America.

• The solar industry expects double digit job growth over the next 12 months. Solar employment is expected to grow by 15.6% over the next year, representing the addition of approximately 22,240 new solar workers. Forty-five percent of all solar establishments expect to have added solar employees by November 2014.

• Two-thirds of new solar hires are living-wage installation jobs. Installers added the most solar workers over the past year, growing by 22%, an increase of 12,500 workers. Installer jobs, which cannot be off-shored and earn an average of $23.63 per hour, are expected to increase by nearly 15,000 next year. This represents a 21% year-over-year growth rate.

• Solar workers are diverse. Nineteen percent of all solar workers are women, representing 26,738 solar workers, and one in six solar workers is Latino or Hispanic. With 13,192 U.S. veterans working at solar establishments across the United States, the solar industry is also an important source of employment for returning veterans, exceeding the percentage of veterans in the broader U.S. workforce.

• Solar jobs have increased over 50% since 2010. Since the first National Solar Jobs Census was conducted in 2010 by The Solar Foundation®, solar industry employment has grown by 53%, which translates to nearly 50,000 new jobs.

• The solar industry supports hundreds of thousands of indirect and induced jobs. Census data include most of the direct jobs and many of the indirect jobs in the solar industry, with the exception of some indirect jobs in the component and materials supply chain. Those jobs, combined with induced impacts of the industry, support an additional 435,000 jobs, bringing the total employment impact for the U.S. solar industry to nearly 600,000.

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The results continue to illustrate that the solar industry is a strong and growing part of the U.S. economy and responsible for thousands of jobs across every state in the nation. Continued growth in installed capacity clearly corresponds with strong job creation.

This report includes up-to-date information on the solar industry, quantifying employment growth since last year’s study and trends since Census 2010. The research findings also provide stakeholders with fresh information on the potential for further growth and the factors that are likely to impact the industry over the coming year. As with the previous Census studies, this report includes information about all types of companies engaged in the analysis, research and development, production, sale, installation, and use of all solar technologies - ranging from photovoltaics (PV), to concentrating solar power (CSP), to solar water heating systems for the residential, commercial, industrial, and utility market segments.

These findings are based on rigorous survey efforts that include 73,796 telephone calls and over 11,000 emails to potential solar establishments across the United States, resulting in a maximum margin of error for employment related questions of +/-1.3%. Unlike economic impact models that generate employment estimates based on economic data (such as company revenue) or jobs-per-megawatt (or jobs-per-dollar) assumptions, the National Solar Jobs Census series provides statistically valid and current data gathered from actual employers.

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Introduction

Throughout 2013, the U.S. solar industry continued to demonstrate dramatic growth and success, increasingly showing signs of a maturing industry that has overcome some growing pains and is now surpassing significant industry milestones. While solar is still a relatively small part of the U.S. energy mix, it is expected to become one of the primary sources of new electricity generation. Cumulative solar capacity in the U.S. already exceeds 10,000 megawatts (MW).

In their most recent Solar Market Insight report, SEIA and GTM Research estimate that nearly 4,300 MW of new PV capacity were installed during 2013, nearly 30% more than was added in the previous year. In addition, 800 MW of new concentrating solar power (CSP) came online, over four times as much as was installed in the entire decade prior.

Some analysts are 5 now predicting that annual photovoltaic (PV) additions in the U.S. will for the first time surpass new capacity installed in Germany, the current global leader.

This Census and other expert analysis continues to affirm that the primary driver of industry growth is the falling cost of solar equipment and installations, along with increased use of innovative new financing models and supportive government policies. While a global glut in solar panel production capacity has contributed significantly to components being produced and sold at a fraction of the cost from just a few years ago (previous Solar Market Insight analyses demonstrated the 44% decline from the second quarter of 2011 to the second quarter of 2012), module prices appear to have stabilized and are expected to continue to gradually decline even with increased global demand.

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These PV component price trends, combined with the scaling up of the solar industry, are reflected in decreases in total average installed system costs, which have declined by more than 50% since the beginning of 2010. Though these price reductions continue to impact certain industry sectors in different and sometimes disruptive ways, they continue to be widely and consistently cited as the leading driver of solar capacity growth.

One value of an annual census is the ability to track metrics over time. In years past, a major focus of our study was workers’ skills and deficiencies. For 2013, however, respondents were asked to provide their feedback regarding their customers’ motivations to go solar, how their customers learned about solar, and who they feel are most knowledgeable about the benefits of solar…

In addition to our Census jobs tracking approach, some analysts find jobs-per-megawatt analyses to be useful. However, not only are they less reliable, they are complicated because regional, system size, system type, and other factors play a major role in the labor efficiency of an installation. Nonetheless, when reviewing the installation workforce data against installed capacity figures, it is clear that the U.S. solar installation sector is becoming more efficient, which in turn will ultimately make it more profitable and stable.

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Census 2013 estimates 81,827 workers are employed by the installation and project development sectors, compared to 65,165 in 2012, a growth rate of 25.6%. The combined sectors installed 3,343 MW of solar (PV and CSP) in 2012 and 5,100 MW in 2013, for growth of just under 53%. These data suggest that the sectors were 21.5% more efficient in 2013, raising their productivity from 51.3 kW per worker to 62.3 kW. When taken as a whole, each solar worker throughout the entire value chain represents 35.7 kW of the installed capacity in 2013.

Unlike economic impact models that generate employment estimates based on economic data (such as company revenue) or jobs-per-megawatt (or jobs-per-dollar) assumptions, the National Solar Jobs Census series provides statistically valid and current data gathered from actual employers. The primary data contained in this report are drawn from a mixed-method survey administered directly to employers. Data collection occurred during October and November 2013 in two stages: (1) through a survey of so-called “known universe” establishments, and; (2) via a random sampling of businesses within various construction, sales and distribution, and manufacturing industries…

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Conclusions and Recommendations

This fourth annual Census confirms that the industry continues to play an important role in America’s overall economic recovery by providing good-paying, high-skilled jobs opportunities to more than 142,000 workers at 18,000 locations in all 50 states. Its 20% growth rate over the last year, (more than ten times the overall national employment growth rate during the same period), makes the U.S. solar industry one of the fastest growing industries in the U.S. Not only did the solar industry exceed its growth expectations, but the pace of hiring in 2013 was more than 50% higher than in 2012. These data suggest that the trajectory for industry growth is even more pronounced than previously anticipated, with no sign of slowing down.

It is well documented in our Census series that competitive pricing is the key driver behind the growth of the solar industry. Market forces and supportive federal and state policies have driven declining costs and price competitiveness. Though the price of solar components and installed costs have generally leveled off over the last year after steady and steep declines, the cost of solar power is lower than ever. At $0.70/watt in Q3 2013, module prices are less than a third of the cost at the beginning of 2010. Similarly, national average installed costs have fallen by approximately 53% over the same period ($3.00/watt in Q3 2012 vs. $6.37/watt in Q1 2010). Successful efforts to further reduce these costs – primarily through addressing the many 25 non-hardware costs of solar – can be expected to continue to drive growth in both installed solar capacity and new solar employment.

Nowhere is the competitive price of installed solar power more prominently displayed than in the installation and project development sectors. In addition to their combined employment growth since 2012, workers in these sectors have dramatically improved their productivity, installing just over 25% more solar power per worker in 2013 as compared to 2012. These productivity gains may help ensure a more profitable and stable industry for the foreseeable future.

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While the last few years have seen much uncertainty and turmoil for some state-level polices (including attempts to weaken net metering and roll back state renewable portfolio standards) and secondary federal policies (such as the U.S. Department of Energy’s Loan Guarantee Program and the 1603 Treasury Program), the 30% ITC has continued to serve as the foundational policy for the solar industry in the United States. Continued policy support is critical to ensure sustained competitive pricing and resulting expansion of installed capacity of solar power.

Some of the same global market forces that have made consumer electronics more affordable in the U.S., upsetting overall U.S. manufacturing numbers, are also affecting the solar industry. After a relatively steep decline between 2011 and 2012, employment in solar manufacturing grew by 0.37% between September 2012 and November 2013 (manufacturing employment in the overall economy increasing by only 0.74% over the same period). Such fluctuations in manufacturing employment may lead some to speculate as to the impact the resurgent U.S.-China solar trade conflict is having on jobs in this sector. Some research indicates that the U.S. imposed trade tariffs have increased the price of Chinese solar modules in the U.S. by 11%, which may have depressed demand. However, price differences of this magnitude may only be affecting demand and associated solar employment at the margins, given increasing cost efficiencies in other areas. A comprehensive study of the broader U.S.-China solar trade conflict is needed to provide a deeper and more conclusive understanding of the conflict’s impact on jobs.

Last, while we find that groups such as Veterans of the U.S. Armed Services and members of the Latino/Hispanic and Asian/Pacific Islander ethnic groups are strongly represented in the solar industry, other key demographics, such as women and African Americans, are significantly underrepresented. Developing a better understanding of the factors accounting for the observed demographic characteristics of the solar workforce may help expand employment opportunities to a larger portion of the population while making companies stronger and more diverse. It is our hope that the demographic figures provided herein can serve as a baseline from which to track progress toward this goal.

Given these industry dynamics, there are a few key actions that certain stakeholders are in a good position to execute in order to foster continued solar industry employment growth.

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Recommendations for Policymakers

Support strong, transparent, and stable demand-side policies

As is commonly understood in the solar industry – and was reflected in results from over 900 survey respondents in Census 2012 – a major driver of solar’s success and employment growth can be attributed to strong and consistent federal and state policy support. Results from last year’s Census showed that employers felt that state-level policies such as renewable portfolio standards and authorization of third-party system ownership, as well as federal consumer tax incentives for solar investment to be two of the top three drivers of industry and employment growth. Given the importance of such policies to the industry, it is not unreasonable to expect that demand-side incentives will continue to have a strong, positive impact on job creation and competitiveness. However, such incentives will have little impact if they are only short-term in nature. Supporting economic growth and new investment requires a long-term commitment to incentives and policies that attract and drive development.

Invest in solar workforce development

Previous Census reports found the majority of employers have some trouble finding qualified applicants to fill their positions. Lack of technical experience is most often to blame for these difficulties, followed by deficiencies in communication, problem solving and analytical skills, and education. These results are not surprising given reports of a continued lack of professionals with sufficient training in various regions across the U.S., particularly in the face of reduced public funding for workforce development.

While solar energy creates jobs across a wide variety of occupations and technologies and benefits families in all 50 states, the majority of these jobs are for highly-skilled and highly-trained workers. Although some entry-level jobs exist, the solar industry should not be viewed as a quick “pathway out of poverty”, and expectations in creating job opportunities for lower-skilled workers must be reasonably managed. As our data show, just over 50% of solar jobs require workers with previous experience, over one in four requires at least a bachelor’s degree, and just over 13% require an associate’s degree or other certification from an accredited college. Given this, programs that stand to make the greatest impact on solar workforce development are: (1) those that provide high-skilled workers with new or updated skills or experience, and; (2) comprehensive entry-level programs (typically offered through technical high schools, community-based organizations, and community colleges) that prepare lower-skilled workers to move into more highly-skilled occupations. While policymakers have generally done well in supporting policies promoting investment in solar energy capital assets, they have been less consistent in their commitment to human capital investments.

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Recommendations for Workforce Training Providers

Know the market

In order to be effective, workforce training programs must have a solid understanding of the labor force they seek to serve, which includes recognizing the gap between the skills trainees already possess and those they need to be marketable to employers, as well as understanding the available opportunities for advancement and how these pathways should be navigated. Of equal importance is understanding local labor demand. Connecting with local employers, understanding their labor needs, and providing training according to these needs are vital components of a successful workforce training program.

Furthermore, many markets are starting to trend toward quality solar workforce training, backed by credentials involving defensible, balanced, and transparent assessments according to well-developed sets of criteria, requirements, and standards. Nevertheless, some establishments will likely continue to prefer training new employees in-house.

Train for the highest growth occupations, integrate solar into existing trade and professional programs, and focus on skill transferability

New solar positions added in 2013 required a diverse range of skill sets. As in 2012, production and technician positions represented the largest occupational category of new solar jobs. However, Census 2013 found that a larger number of new solar workers fell into this category than in 2012 (55.4% of new solar workers in 2013 vs. 40.7% in the previous year). Sales positions were the second largest category of new jobs (12.1%), followed by management and professional jobs (12.0%), administrative positions (10.3%), and other jobs (10.2%). Workforce development professionals can draw on these results when deciding which professional areas deserve the greatest focus in training programs.

Additionally, program designers should look for ways to integrate solar curricula into more traditional or mainstream coursework. By cultivating a workforce with a set of solar skills that enhance a more broadly applicable set of core trade (e.g., roofing or electrical) or professional (e.g., legal or finance) skills, rather than creating solar-only workers, training providers will help ensure that program graduates are diverse enough to be successful, despite fluctuations in demand for some of their skills. For example, a roofer trained in solar can remain gainfully employed during a lull in the housing market by focusing on solar, while still able to transition back to their primary skill set when demand picks back up.

And finally, a greater emphasis should be placed on understanding and developing skill transfer programs designed to facilitate worker transitions into solar. Our finding regarding veteran employment in solar provides an illustration of this need. As a percentage of workers, veterans are more strongly represented in the solar workforce than in the total employed U.S. population. This strong representation may be driven in part by a high degree of skill transferability between military occupations and solar jobs, which has been supported anecdotally in preliminary interviews that The Solar Foundation® has conducted with select solar employers. Despite this potential skills overlap, some groups of veterans – especially those in the 18 to 24 year age group – continue to grapple with extremely high unemployment. Given this, we feel a deeper understanding of skills developed in military occupations and which of these translate well into the various types of solar positions can help these former service members transition into jobs in the solar industry. The Solar Foundation®, in partnership with the Truman National Security Project, plans to make this research effort, and the subsequent development of a standardized skill translation protocol, a major focus in 2014.

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Recommendations for Employers

Support high-quality training

Not only is there a direct connection between installed capacity and number of solar jobs, but there is also a direct connection between training and quality. Shoddy workmanship often results in high call-back frequency, which can narrow profit margins for companies. The workforce training programs that have supported the solar industry thus far (some high-quality, some not) have primarily been sustained through public funding. These funds, however, have been largely exhausted, and new monies are unlikely to be forthcoming. Moving forward, it will be very likely up to the private sector to pay for any and all workforce training, but, in order to maintain consumer confidence, the training should be designed in accordance with the highest standards.

Support education and advocacy organizations

By virtue of not being associated with any one company, solar education and advocacy organizations (usually nonprofit) are able to provide policymakers and the general public with more objective information on the industry. By providing third-party insight into market trends and serving as an impartial messenger of the industry’s successes, these entities provide significant benefits to all solar companies and the individuals these firms employ.

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