Job numbers tell great stories. Clean energy job creation in California has become something of a parable, told and retold around the Capital’s metaphorical campfire. Estimates of the size of the clean energy workforce (here, here, here, and here) and testimonies of workers who have turned their lives around in the solar industry (here, here, and here) are cited to convey the underlying moral: clean energy and climate policies create good jobs.
As academics studying the effects of policies on working people, we are not master storytellers– we know that the story is more nuanced than a simple parable. But if the jobs story is going to be used to shape climate and energy policy in California, let’s get the story right. In this post we look at solar jobs, focusing on job quality. Are solar jobs – and in particular solar construction jobs – good jobs?
To answer this, we must point out that there are two major classes of solar development in California: large utility-scale (>20 MW) solar farms that sell wholesale electricity to energy providers, and smaller-scale (<1MW) customer-sited solar, often called rooftop solar, where the electricity generated is first used on site with the excess energy sold into the grid through a net metering mechanism. These two types of solar energy production are driven by different policies and have different cost structures and job outcomes, which we outline below.
In case you’re in a hurry, here’s the spoiler: in California, utility-scale solar projects have produced both lower cost energy and better careers than rooftop projects.
Although state policy has driven both utility-scale and rooftop solar, a number of analysts, including researchers at MIT and UC Berkeley (see box below) have concluded that state policy has actually favored rooftop, even though it is currently more expensive, less efficient, and yields poorer jobs outcomes than large-scale solar.
Over the next few weeks and months, policymakers in Sacramento will consider upping the renewable portfolio standard (RPS) from 33% in 2020 to 50% in 2030. While there is an emerging consensus for this goal, there are important related policy choices that will determine which segments of the solar industry flourish in the years to come. To understand the ways in which policy choices will affect the solar industry and jobs outcomes, we need a little background on how existing policies are affecting the two classes of solar: rooftop and utility.
Significant built-out of large utility-scale renewable energy projects in California has been driven by the RPS. The power retailers have to procure a certain percentage of their energy from eligible renewable sources, and, to the extent that renewable energy costs more than conventional, the utilities’ higher costs are recovered through rate increases to customers.
Customer-sited small-scale solar development, on the other hand, has been driven by net energy metering policies rather than the RPS. In fact, over 90% of customer-sited solar projects in California take advantage of net energy metering. Additional incentives like the California Solar Initiative also accelerated the growth of the rooftop market. Rooftop solar has generally been a more expensive way of generating kilowatt hours. Right now the owners of rooftop systems recover their costs at the retail rates of power rather than wholesale rates, and because retail rates (up to 36 cents per kWh) are significantly higher than wholesale rates (about 6 to 9 cents per kWh), net metering provides a significant subsidy to the customer-sited (or rooftop) market..
What do we know about the jobs in the two segments? The press release for the Solar Foundation’s 2014 California Solar Jobs Census reads, Solar Industry Creates Thousands of New Quality Jobs in California. This industry-sponsored report claims that the solar industry employs 54,700 solar workers in California, the majority of whom (31,500) work in the installation sector. The study reports average wages of $24.97 per hour for installation workers, but does not seem to break out the white collar and blue collar wages (see description of the installation workers on page 11 of the National Solar Jobs Census). The National Solar Jobs Census (p.48) reports that average wages for installers in utility-scale firms are 20% higher than in firms working on residential and commercial distributed projects, but does not break this down by state. There is evidence that the discrepancy is greater in California, where we see solid middle class careers in the utility-scale segment due to the use of unionized construction firms, and lower wages in the rooftop segment.
A solar study we published last November estimates that 10,200 well-paying job years (that is, one full-time job for one year, or 2080 hours) were created in the construction of utility-scale solar farms in California in the last five years. Using data taken directly from the labor contracts governing these construction projects, we found that the utility-scale blue-collar construction jobs in California, which employ union labor, pay, on average, $78,000 per year (about $39 per hour) and offer solid health and pension benefits. In addition to providing good wages and benefits for union workers, all unionized employers participate in state-approved apprenticeship programs, investing millions of dollars in training so workers gain broad occupations skills that can be used not only in renewable energy projects but also all kinds of other projects where their craft is needed. An apprentice electrician’s mean hourly wage is $23.96 per hour plus solid benefits, with wage increases tied to skill acquisition as they move through their four- or five-year apprenticeship programs until they graduate and gain a journey wage.
In the rooftop market, there is no comparable contract data that documents wages and benefits like we have for utility-scale projects. The solar industry’s National Solar Jobs Census recognizes that installers are the lowest paid class of workers in the industry and the authors note, “A distinct career progression has yet to form for photovoltaic installers.”
“Solar photovoltaic installer” became a federal occupational category only in 2010 and jobs may still be poorly captured in the most widely used government surveys. The data that does exist show somewhat lower wages than those reported by industry.
The California Occupational Guides report that the hourly wages for solar installers range from $11.50 to $21.00 per hour. The Bureau of Labor Statistics (BLS) Occupational Employment Statistics survey shows a median hourly wage of $20.81. It also estimates that only 1,800 solar photovoltaic installers were employed in May 2014, the most recent available data. The large discrepancy in employment numbers between the industry survey and the government data lead us to conclude that we really don’t know a lot about either wages or employment in the rooftop sector. In addition to the difficulty of tracking new occupational categories, BLS-reported wage levels in the construction industry, particularly the residential construction industry, do not fully capture the low end of the pay spectrum due to the prevalence of cash pay, misclassification of workers as independent contractors, and other characteristics of the underground economy.
When we reviewed salary data on websites where jobs are advertised and reviewed, we found wages for solar jobs lower than the Solar Census figures and the government data. For example, Indeed.com’s salary estimator (accessed July 1, 2015) reports a solar installer salary range of $27,000 – $33,000 ($12.98 – $15.86 per hour), which averages to $14.42 per hour.
Individual job postings for solar installers in California, when wages were provided in the job announcements, ranged from $10 to $17, with a few outlying employers offering up to $25 or $30 for people with a lot of experience, and other employers offering unpaid internships. On glassdoor.com, a site allowing employees to anonymously review their employers and post their salary information, the installer salary for Solar City (the largest installer in California in terms of number of projects) ranged from $15 to 21 per hour, averaging about $17.40.
Profiles of individual workers shed additional light on the worker experience. The individuals selected to report on their experience are usually those for whom the career path has been a success. Our Solar jobs report includes testimonies from four workers who had participated in union apprenticeship programs to learn a skilled trade in the renewable energy industry. They commented on the health care, wages, and solid training provided through the apprenticeship system. The National Solar Census also featured an installation worker who became an electrician foreman after completing a 5-year apprenticeship with IBEW and works for a NECA-affiliated firm.
Then there is the profile on the Uplift CA website of a young man who turned his life around with a solar job. He started out doing a six-month internship with GRID Alternatives (an organization that advertises unpaid solar internships), which then led him to a position as a crew leader with Lifestyle Solar, a Central Valley solar installer. It’s a good story, but he’s only making $10 an hour, after completing a six-month solar internship that may have been unpaid. These profiles illuminate the real differences in wages and benefits between union-members working on large solar farms and non-union solar installers working in the rooftop market.
As there are two main types of solar, there also are two types of solar installation jobs in California. The utility-scale union path offers comprehensive training, robust benefits, a decent wage floor and a route up the career ladder, and, as a result, more job security in the volatile construction market. On the rooftop side, the data is much more limited and less consistent. Overall, smaller-scale rooftop installation jobs offer lower wages, fewer opportunities for career advancement, and more limited benefits when compared with utility-scale solar construction jobs. We also note that workers whose skills are limited to rooftop solar installation are subject to the large fluctuations in the solar segment of the construction market, with little to fall back on, whereas utility-scale workers generally gain a much broader skill set through apprenticeship and can work on many types of green and other construction projects.
While more government-sponsored data on rooftop solar jobs would be helpful, it is clear that policies intended to advance the creation of good blue-collar jobs and careers in the solar industry can do so by supporting utility-scale solar development in California.
It should also be noted that there are opportunities to improve job quality on the distributed side. Right now, residential rooftop solar companies, whether they directly employ workers or subcontract out the work to other installation crews, essentially compete in the residential construction market where barriers to entry are low, unionized contractors are absent, and contractors who comply with employment laws and building codes must compete with many who skirt these regulations. All of this puts downward pressure on wages. This pressure is less severe in the larger commercial construction market, and even less common in the public construction market, where public works labor code and enforcement mechanisms kick in, so solar installation in these sectors could improve the jobs outcomes.
Thus far, we have seen little development of mid-scale (1-20MW) commercial or public solar projects in the state, but accelerated development of projects this size is a policy choice. With strong enforcement of employment law, skill certification requirements and other labor standards, project labor agreements, unionization, or other changes, this mid-scale market could create a niche of good distributed solar jobs.
While climate policy is not a jobs program, the particular mix of strategies and public investments that we choose to meet our greenhouse gas reduction goals do have an influence over the types of jobs that are created. Policy decisions will influence whether clean energy jobs are good or not so good. As we consider the costs and benefits of different options, creating middle class careers is an important consideration. To the extent that the jobs story matters and is used to shape policy, let’s get the story right. Right now we get a better deal with larger projects: it’s a cheaper path to meeting our climate goals with better career prospects for workers.
The Costs and Subsidies of Small-Scale Solar Projects
In a recent blog post, Severin Borenstein at the UC Berkeley Haas Energy Institute writes, “…distributed generation also has some serious drawbacks… design, installation and maintenance of solar PV small rooftop by small rooftop costs a lot more per kilowatt-hour generated than grid-scale solar, probably about twice as much these days. The scale economies that are lost with small systems on roofs of different size, shape, and orientation is a big disadvantage compared to grid-scale solar plants that are 10,000 to 100,000 times larger than a typical residential installation. The size of grid-scale plants also makes tracking devices practical, which allows the panels to move throughout the day to continually face the sun and generate more electricity.”
An analysis in The Future of Solar Energy Report published by MIT this spring makes the point even more directly: “Subsidizing residential-scale solar generation more heavily than utility-scale solar generation, as the United States now does, will yield less solar generation (and thus less emissions reductions) per dollar of subsidy than if all forms of solar generation were equally subsidized.” Their policy conclusion is that “Residential PV generation should not continue to be more heavily subsidized than utility-scale PV generation.”