Last year was a rough one for the U.S. solar industry.
Adjustments following the 2016 solar boom, angst surrounding the Section 201 trade case, and a slowdown in established solar markets all contributed to an overarching 3.8 percent cutback in solar jobs over the past year, according to The Solar Foundation's latest National Solar Jobs Census. Between 2016 and 2017, the industry lost 9,800 jobs, marking the first drop ever recorded in the National Solar Jobs Census since it started collecting data in 2010.
Adding to that list of challenges are a number of bankruptcies and snafus at high-profile companies such as SolarCity, according to GTM Research solar analyst Allison Mond. Some companies also had difficulty signing on new customers now that installers have already picked the low-hanging fruit in terms of interested customers.
While multiple factors contributed to the employment downturn, though, the record-smashing year the U.S. solar industry experienced in 2016 was going to be tough to beat regardless.
“2016 was a really big year for all segments of solar, so it’s harder to keep with that pace,” said Mond.
Solar industry bankruptcies in 2017
Source: GTM Research
The Solar Foundation, which conducts the annual solar census study, said that while 2017 represents a setback, the trend is short-term rather than indicative of greater peril. Within a broader context, solar employment has grown by 168 percent since 2010.
“States are still setting their renewable portfolio standards; they’re still increasing them or talking about increasing them,” said Ed Gilliland, senior director of programs at The Solar Foundation. “We will likely experience some headwinds over the next year or two, but certainly the stronger states can sail forward. I think we can still get some emerging states to do well, but they need strong policies to support growth.”
The census projects that employment will pick back up in 2018. Still, last year’s drop speaks to the broader pause now gripping U.S. solar.
Source: The Solar Foundation
While not as damaging as they could have been, GTM Research expects the solar import tariffs recently announced by the Trump administration to push a 7.6-gigawatt drop in demand through 2022. In 2019, GTM Research projects capacity to drop 16 percent from its original forecast.
Section 201 stress caused anxiety within the industry well ahead of the decision. In the census, which was conducted last October and November, 86 percent of solar companies said trade restrictions would negatively impact business, and 71 percent said they had already experienced some negative impacts. Those nerves had already contributed to constrictions in the solar market, and likely also impacted hiring and jobs ahead of the administration’s announcement.
GTM Research analyst Allison Mond said the Section 201 case affects small installation companies first.
“It will definitely hurt the little guys, and I think that started months ago, with a lot of companies rushing to buy panels at low prices,” she said.
Smaller companies might have already been struggling, in part because of the downstream impacts from struggling national companies. The strain of negotiating down inflated panel prices made the market even more difficult.
Policy uncertainty and the “hangover” from 2016
Challenges presented by the Section 201 case worsened for the industry in what The Solar Foundation calls a “recoil from its 2016 installation binge.”
Part of the 2016 boom came from a rush to finish projects before the potential termination of the federal Investment Tax Credit. When the ITC was ultimately extended, this did prompt some developers to push project deadlines into 2017, which accounted for more than 50 percent of GTM Research’s utility PV forecast. Even with those projects, however, 2017 suffered from what Gilliland referred to as a “hangover” after the exponential growth of 2016.
Mature state markets like California, Massachusetts and Nevada likely felt that hangover most strongly. California saw a decline of 14 percent of its solar jobs, while Massachusetts lost 24 percent and Nevada lost 22 percent.
“California losing more than 13,000 jobs is a big setback,” said Gilliland. “Some of that was from the hangover from 2016, but they had lots of policy uncertainty, and five months of rain didn’t help either.”
Gilliland said the transition to new time-of-use rates by the state’s investor-owned utilities contributed to California’s downturn. Those rate changes can be difficult to explain to customers, and solar sales can suffer as a result. And though California is currently staring down another potential drought, 2017 was a wet year, which made installing new solar difficult while also reducing production.
Nevada’s solar market took a hit in 2015 when the state did away with net metering. Gilliland that said since Nevada reinstated net metering and jump-started its lagging market, it’s likely to have seen employment gains. “But not enough to make up for the previous losses,” Gilliland said. “At least not yet.”
Mond attributed the drop in California and Massachusetts not to policy changes but to customer fatigue. Massachusetts’ non-residential market is still booming, expected to blow past its 2016 records. In Q3 2018, the state will move from its Solar Renewable Energy Credit II program to its new Solar Massachusetts Renewable Target, but Mond said those changes should be manageable for the market. She also contends that the same is true for California’s shifting rate structure.
“That’s just a great incentive being not quite as great, but still attractive to most consumers,” Mond said. “What it comes down to is a lot of companies, especially on the residential side, are struggling with customer acquisition.”
At the same time that mature markets experienced difficulties, the solar workforce grew in many states. Solar jobs in Delaware, a state ranking 34th in terms of market size in GTM Research’s latest U.S. Solar Market Insight report, jumped by over 50 percent. Minnesota, which has a more mature overall market and a growing community solar program under Xcel Energy, grew by 48 percent.
“The states with the strongest policies are going to be able to withstand [the Section 201 tariffs] and still grow,” Gilliland said.
Solar and diversity
In other findings, the solar industry upped the number of African-American and Asian workers it employs. The number of women in the industry fell slightly. More solar companies are beginning to track demographic data — 35 percent compared to the 27 percent last year — in efforts to increase diversity, equity and inclusion.
Source: The Solar Foundation
Compared to the overall U.S. workforce, the solar industry has about half as many African-American employees and 20 percent fewer women. The industry has higher numbers of Latino, Hispanic and Asian employees.
The Solar Foundation notes that “solar is also more racially and gender diverse than comparable energy sectors, such as coal and oil and gas extraction.”
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