Distributed Solar – Part I

What is one of the biggest problems in the United States right now? 

Unemployment.

Unemployment in the U.S. is currently 7.7%. While this number is an improvement from the high of 10% measured in October of 2009, it remains a disheartening reminder of America’s stagnant economic growth and widespread budget cuts.  

How can the energy sector improve unemployment?

Distributed solar.

One of the best programs that has the ability to show widespread, accelerated expansion in the next year or two years is distributed solar. There have been numerous other energy-related ideas championed by the government and national energy experts in recent year; however, none have as great of an immediate impact on unemployment as distributed solar.

sp2For example PACE (Property Assessed Clean Energy) is a fine idea; however, it requires more time to evolve. In order to provide commercial, industrial, and multi-family property owners affordable long-term financing resources for energy efficiency upgrades, PACE spreads the cost of the efficiency improvements over the expected life of the measure and can take years to reach completion. Similarly weatherization and other smart energy upgrades must be customized and are hamstrung by so many problems that they will take at least a year to get going at a rapid pace. Lastly, microgrids and similar efforts are laudable for reasons other than impact on unemployment.

Distributed solar appears to be the fastest and most effective way to improve unemployment through clean energy work. The basic math on jobs as a function of distributed solar, shows that distributed solar has enormous potential to create jobs across the country. Consider the following states:

Connecticut: The average capital spending per roof is $30,000 for 7 KW. The estimated addressable market is 80,000 homes – 10% of total residential market. Saturation of this market amounts to $2.4 billion in spending. That equals approximately 20,000 job years. Every year Connecticut accounts for about 1.5 million job years, so 20,000 accounts for 1.3% employment increase. If we assumed the spending were spread over four years, we would see an additional .35% increase in the population /employment ratio (roughly from 52% to 52.35%). 

New York City: Several years ago, the City University of New York developed a map showing that 66.4% of the rooftops in New York City are suitable for Solar PV systems. Saturation of this market would amount to roughly $20 billion in spending. That equals approximately 166,667 job years.

In many American states, penetration is currently only a few percent of the total addressable market. Because an installer that persuades a customer to provide access to a roof would almost have to commit a felony to be dislodged, a competitive race to the rooftops is a practical way to stimulate consumer demand and therefore create much-needed jobs.

That would make the energy sector one of the largest contributors to growth in this critical ratio. It would mean that the contributions to job growth of this sector gave particular prominence to the clean energy
spmovement. 

There do not appear to be any logistical obstacles to full saturation. There are more than enough distributed solar installers, operating under two different business models. Costs are dropping and as scale expands further cost declines seem certain.

The question of whether or not the country should push for full penetration of the distributed solar market is a yes or no question. In several states, such as Connecticut and New York, green banks could mobilize installers of both types of business models to press for changes in policy.

There would also have to be several changes made to policies that currently act as barriers to achieving market saturation:

  • Rooftop solar must be allowed to substitute for grid power during outages;
  • Rooftop solar must be able to monetize RECs;
  • There must be a predictable plan for cash incentives;
  • The approval and review processes must be streamlined and made more efficient;
  • And the sale of surplus electrons off rooftops must be maximized and encouraged

There are counterarguments to the acceleration of distributed solar deployment; nonetheless, it is worth considering the potential impact on unemployment before settling for a laggard solar roll-out. 

Additional articles:

Mireya Navarro, “Mapping Sun’s Potential to Power New York,” The New York Times, June 18, 2011. Available here.

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