5.1 Recruit the Solar Industry
According to a landmark study released in October 2010 by The Solar Foundation, as of August 2010, the U.S. solar industry employed 93,502 solar workers—and research has shown that this number will continue to grow in the coming years. A Navigant Consulting report, for example, indicated that there will be nearly seven direct installation jobs per megawatt of installed photovoltaic (PV) capacity by 2016 (see Publications at the end of this topic area). Manufacturing will have eight direct jobs per megawatt for wafer and cell production, and approximately three direct jobs per megawatt formodules and other equipment manufacturing And, according to an EuPD Research report, the U.S. solar industry will support more than 450,000 jobs in 2016 (see Publications).
Recruiting solar manufacturing companies, including their manufacturing supply chain, requires focused and sustained efforts by local governments backed by a stable and mature economic development organization. Solar companies are keenly aware of the importance of local policies in creating favorable business environments. Corporate investments can range from small (a small assembly operation) to significant (a 1,000-acre manufacturing site). Manufacturing companies typically base decisions on where to locate a new facility on the inherent advantages of the site, proximity to clients, and any local economic incentives that can help offset operations costs. To be successful in attracting investments, community leaders need to understand clearly the requirements of the industry and the advantages and disadvantages of their area as they relate to those requirements. Generally, the critical requirements of solar manufacturers include the following:
- Availability of "ready to go" sites or existing facilities that meet the companies' size requirements, have access to required utilities and infrastructure, and have or can easily acquire necessary operating permits
- Availability of utilities in adequate quantities and at a competitive cost; low-cost electricity is usually of particular importance to manufacturers
- Financial and nonfinancial incentives that reduce development costs or long-term operating costs or both
- A business environment (taxes and regulations) that supports manufacturing in general and solar and renewable energy in particular
- Public policies that support solar and renewable energy development (renewable portfolio standard [RPS], feed-in tariffs [FITs], net metering)
- Proximity to interstate highways, railroad lines, international airports, and in some cases port facilities
- Proximity to raw material suppliers such as glass and industrial gas suppliers
- Existence of a skilled or trainable labor force nearby
- Availability and access to higher education, research institutions, and skill training programs
- Public entities and utilities that are experienced in siting manufacturing facilities
- Access to a viable solar market.
Local development agencies, generally with support from states, use a variety of financial and nonfinancial incentives to encouragebusinesses to locate or expand in their areas. In addition to directly supporting manufacturing operations, local governments can design these incentives to support research, development, and commercialization; partnerships with financial institutions and private venture-capital funds; and marketing and business development. Over the past decade, incentives for manufacturing facilities have evolved and include grants, loans, tax credits, income and property tax abatements, marketing support, corporate tax exemptions, tax credits, and bonus incentives for consumers purchasing solar equipment manufactured in a state. Most recently, many states and local areas are offering tax credits that can be monetized up-front to provide development capital and negotiating buy-back agreements with manufacturers to purchase a portion of their product. As of September 2010, 21 states and offered incentives targeting recruiting or developing the solar energy industry.
Most local governments incorporate various provisions into incentive agreements or rules. To encourage project success and to protect investment in new or expanding business ventures, most communities use formal performance agreements between the community and the company. Recruitment programs, for example, can contain minimum job creation, product output, and investment thresholds. Incentives can also be based on product sales from the manufacturing facility. Some programs disburse incentives in a phased approach based on company milestones. Additionally, loan and grant programs typically require substantial cost sharing. Not meeting project goals and terms (e.g., vacating the facility early) sometimes requires repaying the incentive. Conversely, achieving specific job creation or economic development targets can mean more favorable loan terms.
BENEFITS Securing new investments from solar energy companies helps a community diversify the economy, expand the workforce, and generate new sources of revenue. It also contributes to building a renewable energy infrastructure that reduces carbon and is not easily outsourced. Additionally, a local government can provide a real-world test environment for locally manufactured solar products on public facilities.
Implementation Tips and Options
□ Fully understand solar manufacturers' requirements for selecting a new location and the assets and liabilities of a community as they relate to the requirements, because not all communities have the same potential for success. Many communities spend significant amounts of time and energy pursuing projects for which they are not competitive.
□ Know and understand the community's competitive position for recruiting these companies. Develop strategies and programs that strengthen advantages and overcome weaknesses. Short-term success is often expected, but successful communities have long-term commitments, strategies, and programs.
□ Ensure an investment environment that supports manufacturing in general—this will probably be good for PV manufacturers as well.
□ Develop a comprehensive incentive and assistance program with both financial and nonfinancial programs that assist in project development and maintain competitive operating costs. These can include tax, fee, and utility cost reductions, grants and loans, free land, employee training, research collaboration, product buy-back agreements, and expedited permits and approvals.
□ Pursue a marketing program, but only after the community has assessed its competitive position and established long-term strategies. Target marketing to the needs of the industry with factual, easily understood information. These companies are being recruited by communities throughout the world and can easily tell if a community understands the company's needs and has the attributes it requires.
Austin, Texas: Supporting Local Industry Through Renewable Portfolio Standards and Rebate Programs
The city of Austin established an RPS of 35% by 2020 for municipal utility Austin Energy. The RPS includes a goal of 200 megawatts of installed solar energy systems. To further support a local solar industry, Austin Energy increases its incentive of $2.50 per watt to $3.125 per watt for customers who install PV systems that include equipment manufactured in Austin.
Miami-Dade County, Florida: Creating New Jobs Through the Targeted Jobs Incentive Fund
The county's Targeted Jobs Incentive Fund (TJIF) offers financial incentives for select industries—solar thermal and PV manufacturing, installation, and repair companies—that wish to relocate or expand within Miami-Dade County. To be eligible, companies relocating to Miami-Dade County must create at least 10 new jobs, and expanding companies must create either at least 5 new jobs or at least 10% of the company's workforce at the time of application, whichever is greater. Miami-Dade County gives qualifying companies up to $9,000 per new job in TJIF incentives.
Additional References and Resources
Database of State Incentives for Renewables & Efficiency
This Web site contains summary tables of local, state, and utility financial incentives, including industry recruitment and support. DSIREusa.org, maintained by the North Carolina State Solar Center in partnership with the Interstate Renewable Energy Council (IREC), is the only comprehensive, regularly updated database of state renewable energy incentives in the United States, and also includes information on many local incentive programs. DOE funds this ongoing effort.
Jobs and Economic Development Impact Models
Developed by the National Renewable Energy Laboratory (NREL), the Jobs and Economic Development Impact (JEDI) models are user-friendly tools that estimate the economic impacts of constructing and operating power generation andplants at the local and state levels.
U.S. Solar Policy Impact Analysis: Economic Impact of Extension of the Treasury Grant Program (TGP) and Inclusion of Solar Manufacturing
Equipment in the Investment Tax Credit (MITC), EuPD Research, May 2010
This study, prepared for the Solar Energy Industries Association (SEIA), includes forecasts on the number of jobs and solar installations resulting from an extension of the TGP and inclusion of the MITC.
EESI Fact Sheet: Jobs from Renewable Energy and Energy Efficiency
Environmental and Energy Study Institute, October 2008
The Environmental and Energy Study Institute (EESI) is a nonprofit organization established in 1984 by a bipartisan, bicameral group of members of Congress. The institute's charter is to disseminate timely information and develop innovative policy solutions that set theon a cleaner and more secure and sustainable energy path. This fact sheet reports the major findings from job-creation studies in the renewable, fossil, and nuclear energy industries.
Economic Impacts of Extending Federal Solar Tax Credits
Navigant Consulting, September 2008
This report, prepared for the Solar Energy Research and Education Foundation, includes forecasts on the number of jobs resulting from an extension of the federal solar tax credit.
This 12 kW PV array is the largest system entirely owned by the City of Portland. (City of Portland/PIX18048)