The 2017 Mid-Year State of Solar & Energy Storage
As solar and energy storage recruiters with nearly a decade of experience working in renewable energy, we at Peak Demand have a unique perspective on what is happening in the industry.
Since we are regularly asked about what is going on in the market (especially now), we decided to create a brief summary of what we are hearing and seeing. Also included are our predictions for the 2nd half of 2017 in terms of activity in the market and how it could affect hiring trends.
Politics: Is the Bark Worse Than the Bite?
There was significant concern over the election of Donald Trump as President of the United States. Policy change at the Federal level can have a major effect on our industry, and there was some serious apprehension immediately following the election.
Earlier in the year we spoke with several companies that pulled back on hiring efforts, as well as a handful of candidates that walked away from solar, all because they feared that federal support for solar would negatively impact the industry.
So far we haven’t seen much change in federal policy. There has been no rollback of the ITC, or any other major changes on the federal level. Hopefully that trend continues moving forward.
The Suniva 201 Trade Case
As you know, the biggest concern in the industry right now is the recent Suniva Section 201 trade case that everyone has been following. We have seen a few of these trade cases in solar over the last several years, and the truth is that no one really knows how this one will play out. In the meantime, the uncertainty creates problems for everyone.
If the International Trade Commission determines that oversees manufacturers have harmed US manufacturers, the Executive Branch will have unilateral authority to assess penalties (tariffs or a minimum price market, etc.), and no one can accurately predict what the administration will do. If they are looking for a way to damage the industry, they will likely have the opportunity and ability to do so.
While I don’t believe the Federal Government would eliminate or put at risk the 250,000+ jobs that revolve around selling, installing, and maintaining solar projects to protect the 2,000 or so jobs manufacturing solar cells and modules in the US, you never know.
So far we have heard that investors are pulling back on funding new projects, projects in the pipeline are being pushed back, and several vendors/suppliers are seeing orders pushed back or canceled. There is a shortage of modules, and module ASPs have crept up a bit since there is little to no inventory.
Companies at every step of the value chain are seeing and feeling the effects of the uncertainty, but it’s important that we not be our own worst enemy. Uncertainty breeds fear, and fear breeds inaction. As some companies start to freeze up, others can take advantage of shifting market conditions.
How Does This Affect Hiring?
In May, the Bureau of Labor reported that unemployment had dropped below pre-recession numbers for the first time since the recession. As a result, we find ourselves in an extremely candidate driven market, where many hiring managers are having trouble finding the talent they need.
We are generally seeing strong demand for experienced Engineers, Construction Managers, and top Sales professionals across the board. The market appears to be a little soft at the executive level, as we see further consolidation in the number of companies in the market, meaning there are fewer seats around the table.
With module prices low, we have been waiting to see significant growth in Project Development/Origination. For a while it seemed that most organizations were focused on acquiring individual projects or portfolios of projects, but now we are starting to see them hiring and filling out development and origination teams. While some of these are established players investing in growth, several of these companies are start-ups that have formed out of the ashes of SunEdison and other groups that have sold or dissolved their divisions.
We all know that the industry operates on razor thin margins. We have enjoyed historically low interest rates for the last several years, but the fed recently raised interest rates by 0.25% and they are predicted to raise them again by the end of the year. As the economy continues to heat up, this will definitely be an area to watch.
One of the key areas the new administration wants to tackle is tax reform. Without getting overly political on the topic: if corporate tax rates drop dramatically, the tax equity pool shrinks. A lack of tax equity, or an increase in cost for tax equity, could also cause some trouble as it increases the cost of developing projects.
Over the second half of the year we expect hiring to continue picking up slowly. Many organizations are realizing that they can’t sit around and wait for a determination of the trade case and need to add people in key areas.
We are seeing a few Business Development opportunities with Module, Inverter, and BOS providers along with strong demand for Engineers, Project Managers, Site Supervisors, and other professionals needed to get projects across the finish line. Although the storage market is still in its infancy, we are seeing an increase in hiring opportunities, and expect the market to grow at a reasonable pace over the next year or so as battery prices drop and time-of-use rate changes improve the economics for storage.
This industry is full of passionate, intelligent people that are driven to transform our energy landscape. We have faced headwinds before and we have always prevailed. If module prices rise as a result of this trade case, many projects and organizations will be impacted. Even so, we will find other ways to reduce costs and there will still be great opportunities in the market. It may take cell/module manufacturers a little while to adjust to whatever the new reality will be, but they will adjust and the market will move on.
Recently, there was news that one of only two Nuclear Power projects under development will be canceled as cost overruns were pegging its overall cost at roughly $25 Billion! The reality is that solar and storage are here and are less expensive than fossil fuel generation in most markets.
This current situation is just a bump in the road, and we here at Peak Demand are grateful that we have the opportunity to help great companies hire talented people that are changing the world by reducing our dependency on fossil fuels.
As much as I hate the cliché, we are all riding the “solar coaster.” Our industry has its ups and downs, but we have persevered through all of the volatility over the years. This cycle will not be any different. No matter what happens with the 201 case, the supply chain will adapt along with the rest of the industry and we will keep moving forward, like we always do.
I look forward to seeing everyone at SPI in a few weeks! If you would like to discuss how Peak Demand, the leading solar and energy storage recruiters in the industry, can help you build a hiring process designed to attract the best possible talent, click here to access my calendar and schedule a quick 15-minute conversation.