[V]ermont’s clean energy employment grew by 6.2 percent between the first quarters of 2014 and 2015, but some employers believe these gains may be short-lived.
Solar energy workers occupy more than a third of the state’s renewable energy jobs, and employment in that sector grew by 21.8 percent between 2014 and 2015 – the fastest-growing clean energy sector in the state.
Employers say this growth in part reflects increased demand prior to the expiration of an important federal tax credit for solar installations.
The figures were released Monday by the Public Service Department in a report that compared the 6.2 percent clean energy rate of employment growth with a statewide average of 1.8 percent.
“We’ve seen incredible growth in the solar industry over the past year, so much so … that we’ve doubled our head count to meet demand,” said Emily McManamy, spokeswoman for Waterbury Center solar firm SunCommon.
Further growth is expected for the upcoming year, McManamy said.
Bruce Genereaux, owner of Groton-based Green Mountain Community Solar, attributes solar’s growing popularity to more savvy customers.
“What I’m seeing is greater awareness by Vermonters of the environmental and economic benefits of solar energy,” he said.
Genereaux said businesses like his own have been encouraged by an IRS ruling handed down two weeks ago, in which an individual in Rutland was allowed the federal residential tax credit for an off-site, community-shared solar installation.
That 30-percent federal tax credit has driven the 1,600 percent growth in solar installations nationwide since it was instituted in 2006, according to the Solar Energy Industries Association.
The credit applies to solar installations placed on businesses and residences, and the recent IRS determination means it could apply as well to remotely located, shared solar installations, SEIA President and CEO Rhone Resch recently said.
But the credit is set to expire at the end of 2016 unless Congress extends it in some form.
Some in the industry see that sunset as fuel for Vermont’s burgeoning solar industry.
“The investment tax credit is going to be reduced at the end of 2016, which is causing people to get it now rather than later,” said Jerry Morton, owner of Bridgewater Corners-based renewable energy concern RES-TEC. “The smart people are looking at it now, saying, ‘Gee, the line could be long in 2016, I don’t want to wait.’”
The situation has bolstered the industry, Morton said – he saw his own sales increase around 15 percent over the last year – but caused long-term uncertainty.
“The big question for us is, do we expand? None of us can say with any real accuracy what’ll happen in January of 2017,” Morton said.
He’d like to hire three or four new employees right now, Morton said, but instead he’s forced to become choosier about the jobs he accepts. Hiring new people wouldn’t make sense right now, when the industry could undergo a dramatic reversal in just over a year.
“We’re in a highly subsidized industry, and that subsidy is going to be reduced,” Morton said. “When it does, we’ll be sitting here in Vermont with a lot of solar installers. What we predict … is a drastic reduction in demand.
“Companies are going to go out of business, no doubt about that,” Morton said.
Existing efforts by the state seem unlikely to prevent this, he said.
“The Legislature of Vermont has been terrific about supporting solar,” Morton said, “but no matter what the state of Vermont does, by far the largest solar energy incentive is the [federal] tax credit.”
Things could change quickly, however, said Nathaniel Vandal, principal at Waitsfield-based Green Peak Solar.
Vandal worked on wind energy projects before turning his attention to solar. Operators in that industry are used to the type of turbulence the solar industry is currently experiencing, Vandal said.
“Wind has been a lot more subject to ups and downs [resulting from] federal energy policy,” Vandal said.
“Wind has gone through this federal tax flip a number of times,” he said. “In many cases it was extended at the 11th hour, or there could be a change in the tax code definition, from a project needing to be in the ground to the project needing to be under construction.”
The credit could also be temporarily extended, Vandal said. It was already extended once, in 2008, only two years after it was instituted.
“It’s anybody’s guess,” he said, “but a lot of us are starting to look at, what do the economics of a project look like after the credit goes away.
“There’s already a lot of downward pressure on cost,” Vandal said, and with the loss of the credit, “there’s going to be continued downward pressure.”
This will undoubtedly affect businesses, he said.
“It’s a pretty low-margin business, so once you take away a 30 percent tax credit, that’s a pretty big haircut on your financials,” Vandal said.
Until that time, those in the industry project continued growth as was seen in the Public Service Department’s report from Monday.
“A lot of people expect continued expansion of solar deployment until 2016,” Vandal said. “But what you’ll see is, I think the industry will contract after ’16.”
The report, titled “Vermont Clean Energy 2015 Industry Report,” forecasts an additional 1,000 jobs in the state’s clean energy workforce over the next year.
That total workforce includes those employed by energy efficiency establishments, which employ the greatest percentage (49 percent) of Vermont’s clean energy workforce.
Energy efficiency jobs include those involved in lighting, residential weatherization, HVAC installation, and other technologies.
This clean energy sector grew by 2.2 percent between 2014 and 2015, according to the report.
Renewable energy, of which the solar industry is a subset, grew its workforce by 12.4 overall between 2014 and 2015, the report states. Renewable energy makes up 31 percent of the state’s clean energy workforce.
Clean energy industry employers are expected to add another 1,000 employees to their ranks over the next year, the report states.
