Thursday, July 26, 2012

How Secure Are Green Jobs?

It's been an article of faith among advocates of "green jobs" from expanding renewable energy deployment that wind and solar installation jobs are secure because they can't be sent offshore, even as the manufacturing of wind turbines and solar equipment increasingly shifts to Asia.  A story in MIT's Technology Review casts doubts on that assumption, for reasons that have much to do with recent reductions in the cost of solar photovoltaic (PV) cells, modules and panels.  Green jobs, which in any case shouldn't be viewed as the main selling point of renewable energy, turn out to be much like other jobs in facing competition from automation, as well as from globalization.

Why would it suddenly make sense to consider installing utility-scale solar panels using the robots highlighted in the article?  PV module costs have declined dramatically in the last two years.  As I've noted in other postings, this trend reflects the expected experience curve effects--such goods become cheaper as you produce more of them--but also the fierce competition resulting from enormous over-building of global PV manufacturing capacity as countries competed with each other to offer generous subsidies for this industry.  One consequence of these PV hardware price declines is to increase the share of "non-module" costs in the total installed cost of solar panels. Because the power produced by PV is still more expensive than conventional energy in most markets, that tends to shift the focus of innovation toward ways to reduce the costs of the mounting hardware, inverters, and labor used to put these arrays in place.

The article makes it clear that only certain parts of the solar installation trade are currently threatened by robotic installation.  Robots apparently aren't suited to rooftop and small ground installations, yet.  However, with politicians busily blurring the distinctions between outsourcing and offshoring, while neglecting the ongoing transformation of work by automation, computing and telecommunications, it's worth recalling that energy remains a capital-intensive commodity business.  Keeping costs down is crucial for both energy providers and their customers, and thus for the entire economy they energize.  When labor is involved in producing energy, its productivity must be very high, or it naturally becomes a target of innovation and process reengineering.  That needn't mean low wages, but it does imply fewer workers working smarter, with more automation.

The energy industry offers excellent opportunities in many sectors, especially those that are growing rapidly because of new technology or the removal of artificial constraints.  Yet we shouldn't fool ourselves that these jobs are any more protected or permanent than any others, especially in segments that aren't yet cost-competitive.