How Smart Grid Policies Create Employment Opportunities

Published: Mon 15 Sep 2014
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

Most Smart Grid discussions about human impacts address the demographic trends in utility workforces or the influences that Smart Grid technologies and applications have on people in residential and commercial settings. While both are very worthy topics, the subject of job creation doesn’t get the same attention. And that’s a puzzle, given today’s economy. The Smart Grid’s technology, policy, and financial disruptors have happy consequences for the labor market through increased and sustainable local employment opportunities.

Jobs can be defined as direct, indirect, and induced. Direct jobs are the positions created to perform a specific function. Indirect jobs are created in supply chains and the businesses that support those direct jobs. Induced jobs are created based on the savings generated from the results of the direct and indirect jobs.

For instance, one of the most important Smart Grid trends is the growth of distributed energy resources (DER). One important DER asset class is renewable energy such as found in solar generation solutions. The state of California has more than 47,000 people working in this sector – about one third of the nation’s total solar employment. Many of these jobs are focused on installation and maintenance of solar systems – “boots on the ground” or direct jobs that every region of the USA should encourage.

What led to solar generating energy and jobs? It’s not just the natural climate of abundant sunshine in the state. The state renewable portfolio standard of 33% that Governor Jerry Brown stated was a “floor, not a ceiling requirement”; the million solar roofs program, and other regulatory and legislative actions created the business climate, which enabled companies to put certainty to former risks, and led to the establishment or growth of scores of businesses and new direct, indirect, and induced jobs.

Other DER asset classes include energy storage, energy efficiency retrofits, and demand response programs. The California Public Utilities Commission (CPUC) mandated in 2013 that its regulated utilities must incorporate 1.325 GW of energy storage into their grids by 2020, the largest amount of storage in the world today. Energy storage and renewable generation assets go together like peanut butter and jelly – good on their own, but even better together. Like recent solar cost trends, upfront energy storage costs are expected to decrease as deployments increase and benefit from economies of scale. New market entrants with innovations in technologies, processes, and services will bend the cost curves downwards even more. These trends mean more direct jobs for skilled technicians and a labor force that remains in place to respond to maintenance and upgrade requests. Greentech Media estimates that the energy storage market will quadruple every four years, and one of the reasons is California policy, which essentially made a market for energy storage solutions at the transmission, distribution, and behind the meter (consumer and prosumer) points.

Energy efficiency is another promising homegrown employment area. Spurred by the oil embargo and economic shocks of the early 1970s, California has gradually introduced energy efficiency (EE) standards for white goods like refrigerators, electronics like TVs, and commercial and residential buildings themselves. The building standards are updated every three years. Similar policies have been adopted worldwide since then. The latest round of EE building standards will create locally-situated jobs as building owners retrofit structures or deploy the appropriate energy efficiency measures in their new construction. This American Council for an Energy-Efficiency Economy (ACEEE) paper outlines the economic impacts of EE projects in both employment and cost savings. The cost savings benefits of energy efficiency measures are sometimes overlooked too. As less money is needed to pay for energy expenditures, more capital is available to invest in business growth.

There are two centers in California designed to support job training on EE technologies and services. The newest center is a collaboration between the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA). These organizations understand the connection between smart energy policies and sustainable employment. California has often led the way in smart energy policy, although the aftermath of Superstorm Sandy has prompted some eastern states to promulgate innovative energy policies that build and enhance grid and community resiliency. Where these pioneers lead – will other states follow? They would be wise to enact similar energy policies to benefit their regional economies through job creation and reductions in energy costs for citizens and businesses.