This article was written by Ed Ballard. See original article here.
Washington is funding a boom in clean-energy investment. How will businesses find the people to do the work?
For the job market, the Inflation Reduction Act “was just gasoline on the fire,” said Joe Amara, a recruiter who finds executives for clean-energy companies. “Midlevel directors are getting paid what senior VPs were getting paid just a few years ago,” he said.
Despite recent layoffs at big tech companies, the U.S. labor market is still tight. At 3.7%, unemployment is just above the pre-Covid low. And demand for clean-energy jobs has been outpacing the broader job market since 2019, according to a LinkedIn survey published early this year.
It found that the number of job ads seeking green skills, such as the ability to service a solar farm or conduct an environmental audit, is rising faster than the number of people touting those skills on their profiles.
Shortages of key personnel are pushing up labor costs, renewable-energy executives say. One especially shallow pool of talent is the market for financiers who understand tax incentives.
The Biden administration’s clean-energy ambitions revolve around supercharging this byzantine system. That turns out to be pretty complicated. Tax credits for wind and solar projects have been extended, and others have been introduced, but some important details about how it will all work haven’t been confirmed, as I report for the Journal today.
Clean-energy executives and their advisers generally agree the market will somehow figure out how to make the most of all the new and improved credits. It’s free money, after all. But how long that takes—and how valuable the market ultimately becomes—isn’t clear.
Most likely the renewable-energy financing business will continue evolving the way it has over the last 15 years or so, a process of trial and error to see which financing structures work best. Good news for tax experts.
In the U.S., renewable-energy projects get a large chunk of their financing through what’s called tax equity. This complex financing setup, which sprang up because developers generally don’t have large or stable enough taxable earnings to monetize all the tax breaks they’re eligible for, usually involves a bank owning a stake in a project in exchange for the stream of tax credits.
This is a large market, worth $20 billion or so a year, and it’s dominated by a handful of big banks. That’s because the necessary legal knowledge is expensive to acquire, and acquiring it could be a bad investment—there is a risk that the market will go away if tax credits aren’t renewed every few years.
That’s one reason why the talent pool is shallow. Now, with investors lining up, the ability to structure clean-energy investments is at a premium.
“We have tried to hire a couple of senior structured-finance folks and the salaries that we’re being told they’re being offered are more than my CFO makes,” Scott Wiater, chief executive of solar developer Standard Solar, told me.
He predicted that this situation will turn out to be a short-term blip, a sign of the exuberant mood engendered by the most significant clean-energy legislation in U.S. history. But, for better or worse, the fate of America’s energy transition hangs on financial engineering as much as on engineering of the electrons-and-chemicals kind.
