Association for Public Policy Analysis & Management

The solar industry is already one of the most important employers in the US, but whether its labor market response to net metering policy changes is equal among regions is still unknown. Despite its rapid growth in the past, recent changes in renewable policy caused solar industry employment to decrease in 2018, showing that the solar industry labor market is extremely sensitive to changes in policies. Among the renewable energy policies, the net metering policy is the one most adopted across the US, although variations in design exist from region to region. The response of the solar industry labor market to policy designs has inspired research that considers the effect of net metering policy design on the solar industry labor market.

In this research, we advance the energy policy and justice literature in two ways. First, we show how various net metering policy designs affect solar labor markets. We do so through detailed categorization of net metering policy designs, which, as far as we know, has not been done before. We also study whether the policy designs shift the ratio of labor expenses in solar industry revenues, the results of which could reveal important insights into income and negotiation power inequity between the employers and the employees.

In the analysis, we measure the labor market in three ways: average weekly wages, labor expense to revenue share, and labor expense per kilowatt (kW). When implementing net metering policy, the changes in negotiation power are shown in the labor expense to revenue share. Meanwhile, the change in wage could be the result of change in productivity (labor expense per kilowatt) or changes in individual negotiation power. If the average wage holds constant but the productivity increases, then the inequity between average labor and the employer increases.

On a sample of net metering states, as measured in county-quarter units, we employ a two-stage linear dynamic model. The resulting sample includes 5,264 observations, which includes 188 counties and 28 quarters between 2011 Q1 to 2017 Q4.

Preliminary results show that the labor expense to revenue shares decreases when the net metering policy is implemented, especially in higher income regions. Although the wage and labor expense to revenue share does not change significantly when net metering policy is implemented, the labor expense per kW increases, especially in higher income regions. This means the implementation of net metering policy lowers the individual negotiation powers, especially in lower income counties. The result suggests that, especially in lower income regions, the net metering policy could reach a better equity between labor and employers in solar industry by increasing the negotiation power of the workers, such as introducing more competitions between solar industry firms or constructing more transparent local solar labor markets.