Date : Thu, 6 Aug 2009 12:48:39 -0400
For Immediate Release Contact: Jeff Tittel
August 6, 2009 609.558.9100
Putting Solar in the Shade
Trenton - Earlier this summer, Governor Corzine signed legislation (A3372/S2340) requiring prevailing wage for any programs that receive financial assistance from the Board of Public Utilities. Prevailing wage, the pay for government construction projects, can be double the average industry wage. The Sierra Club is concerned that this legislation will have a chilling effect on the growth of green jobs and clean energy projects in the state.
"We support having prevailing wage for governmental contracts, but we are concerned that the broad sweep of this law will undermine the intent of the BPU's Clean Energy Programs - protecting the environment and saving consumers money," said Jeff Tittel, Director of the New Jersey Sierra Club.
The average solar installer earns $25-30 per hour; with prevailing wage it will be as high as $76 per hour with benefits. This is equivalent to a 150% pay increase. According to the Mid-Atlantic Solar Energy Industries Association (http://www.mseia.net), the increase in labor costs could raise the price of the average solar installation by 1/3. Any entity that receives funding or rebates from the NJ BPU Clean Energy Program and spends more than $12,000 dollars on an efficiency or clean energy project will be required to pay these increased wages. The increased cost may deter investments in renewable energy because of the higher cost and longer pay back period.
"This bill is like putting a giant umbrella over New Jersey, blocking out the sun and undermining clean energy," said Tittel.
The increase in labor costs would extend the pay-off time - the time in which the savings pay for the cost of the equipment - triggering poison pills in many energy programs. Under different rules in the Board of Public Utilities and Division of Community Affairs, the costs of clean energy and energy efficiency programs must be recouped in savings in less than seven years.
Prevailing wage will be required on every construction project on businesses that costs more than $12,000. Currently a beauty parlor may plan to invest $15,000 in energy efficiency to take advantage of a $2,500 dollar rebate from BPU, totaling their costs at $12,500. This legislation would raise the initial costs to $21,000 being cost prohibitive for small business owners. The federal statute exempts buildings less than 9,600 feet from prevailing wage. This type of exemption would allow smaller businesses access the long term benefits of renewable energy sources.
The legislation will stunt smaller construction projects and the growth of smaller solar companies. By raising the cost of installation smaller solar projects may become too expensive, and the need for smaller solar companies will be reduced. This will help give large utilities a monopoly on solar energy, because they already pay prevailing wage.
It also fails to recognize that the money distributed by the BPU for rebates is not government money; it is part of a private investment system called Solar Renewable Energy Credits (SRECS). Utilities buy SRECS to meet their renewable portfolio standard. They can purchase them through the solar owner or provider. The program is overseen by the BPU, the board sets the price of SRECS, but all transaction and financing are private.
While this law exempts single family home owners, townhouses, and apartment complexes up to four stories, it fails to account for the complexities in financing. In many instances the SRECS are pursued by solar companies as part of the project's financing instead of the single family home owner, which would make them susceptible to the labor cost increases.
New job training initiatives around the state have focused on weatherization training programs for recent high school graduates or drop outs. Labor Union 55 in Newark employs local people, and does not require a high school diploma. They pay 17 dollars an hour; while good pay this is well under the prevailing wage. Requiring prevailing wage would undermine the viability of the program. Isles, Inc. in Trenton has a similar program.
Many unions that supported this legislation have not supported global warming or green jobs policies; some have been major supporters of off shore oil drilling. These unions have not been concerned with climate legislation, and their negotiations will undermine the long term viability of clean energy jobs in New Jersey.
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