Climate change was the central theme of last week’s World Economic Forum in Davos.
Almost all mainstream business and financial newspapers are running regular commentaries on climate change and our work to reduce its impact.
The “Renewable Energy Revolution”, it seems, is upon us.
So, what does this mean for the future of work in the sector?
Exponential job growth in green energy
According to the most recent statistics from the International Renewable Energy Agency (IRENA), the global renewable energy sector employed 11 million people in 2018, while the International Labor Organization forecasts that a further 18 million jobs will be created by 2030.
At present, these jobs are high value and geographically concentrated.
Asian countries account for 60% of the total jobs figure, though Brazil, the United States, and members of the European Union are also green energy jobs leaders.
Several factors are shaping how and where these jobs are created. Principally these are:
- National deployment and industrial policies
- Changes in the geographic footprint of supply chains
- Changes in trade patterns
- Industry consolidation trends.
Despite the current concentration, IRENA states in their annual report that “the increasingly diverse geographic footprint of [green] energy-generation capacities and, to a lesser degree, assembly and manufacturing plants, has created jobs in a rising number of countries.”
In the U.K. for example, the National Grid has said that 120,000 green energy jobs need to be filled by 2030 to help cut greenhouse gas emissions, and that the number is likely to reach 400,000 by 2050.
Which green energy technologies are the largest employers?
As shown in the chart below, at present Solar Photovoltaic (PV) is the largest employer when we view green energy jobs by technology.
It is also important to consider the growth trends that sit behind this chart, because not all green energy technologies are growing at an equal rate.
Hydroelectric power, for example, has been a stalwart of the Green Energy sector for a long time. It still has the largest installed capacity of all renewables and employs 2.1 million people directly, but both output and employment are now growing more slowly than in the past.
Solar PV, on the other hand, is the largest employer, contributing a third of the total renewable energy workforce.
In addition to being largest at present, Solar PV is also the fastest growing employer, currently employing 3.61 million people, an increase of around 265% since 2012, when employment in Solar PV technologies was 1.36 million.
Which companies are the largest employers in green energy?
In the face of intensifying competitive pressures, industry consolidation is changing the face of the renewable energy sector.
In wind power, for example, Siemens and Gamesa merged; Mitsubishi Heavy Industries and Vestas formed an offshore joint venture (MHI Vestas); and General Electric (GE) bought Alsthom’s wind assets and acquired Denmark’s LM Wind Power.
Just three companies (Vestas, GE and Siemens Gamesa) have dominated the U.S. installation market in recent years (BNEF and BCSE, 2019).
GE and Siemens Gamesa together control about half of the Brazilian market. Just five turbine manufacturers accounted for two thirds of all onshore wind turbines commissioned globally during 2018:
- Vestas (Denmark)
- Goldwind (China)
- GE (United States)
- Siemens Gamesa (Germany and Spain)
- Envision (China)
In the offshore segment, Siemens Gamesa and MHI Vestas are the undisputed global leaders with a combined 59% share in 2018, followed by three Chinese companies (Sewind, Envision, and Goldwind) that hold a combined 35% share.
In Europe, just two firms accounted for 93% of cumulative offshore turbine installations as of the end of 2018: Siemens Gamesa (69%) and MHI Vestas (24%)
Green energy employment shows greater gender diversity than Fossil Fuels
In a separate report (Renewable Energy: A Gender Perspective) IRENA examined the levels of gender diversity in those employed in the green energy sector.
That report found that women currently represent 32% of the renewable energy workforce, substantially higher than the 22% average reported for the global oil and gas industry.
However, the report did acknowledge that there are still substantial improvements to be made, particularly in the area of gender diversity in STEM roles, stating:
“Because of its multi-disciplinary dimension, the renewable energy field exerts an appeal on women that the fossil fuel industry has lacked.
Still, in renewables, women’s participation is much lower in science, technology, engineering and mathematics (STEM) jobs than in administrative jobs.”
What skills do these green energy projects require?
As discussed in the IRENA Renewable Energy and Jobs report, the global shift to renewables is demanding a growing array of skills, including technical, business, administrative, economic and legal, among others.
The highly skilled nature of these roles, coupled with their current geographic concentration, will inevitably mean that many of these projects will require highly skilled expatriate contractors.
A contractor from the U.K. for example, highly experienced in offshore wind installation projects in the North Sea, might increasingly find the best contract opportunities in Asia (where the Global Wind Energy Council (GWEC) forecasts greatest growth in offshore installations) or North America.
Managing the employment of expat contractors
Managing the employment of these workers might not always be straightforward. With the combination of industry consolidation and geographic concentration, the company that is running the project might have no corporate structures in the region in which the project is taking place.
Additionally, the contractor with the best skills for the job might come from a different region entirely.
Depending on the nature and anticipated duration of the project, the company would do well to fully investigate the options that are open to them before engaging that project.
This might not always mean going to the full extent of opening a branch or a subsidiary in the location where the project is being carried out.
Due to the complexities of securing visas, managing both employee’s and employer’s taxes and social security payments, and complying with all local employment legislation, having a third party remove all of these burdens through a Professional Employer Organization (PEO) structure might be the best option.
However, this is not always the case, and carrying out a full review of all options will ensure that a company engages the project in the way that works best for their circumstances and strategic objectives.
We are experts in local and international employment and payroll legislation, and can help guide our clients through the minefield of cross border employment.
We have extensive experience in helping companies manage green energy projects in a variety of locations across the globe. If you have a project you are hiring for, get in touch to find out how we can simplify the process and reduce your risk exposure.