It’s going to be a record year for solar PV and wind projects in Australia, but do we have enough skilled workers to get us over the line? EcoGeneration looks for signs of stress in the clean energy recruitment market.
There’s good news and bad news in the world of clean energy. First the good news. The solar PV and wind projects required for Australia to hit its 2020 Renewable Energy Target are being built. In fact, there’s a surplus. The bad news is that there is simply not enough skilled talent to handle the backlog of work.
The latest estimate from the Clean Energy Council suggests 5,500 jobs will be created to complete more than 50 wind and solar projects worth more than $10 billion.
“It’s busy all over the place,” says ACRWorld director of renewable energy Rob Lawrence. “Everyone knew this was coming. The industry will cope, but it’s certainly very tight.”
At global business growth and expansion consultancy Polyglot, head of renewable energy and infrastructure Jan Rieche thinks constraints in the talent pool may test the limits of some projects.
Everyone knew 2018 would be a busy year, says Rieche, but things got “crazy busy” about November last year and haven’t let up. Polyglot’s seeing inquiries from across the board – EPCs, contractors, development companies, project finance companies, smaller contractors – and Rieche expects things will get even busier when workers are required to bolt hundreds of thousands of panels in place.
“This will put immense cost pressure on EPCs and eventually also developers,” Rieche says. “If you marry that problem with increasing panel and general equipment prices, it might squeeze their margins quite a bit. This year will show us who did their planning and financial modelling really well and who didn’t.”
Rising panel prices are a function of rising demand, as manufacturers channel supply to international markets where margins are favourable. “In some countries, even in India, the margins are bigger [for panel manufacturers than in Australia],” he says. “So they send to where the margins are bigger.”
Rieche predicts some projects that are pinched by rising costs may even be sold entirely or partly to other investors or developers. “I’m pretty sure we’ll see some,” he says.
Bees to honey
At Bradman Recruitment Group director Michael Green is taking calls from companies looking to enter Australia or existing players after new staff. He admits some of the established companies in the Australian renewables market are “raising an eyebrow” over what work there will be for any new entrants and how they will win market share, but the ones he’s spoken to are very positive. “I don’t know quite [which side] to believe. The reality is probably somewhere in the middle of that,” Green says.
Other than the more traditional wind and solar, inquiries from overseas have come from companies working in energy efficiency, cryptocurrencies and energy retail, he says. “We’re even doing some recruitment for a new EPC that’s entering the market from the US.”
The most gaping skills shortage is developers, says Green, the skilled talent who find sites, negotiate with landholders, government and authorities, design power purchase and offtake agreements and apply for grid connection and permits. “You’ve really got to dig very deep to fill a development role at the moment,” he says.
Salaries offered for developers have risen. Nine months to a year ago he says it would take about $150,000 to lure an experienced developer. Now it’s more like $175,000 to $200,000. “And even then it’s not easy.”
As Australia gears up to replace its fleet of ageing coal-fired generation, developers are scouring the country non-stop to find new sites that would fit renewable energy projects. “There is full employment in developers,” he says. It’s full steam ahead, and Green admits employers seldom make mention to him of the National Energy Guarantee or what will happen beyond the 2020 Renewable Energy Target.
Up against the tunnellers
The recruitment market has been “incredibly busy”, says ACRWorld director of renewable energy Rob Lawrence, with an emphasis on construction of wind and solar farms mainly on the east coast and in South Australia, with some in the west as well. The challenge is to fill positions, especially as it is also a boom time in infrastructure.
“It’s got to the point where really the industry is at maximum capacity now, so anybody who has experience in wind or solar is employed and people are just trying to pinch off each other,” Lawrence says.
The other way to relieve that pressure is to recruit from overseas or from other industries. It was once the time that workers left over from a waning mining sector could be attracted to clean energy projects in regional areas. When you’ve been working on energy infrastructure projects or at mines far from the state capitals it’s not such a jolt to the system to take a job on a wind or solar farm. Since then, work has begun on vast infrastructure projects in the cities.
“There’s a renewable energy boom happening but in Sydney and Melbourne there are hundreds of billions of dollars worth of intrastructure projects going on at the same time,” Lawrence says. “Our company recruits across both areas – and those areas are just booming.”
In the minds of some jobseekers there are a couple of forces that may appear to be aligned against renewables: infrastructure work pays better, and in the current market there are plenty of roles offered in the cities or very near them. “That’s really who the renewables sector, from a construction perspective, is competing with.”
In this market, Lawrence says recruiters have to rely on networks of contacts established over the long term. A prospective worker’s skills and flexibility about location must be matched with the developer’s requirements, all within the constraints of a tight labour market. “It’s tricky,” he says. “Everybody’s looking for the same sort of people: civil and electrical project engineers, construction site managers, site supervisors – and those people are easily transferrable into infrastructure projects and other projects, so they’re not all gagging to get into renewables.”
But let’s not overlook the clean energy sector’s pulling power, where so many who work in it are happy to admit they were attracted by a personal sense of purpose. Everyone knows clean energy is good energy – that it can be done and so it needs to be done. To take part in that revolution is to take part in a massive cleansing of the economy and all that drives it. “That attracts a lot of people.”
Compared with other types of generation wind and solar plants are pretty quick to build. If workers are thin on the ground in Australia and need to be sourced from overseas, developers will be hoping the paperwork around visas can be processed quickly. That’s not been the case recently, however, and Lawrence says processing has been “very slow”, with applications taking up to 12 weeks.
Changes to the visa requirements in 2016, where the 457 was abolished and replaced with the Temporary Skill Shortage visa, the requirement for skilled workers, had a knock-on impact, he says. Well-resourced developers in the infrastructure sector have plenty of experience managing applications and guiding recruits through the visa process whereas some companies in the renewables sector may struggle with it. Some may even shy away from recruiting offshore simply because it’s seen as a bit tricky.
The Temporary Skill Shortage visa is offered in three variants: a short-term stream, up to two years; a medium-term stream, up to four years, and; a labour agreement stream for sponsored migration, with the possibility of permanent residence.
The attitude towards finding talent overseas varies from client to client, says Green at Bradman Recruitment, and some are “dead against it”. For them, the rigmarole involved with applying for visas and relocating workers and families is a step too far. As a recruiter he can see the benefit of sometimes looking offshore for the right person, even if a few extra costs are incurred. Immigration and relocation can add about $20,000 to a package, but that could work out being good value if it means an employer finds exactly who it’s looking for. “If you have an open mind I think you’ll have a stronger short list,” he says. “I guess each company has to make that decision for itself.”
Hold on to your talent
As demand for workers exceeds supply, wages are beginning to feel some upward pressure and employers are taking caution to hold on to the staff they have. Some companies are placing key employees on retention plans or increasing notice periods in an effort to retain staff. Any increase in salaries will be reflected in higher project costs, but there haven’t been any major blow-outs – so far.
If more workers in regional areas were offered training in renewables the job market wouldn’t be so tight today, but it’s a bit late for that now. Once approval and financial backing comes through, every developer wants its wind and solar plants built as soon as possible, and they’ll want workers who have done it before. For them, there isn’t the time to train whoever is looking for work in the area. “It’s almost as though they’ve thought about this too late [and they] should have been training people two-plus years ago,” says Lawrence at ACRWorld. “But that’s just not how it’s worked.”
It’s a good time for Australian workers attracted overseas to think about returning, especially from the UK, for example, where the renewables sector has been hit hard. A trip back home could pay off, although the number of Australian clean energy workers roaming the world is a drop in the ocean compared with the number required back at home to complete the backlog of projects.
What comes next?
The rush to build clean energy generation isn’t so much driven by uncertainty over the National Energy Guarantee, says Rieche at Polyglot, but by the Renewable Energy Target. “It’s a question of can we build it and commission and connect it on time,” he says. “And with what kind of margin, if any, can we build it.” Panel price and cost of labour will be the two major pain points.
After the RET’s been met he expects a lull in the industry, but it won’t “fall off a cliff”. Companies that managed the building boom will have learned valuable lessons along the way and be faster and more efficient at delivering projects, including managing labour costs. There may not be as many projects after 2020 but those who are building them will have a much better understanding of the costs and structures. “Those projects, most likely including storage, will be able to compete definitely with coal-fired and potentially with gas,” he says.
It will be a different landscape, where some companies will exit Australia in search of the next boom market, possibly Africa, and the rest will progress with a little more confidence and perhaps test the merchant market. “If you do it right in the next year-and-a-half – and you’re happy to work some crazy hours this year and suffer a couple of blows as well as the good times – then I think there is a great opportunity for local businesses to learn and for overseas businesses to localise their workforces more and more.”
So, now that we’re all up to date on the job market, let’s get back to work.