‘Prevailing Wage’ for Solar Development Passes, Survives Debates Over Uncertain Cost

Legislators broke largely along party lines in approving a bill that will require developers of large solar projects to pay workers the prevailing wage. The bill faced vocal industry opposition warning that the law will add to the expense of solar energy and slow development of additional solar capacity.

On Tuesday night, the House voted to approve the bill by a vote of 89-59 , with one Republican voting “yes” and five Democrats voting “no.” The bill later passed the Senate on Thursday night by a vote of 24-12, with Democrats voting in favor and Republicans opposed. 

The debate in part underscored tensions between a solar industry set on growth on the one hand, and lawmaker support for organized labor on the other. But even legislators otherwise supportive of renewables voiced skepticism about solar development given the relative cost of the projects and the tendency to build large solar projects on forest or farmland. The debate also highlighted the uncertain cost to consumers of green energy projects before the policies are put in place.

State Rep. Jonathan Steinberg, D-Westport, who split with most Democrats by voting against the bill, voiced concern about the unknown impact of the legislation on costs. Steinberg said that a law passed by the legislature a few years ago requires a ratepayer impact study for any energy policy that would affect customer rates, and this bill should have had that review.

“It’s very hard for me, in the absence of the seemingly legally required ratepayer impact statement – which may have indicated significant ratepayer impacts depending upon the size of the project and the number of employees involved – to support a bill, which goes against both the solar industry, our desire for renewable energy, and maybe the best interests of the potential employees for this project, who may find that those projects don’t go forward,” Steinberg said.

The bill will require all contractors and subcontractors on renewable energy projects 2 megawatts or larger to pay construction workers and operations, maintenance and security employees working on site at least the prevailing wage and fringe benefits – unless the project is covered by a project labor agreement.

Steinberg said he was conflicted on the bill, given his closeness to environmentalists who supported it, after hearing from solar installers and developers who said it would be an additional burden at a time when a key state incentive for home solar has lapsed. 

The Residential Solar Incentive Program, which compensates owners of home solar systems for the power they provide to the grid, reached its cap earlier this year, and a replacement program won’t take effect until 2022 – a situation the industry has said is devastating for business.

Steinberg said increasing wages would, by definition, increase project costs and make them less attractive investments. He questioned how the bill would help create good-paying clean energy jobs if it is going to stymie solar investment in the state.

“They’ve already indicated that many solar employers have chosen to leave the state because of the uncertainty of what’s going on here,” Steinberg said. “And now we are throwing another burden on them which could further constrain their ability to move forward with big projects, which I find little upside down, given the fact that moving forward with large scale solar projects is absolutely critical to our transition to renewable energy from fossil fuels.”

The bill also requires the contractors to “take all necessary actions” to establish a workforce development program to train new workers for higher-paid roles, and to ensure contractors participate in apprenticeship programs.

State Rep. Robyn Porter, D-New Haven, chair of the Labor committee, said the bill is aimed at helping workers move into the growing renewable energy sector with “high paying, liveable, sustainable wages,” and at ensuring that people from within Connecticut are hired for these jobs.

State Sen. Norm Needleman, D-Essex, chair of the Energy and Technology committee, said it’s not uncommon for major construction projects that come from state procurements or grants given to towns to have the same prevailing wage requirements. He said prevailing wage requirements were also included when the state held a procurement for offshore wind energy.

“The building tradespeople are suffering from the lack of big construction projects,” Needleman said.

The solar industry made a concerted effort to lobby against the bill, which representatives of the industry said would add an unnecessary additional burden on solar developers, who are already fighting against caps on solar incentive programs they say are slowing the industry’s growth in Connecticut.

“There’s a lot more small businesses that will have to comply with these bureaucratic duplicative requirements that the state’s gonna place on them,” Mike Trahan, executive director of Solar Connecticut, said. “And some of them are just going to say, “Forget it.’ What’s the benefit to the user? What’s the benefit to the climate? It’s just paying other people more to do the same job. And the ratepayer pays the bills.”

Trahan said the organization estimated that if 25 megawatts of solar are built each year for the next four years, the total added cost from paying higher wages and funding job-training programs would add about $100 million in costs for developers over the 20-year life cycles of those projects.

Needleman dismissed the cost argument as a lobbying tactic, and said his understanding is that labor is about 10 percent of the total cost of building a solar array. Given that, Needleman said that requiring prevailing wage shouldn’t have a significant impact on cost. 

“There’s a lot of lobbying going on right now, one to raise the VNM cap – which has a tremendous ratepayer impact – and at the same time to let these solar companies bring in cheap labor from out of state,” Needleman said. “They’re just lobbying because the solar companies want to make as much money as they can.”

A report from the UC Berkeley Labor Center disputed the solar industry argument that prevailing wage laws significantly increase solar costs and slow investment. According to the report, installation labor accounts for 6 to 11 percent of project costs, so a 50 percent increase in those labor costs would increase total costs 3 to 5 percent. 

Trahan questioned the usefulness of national-level numbers, and said the cost for workers on the job site in Connecticut can be 30 percent or higher.

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