I think I am alone in this, but The Goal was one of my least favorite business school books.

And yet, here I am a decade later using it to frame an argument on why the speed of the energy transition might ultimately depend on labor so it must have had an impact on me.

Published in 1984, The Goal has remained a mainstay of business school since then. It’s written in the style of a novel to unpack the theory of constraints in manufacturing.

Alex, the book’s main character, eventually realizes that bottlenecks determine the rate at which products roll off an assembly line. I’m oversimplifying the idea, but he eventually realizes the slowest operation always determines the maximum production speed.

Replace production with deployment, and we have an idea we can apply to renewable assets. Bottlenecks are everywhere in energy transition infrastructure:

• supply chain disruptions in transformers, inverters, and switch gears
• transmission and substation capacity constraints due to red tape
• interconnection queues full as utilities conduct feasibility studies

Labor is the next big bottleneck to join this list. We can only deploy renewable assets as fast as labor will allow.

Vacancy rates in industries core to the transition continue to climb, with manufacturing and utilities particularly hit hard. Almost 40% of energy companies report “significant” hiring difficulties.

Estimates put the current skills gap at somewhere between 750,000 and 1,500,000 jobs annually.

The skills gap decreases throughput and, if allowed to grow large enough, will also affect project economics of all sizes. In large projects financed with debt, longer construction times due to fewer workers means higher interest payments.

In smaller projects like residential solar and HVAC, labor costs will take up a larger share of overall project costs. The UK already feels this pain as solar panel prices reach all-time lows while installation costs driven by labor are near all-time highs. Labor costs now account for roughly 10% of residential installs.

Declining economics means that ultimately fewer projects get done.

There’s no easy fix, but I’d love to hear from you if you are working on one. Solving the skills gap is a problem without an obvious solution. We can’t create more workers out of thin air, and re-skilling has proven difficult with less demand than you’d think.