Net Employment Benefits from Onshore Wind in 2020 SEAI / IEA Wind RD&D Seminar 26th May 2014 Sarah Stanley ESRI/SEAI Fellow, Economic Modelling Department, SEAI
Introduction Multiple Motivations for Wind Deployment: - Displacement of fossil fuel emissions, diversify energy portfolio, target compliance SEAIs Sustainable Energy Investment Model (SEIM) Net Macroeconomic and Employment Impacts from Onshore Wind in 2020. Presentation Outline: - Modelling Methodology - NREAP/NEEAP 2020 Scenario Assumptions - Preliminary Results - Future Analysis
Introduction to the Sustainable Energy Investment Model (SEIM) SEIM based on REMI. Widely applied in the US. Combines I-O and econometric methodology. Core function is Impact Analysis (not forecasting). Insights into how investment in renewable energy can affect employment, output, and expenditure. Net Impact Analysis rather than Gross.
Introduction to the SEIM
Introduction to the SEIM NREAP Wind Capacity Capital Investment in wind and trans. grid New Sales of Wind Energy Displacement of Fossil Fuel Transport and Storage Electricity Price Scenarios Irish Economy 20 Industries (I-O 2009) Baseline growth to 2020 2% pa Baseline Wind Capacity
NREAP/NEEAP v Baseline 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 2000 4000 6000 8000 10000 12000 14000 2013 2014 2015 2016 2017 2018 2019 2020 %oftotalelectricitygeneration GWh NREAP/NEEAP Renewable Electricity Generation (GWh) Hydro Biomass LFG Biodegradable MSW Wind % of total electricity Focus on onshore wind to meet 40% electricity target. By 2020, capacity of 3,566 MW required (SEAI Energy Forecast Model) 1,181 MW gap between baseline (control) and NREAP capacity 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2013 2014 2015 2016 2017 2018 2019 2020 Aver.AnnualGeneration,GWh GWCapacity Electricity Generated by Wind Baseline and NREAP/NEEAP Scenario . BASELINE NREAP Additional
Assumptions in the Baseline - What if we dont invest in wind? SEIM Baseline: electricity supply grows at a rate relative to overall growth (~2% per year). In line with SEAI Energy Forecast. With increased wind deployment, no displacement of fossil fuel generation capacity imposed in the baseline: - Wind displaces running costs for conventional plants (via cost of imported fossil fuels, ~ 177ml in 2012, SEAI). - Capacity payments provide lost revenue for generators for continued operation. Little loss of plant employment. - Displacement in the transport and storage of fossil fuels imposed.
Capital investment in wind: Demand increases, primarily for the construction of wind farms. Higher demand generates employment Employment stimulates higher disposable income and consumption, as well as changing optimal capital stock. In price block, employment feeds into a change in employment opportunities, compensation, production costs, and prices Structure of the Model Model Blocks and Linkages: A change in one input will create a reactionary change in all other endogenous areas of the economy
Capital Investment in Wind broken down by Industry 70%(Additional) 192 million average annual capital investment to reach 2020 NREAP/NEEAP targets 12% 10% 2.5% 2.5% 3% (Controls) Industrial Sectors in the REMI model
Capital Investment in the Transmission Grid broken down by Industry 145 million average annual capital investment to reach 2020 NREAP/NEEAP targets 26% 38% 18% 18% Industrial Sectors in the REMI model
Employment Impact Analysis using the REMI model Induced Investment Employment Induced Employment Indirect Employment Direct Employment
Scenarios Scenario 1: Capital Investment in Wind Sales of Electricity from Wind Displacement of Fossil Fuels Scenario 2: Capital Investment in Wind Capital Investment in the Grid Transmission Grid O&M Sales of Electricity from Wind Displacement of Fossil Fuels Scenario 3: Total Capital Investment (Scenario 2) 2% Decline in Electricity Prices in 2020 Scenario 4: Total Capital Investment (Scenario 2) 2% Increase in Electricity Prices in 2020 Electricity Price Scenarios Capital Investment
Capital Investment Scenarios, Number of Net Jobs per MW, 2020 Wind Only 2.63 Direct 1.54 Electricity Supply 0.35 Construction 1.18 Indirect 0.49 Induced 0.16 Investment Demand 0.50 Wind and Transmission Grid 3.93 Direct 2.25 Electricity Supply 0.42 Construction 1.83 Indirect 0.77 Induced 0.25 Investment Demand 0.75 -0.5 0.5 1.5 2.5 3.5 All Other Wholesale/Retail Trade Transport, Storage of Fossil Professional Services Manufacturing Electricity Supply Construction Wind Only -0.5 0.5 1.5 2.5 3.5 All Other Wholesale/Retail Trade Transport, Storage of Fossil Professional Services Manufacturing Electricity Supply Construction Wind and Transmission Grid 1282087
Electricity Price Scenarios, Number of Net Jobs per MW, 2020 Total Investment, 2% rise in Electricity Prices 2.47 Direct 2.25 Electricity Supply 0.42 Construction 1.83 Indirect 0.20 Induced -0.11 Electricity Supply - 0.09 Retail, Accom,Food - 0.02 Investment Demand 0.43 -0.5 0.5 1.5 2.5 3.5 All Other Wholesale/Retail Trade Transport, Storage of Fossil Professional Services Manufacturing Electricity Supply Construction Total Investment and -2% elect. price -0.5 0.5 1.5 2.5 3.5 All Other Wholesale/Retail Trade Transport, Storage of Fossil Professional Services Manufacturing Electricity Supply Construction Total Investment and +2% elect. price Total Investment, 2% fall in Electricity Prices 5.42 Direct 2.25 Electricity Supply 0.42 Construction 1.83 Indirect 1.35 Induced 0.61 Electricity Supply 0.10 Retail, Accom, Food 0.10 Investment Demand 1.07
Electricity Supply Net Employment 0.6 net jobs per MW in domestic electricity supply services (0.4 direct, 0.2 indirect and induced) Long term direct employment with structural importance for Ireland. 0.08 net jobs per MW in repairs Opportunity to capitalise on new growth sector in wind energy and develop indigenous expertise in wind management.
Construction of Wind and Transmission Grid Net Employment Construction employment gradually increases up to 2020. Approx 2.7 net construction jobs per MW (in job-years) in entire economy in 2020 (1.8 direct, 0.2 indirect and 0.7 investment induced) Short term boost to Irish construction sector Evenly dispersed between BMW and S&E 0.07 professional services jobs per MW (engineering, legal, etc.) 0.05 finance jobs per MW (both ~50% import intensity) 0.04 less jobs per MW in transport and storage of fossil fuels
Manufacturing Net Employment 0.2 net Irish jobs per MW in manufacturing (0.14 indirect, 0.06 induced) assuming a 66% import intensity. Ireland is well placed to capture 22% of investment in wind manufacturing (foundations, controls and instrumentation). Other manufacturing activities require scale/policy incentives 0% 10% 20% 30% 40% 50% 60% 70% PercentageofTotalCost Ireland's Capacity to Capture Onshore Wind Supply Chain No Local Supply Chain Less Well Positioned Averagely Positioned Well Positioned
Findings, Other Factors & Future Analysis In addition to environmental and security of supply benefits, wind deployment has positive impact on GDP & Net Employment Other Factors Omits impacts on amenity value, housing prices, tourism. Similarly ignores ancillary benefits: - supply chain development, target penalty cost, security of supply, avoided environmental costs. Future Analysis Comparison between various forms of RE investment Further electricity price sensitivities Post 2020 capacity projections and impacts on employment, taking into account projected future investment and duration of feed-in tariffs.
Gross Value Added by 20 NACE Industry Sectors, 2013 Agriculture, forestry, fishing Mining and quarrying Manufacturing Electricity supply Water and waste activities Construction Wholesale and retail trade Transport and storageAccomodation and food services Information and communication Finance and insurance Real estate activities Professional activities Admin Public admin Education Health and social work Arts, recreation Other services Households as employers
Baseline v NREAP/NEEAP figures (2012 prices) Baseline (REMI control forecast) NEEAP/ NREAP (REMI alternate scenario) Total Projected Wind Capacity 2020 2.4 GW 3.5 GW Average Additional Wind Capacity p.a. (2013-2020) 93 MW 241 MW Share of Total Electricity Consumption 2020 22% 32% Wind Investment Cost per MW 1.3 million 1.3 million Average Wind Investment p.a. (2013-2020) 121 million 313 million Total Projected Wind Output 2020 6,327 GWh 9,363 GWh Average Additional Wind Outp