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

• SEAI’s 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

% o

f to

tal ele

ctr

icit

y

gen

era

tio

n

GW

h

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

201

3

201

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201

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201

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201

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201

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202

0

Av

er.

An

nu

al

Gen

era

tio

n,

GW

h

GW

Cap

acit

y

Electricity Generated by Wind Baseline and NREAP/NEEAP Scenario

. BASELINE NREAP Additional

Assumptions in the Baseline -

What if we don’t 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%

Perc

en

tag

e o

f T

ota

l C

os

t

Ireland's Capacity to Capture Onshore Wind Supply Chain

No LocalSupply Chain

Less WellPositioned

AveragelyPositioned

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.

Sarah.Stanley@seai.ie

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 storage Accomodation 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 Output p.a. (2013-2020) 290 GWh 670 GWh

Average no. of turbines p.a. (2MW turbine, 30% load factor) 55 127

REFIT Price Onshore Wind c/kWh (2012) 6.84 6.84

Ave. Value of Additional Wind Output p.a. (2013-2020) €19 million €45 million

Ave. Tr. Grid Capital Investment Cost p.a. (2015-2020) €145 million

Average Transmission Grid O&M Cost p.a. €6 million