Employment Impact of using RE Sources in Electricity Generation - - PowerPoint PPT Presentation

Employment Impact of using RE Sources in Electricity Generation

Barbara Breitschopf & Carsten Nathani & Gustav Resch Presentation of methodological outline and main results

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How to assess employment impacts of RE deployment – methodology Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Application of gross approach

Background

• Tremendous growth of RE capacities worldwide:
• PV: 74% in 2011 (GSR, REN21 2012)
• CSP: 35% in 2011 (dito)
• Wind: 20% in 2011 and 26% between 2006 und 2011 (dito)
• about 37% of newly installed power capacity is from non-hydro-RE in 2011
• RE power capacities in GW (source: GSR, REN21 2012):
• China: 70 GW,

USA: 68 GW, Germany: 61 GW

1= excl. hydropower; incl. hydropower: 1360 GW

Background

• Investments in RE* in billion $ (from: Global Trends in RE Investments 2012, UNEP & Frankfurt School

2012):

What are the economic implications of investments in / deployment

• f RE ?

* including small hydropower

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Background

Many impact studies have been conducted but with diverging results due to different methodological approaches, system boundaries and assumptions the IEA-RETD* initiated and funded a project:

• The Economic and Industrial Development (EID)-Employ project:
• provide a better understanding of key parameters and mechanisms

that determine/influence the impacts of RE on employment;

• review employment impact studies and elaborate guidelines to assess

employment impacts. This includes the identification of data sources and other inputs;

• Objective: to get comparable results based on a consistent and homogenous approach; to

define impacts or types of impact study;

• Target group: policy maker and analysts
• assess gross employment of RETD countries where data is available

by applying the guidelines and document the results of the project

Text

* (Renewable Energy Technology Deployment with its current members Canada, Denmark, France, Germany, Ireland, Japan, Netherlands, Norway, and United Kingdom).

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Application of gross approach

Text

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Principal approach: At what we are looking?

• define boundaries of the RE industry*

(example wind power plant (WPP))

Text

WPP: Wind power plant WT: Wind turbine MANUFACTURING OPERATION CONSTRUCTION AND INSTALLATION Project development

• and

planning Assembly

• f

WPP Opera on

• f

WPP Demoli on

• f

WPP Founda ons for WPP Manuf.

• f
• ther

components Site

• prepara on

Manuf.

• f

WT tower Manuf.

• f

WT nacelle Manuf.

• f

WT rotor blades Connec on to the net Replace- ment

• f

WPP parts Transport

life cycle phase (O&M) life cycle phase (manufacturing)  the basis of the assessment approaches are the life cycle phases of RE generation technologies

*RE industry: a cross- sectional industry (no separate NACE classification) that comprises all activities related to RE use

Principal approach – system boundaries

• RE industry: cross-sectional industry that comprises all

economic activities related to RE use

• All life cycle phases of a RE facility:
• Manufacturing, construction and installation (MCI)

(incl. reinvestment)

• Operation and maintenance (O&M)
• Demolition
• Breakdown of life cycle phases into economic activities

(important for capturing imports and exports)

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Principal approach: Steps and elements - the functional chain

Text

policies impulses (from prices, income, activities) positive / negative impact mechanisms impacts activities in RE (CE) technologies

Planning &Development, MCI, O&M, fuel supply, ex/imports, ... expenditures for investment, O&M, fuel …. income from RE, prices for power, … direct, indirect and induced effects Δ employment

life cycle phases & technologies

Functional chain: Examples:

• and

• f

• f

• f

• f
• ther

• prepara on

• f

• f

• f

• f

 the life cycle of RE generation technologies is broken down into life cycle phases:

CE: conventional energy; MCI: manufacturing, construction, investment; O&M: operation and maintenance;

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Principal approach: Steps and elements

• activities generate economic impulses in form of

expenditures for investment, fuel supply, O&M, other services and trade or, alternatively, from generation and capacities (for approaches without a model)

• further impulses could come from electricity prices

and income generated in the (RE) industry*

• in addition, there could also be decreased impulses

from the CE industry**

• impulses are translated into different economic

effects via impact mechanisms Text

*RE industry: a cross-sectional industry (no separate NACE classification) that comprises all activities related to RE use ** CE industry: cross-sectional industry that comprises all activities related to CE generation

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Principal approach: Steps and elements

• effects can be
• direct (within the RE or CE industry*)
• indirect (in the upstream industry of the RE or

CE industry*)

• induced via prices and income from RE or CE

industry on sectors beyond the RE or CE industry and its upstream industries

• effects add up to an impact

Text

*RE industry: a cross-sectional industry (no separate NACE classification) that comprises all activities related to RE use ** CE industry: cross-sectional industry that comprises all activities related to CE generation

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Principal approach: steps and elements – impact mechanisms and effects

Text

demand for investment goods investment, O&M services, fuel supply, ... expenditures, trade, upstream RE (or CE) industry RE (or CE) industry price impulse/ cost impulse industry production production

• f

consumer goods employ- ment income

• f

house- holds from RE industry demand for consumer goods

direct effects indirect effects induced effects (type 1) induced effects (type 2)

private con- sumption energy prices for households demand for consumer goods costs in industry employ- ment employ- ment

primary effects secondary effects impulses positive & negative impact mechanisms

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How it should (not) work

Text

 / 

Impact

(GDP, jobs)

?

effects effects effects

 Based on the effects, two main types of impact studies can be distinguished

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Application of gross approach

Text

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Type of impact assessment studies:

Text

Economy-wide jobs

• effects: positive & negative,

in/direct and induced

• impact: net

impact assessment studies

00

RE-industry jobs

• effects: positive, in/direct
• impact: gross

policy makers‘ perception:

• relative labour intensive RE

power generation vs CE

• shift to domestic production

(value added)  “co-benefit” of RE (part of the whole picture)

• negative effect of

high energy prices

• job losses in CE

industry  “net benefit” of RE (whole picture)

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Type of impact assessment studies (gross)

1. Sectoral impact – impact on RE industry: assessment

• f jobs in RE industry = gross impact study

 provides an idea about relevance and structure (technologies) of this industry (RE),  the following questions can be answered:

• Which part of total employment in a country is related

to RE use? Relevance of domestic RE use vs. RE technology exports for employment? Relevance of various RE technologies? Relevance of indirect employment in industries supplying the RE industry

 looks at positive effects of RE deployment Text

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Type of impact assessment studies (net)

• 2. economy-wide impact: assessment of changes in

economy wide jobs (all economic sectors) by RE deployment = net impact study  provides an idea about the economy wide impact of RE deployment on jobs (change of jobs e.g. in consumer goods industry)  takes into account (should) effects at all levels: technology system, micro-level (actors like private and public households, firms or sectors, trade) and macro- economic level  includes in/direct, induced effects (positive and negative)

• f RE deployment  reflects a kind of net benefit of RE

deployment (for the entire economy) Text

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Type of impact assessment studies (net)

 requires a comparison between two situations:

 scenario with RE (advanced RE deployment scenario)  scenario without RE deployment (baseline scenario); both include assumptions about domestic and world-wide economic developments as well as technology developments,

 impacts on employment depend on assumptions about

• fossil energy prices
• exports
• technology costs (learning curves), productivity
• RE deployment status of baseline scenario
• domestic biomass supply
• …

Text

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Type of impact assessment studies: summary

Text

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Type of impact assessment studies: selected approaches

Text impact assessment studies

00

EF-approach:

• data: employment

factors (EF), capacity and generation

• complexity: low

(direct effects) gross IO-model:

• data: IO-

coefficients, cost structures, investments, O&M

• complexity:

moderate (direct & indirect effects) net IO-model:

• data: IO coefficient,

cost structures, MCI, O&M, electricity price

• complexity: direct,

indirect & induced effects, simple scenarios full economic model:

• data:
• macro-economic
• energy sector
• trade
• complexity: direct,

indirect & induced effects, scenarios RE-industry jobs

• effects: positive, in/direct
• impact: gross

Economy-wide jobs

• effects: positive & negative;

in/direct and induced

• impact: net

IO: input-output; MCI: manufacturing, construction, installation; O&M: operation and maintenance

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Application of gross approach

Text

Deciding on approaches

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Deciding on approaches (1)

• distinguish between the type of question to be answered:
• employment in the RE industry

sectoral jobs  gross benefits (partial picture) simple-moderate approach (not complex)

• Economy-wide employment impact due to RE promotion

total jobs net benefits (whole picture) moderate-complex approach

• take into account your available budget and knowledge:
• low budget/know-how  gross impact study or net input-
• utput approach

Text

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Deciding on approaches (2)

• decide on the methodological approaches
• gross impact:
• employment factor approach (direct)
• appropriate employment factors needed, often not available

for country

• technology specific (potentially)
• for quick estimates and updates
• gross input-output approach (direct and indirect)
• consistent framework allows other impacts to be assessed

(e.g. value added)

• integration of technology specific aspects
• difficult to allocate RE industry impulses to IO-table industries

Text

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Deciding on approaches (3)

• decide on the methodological approaches
• net impact:
• net input-output approach
• see gross IO
• limited linear relation between input-outputs, average

coefficients not reflecting marginal changes

• no interaction between prices and quantities
• full economic model
• very complex, know-how intensive
• requires energy sector, socio-economic and

demographic data

• assumptions for scenario development
• best suited to assess future impacts

Text

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Employment factor approach
• Gross IO approach
• Net impact studies
• Application of gross approach

Text

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Gross impact assessment studies – sectoral studies

• employment factor (EF) approach

Text

impacts activities in RE (CE) technologies

MCI, O&M, fuel supply, ... Direct effects employment

life cycle phases & technologies

Functional chain: Examples: Steps: determine system boundaries determine activities and technologies document calculations and results calculate employment

Employment factor approach: methodology

• Employment factor: employment needed to perform an

activity in the RE facility life cycle (e.g. 3 FTE-years per MW wind power plant installed)

• Calculation steps:
• Determine system boundaries
• Determine activity values and employment factors
• Determine domestic activity level by incorporating imports and

exports

• Calculate direct employment
• Document methodology and results

Employment Factor approach: calculation steps

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input data:

• installed

capacities, fuel input, electricity generation

• imports, exports
• employment

factors determine

• technologies
• life cycle

phases

• activities

1 2 3

calculate direct employment determine system boundaries determine activity values and employment factors

4

document calculations and results

Employment factor approach: data requirements and sources

• Annual data on installed capacities, net capacity increase

(MW), biomass fuel input and power generation (GWh) by technology

• Sources: RES statistics (e.g. IEA), industry associations, RES

studies

• Data on import and export (shares) by activity
• Data are only partly available from trade statistics; other

sources: industry associations and enterprises, RES studies

• Employment factors by technology and activity
• Sources: employment requirement / cost analyses, estimates

from associations, enterprises, experts

Employment factor approach: example wind power plant

This example shows exemplary employment factors and activity levels for the MCI and the O&M phase of a wind power plant. Abbreviations:

• WT: Wind turbine
• WPP: Wind power

plant

• FTE: Full time

equivalent

• a: year
• MCI: Manufacturing,

construction and installation

• Domestic

share (incl. net exports) Employ- ment factor

• Activity
• Activity

level

• parameter

Activity value

• Value

Unit Project development and planning New capacity installed 1,500 MW 100% 0.8 (FTE * a) / MW Manufacture

• f

WT towers New capacity installed 1,500 MW 80% 1.2 (FTE * a) / MW Manufacture

• f

WT nacelles New capacity installed 1,500 MW 110% 1.3 (FTE * a) / MW Manufacture

• f

WT rotor blades New capacity installed 1,500 MW 180% 0.7 (FTE * a) / MW Construction and installation

• f

WPP New capacity installed 1,500

• MW

100% 3.0 (FTE * a) / MW Operation

• f

WPP New capacity installed 10’000 MW 100% 0.2 FTE / MW

Discussion: Employment factor approach

• Strengths:
• Potentially technology-specific, if reliable data available
• Low-cost approach and easy to use, if employment factors

available

• Good for fast estimates and updates
• Limitations:
• Reliable sources for country specific employment factors are

scarce

• Exports are difficult to integrate
• Only direct employment

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Employment factor approach
• Gross IO approach
• Net impact studies
• Application of gross approach

Text

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Gross impact assessment studies – sectoral studies

• gross IO approach

Text

impulses (activities) positive impact mechanisms impacts activities in RE (CE) technologies

MCI, O&M, fuel supply, ex/imports, ... expenditures for investment, O&M, fuel …. … direct, indirect effects employment

life cycle phases & technologies

Functional chain: Examples: Steps: determine expenditures for RE use assess domestic

• utput by industry

determine system boundaries determine activities and technologies document calculations and results calculate employment

Gross IO modelling: methodology

• Combines techno-economic data for RE technologies with

economic input-output modelling

• Calculation steps:
• Determine system boundaries
• Determine expenditures for RE use, allocate to cost

components and industries

• Calculate domestic output by RE technology and by industry
• Calculate direct and indirect employment
• Document methodology and results

Gross IO modelling: calculation steps

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1 2 3

calculate domestic

• utput by

industry determine system boundaries determine expenditures for RE use

determine

• technolo-

gies

• life cycle

phases

• activities

input data:

• installed

capacities, fuel input, electricity generation

• specific

investment, O&M, fuel costs

5

document calculations and results calculate direct and indirect employment

4

input data:

• cost

structures

• allocation
• f costs to

industries

• imports

and exports input data:

• input-
• utput table
• sectoral

employmen t data

• imports and

exports

Gross IO modelling: data requirements and sources

• Annual data on installed capacities, net capacity increase

(MW) and power generation (GWh) by technology

• Sources: RES statistics (e.g. IEA), industry associations, RES

studies

• Techno-economic data
• Specific installation, O&M, fuel (and demolition) costs by

technology (e.g. EUR/kW or EUR/MWh)

• Cost structures: breakdown of specific costs by cost component

/ activity

• Allocation of cost components to industries of IOT
• Sources: Techno-economic studies, expert’s estimates
• Input-output table (IOT) of a country and sectoral

employment data

• Sources: usually published by statistical office

Gross IO modelling: example wind power plant

Input data for the example Variable Unit Value Total installed capacity MW 10,000 New capacity installed MW 1,500 Specific installation cost EUR/MW 1,553 Specific O&M cost EUR/MW 37 Specific capital cost EUR/MW 147

Gross IO modelling: example wind power plant

Input data for the example calculations Cost components Cost shares Import shares Export shares Allocation to industries

• f

IOT Construction

• f

WPP 100%

• Planning

4% 0% 0% Business services (74) Manufacture

• f

WT towers 15% 20% 30% Man.

• f

metal structures (28) Manufacture

• f

WT nacelles 37% 20% 100% Machinery (28) Manufacture

• f

WT rotor blades 15% 30% 80% Plastics processing (25) Transport 4% 0% 0% Ground transport (60) Site preparation 3% 0% 0% Construction works (45) Foundations

• f

WPP 6% 0% 0% Construction works (45) Assembly

• f

WPP 6% 0% 0% Machinery (28) Connection to the net 10% 0% 0% Electrical industry (31)

Gross IO modelling: example wind power plant

Results of the example:

Variable Unit Construction

• f

domestic WPP Operation

• f

domestic WPP Export Total Expenditure m EUR 2'329

• 1'834
• 4'163
• Domestic
• utput

m EUR 1'982

• 1'834
• 1'246
• 5'062
• Direct

employment EP 13'737

• 3'517
• 6'689
• 23'943
• Indirect

employment EP 10'820

• 2'118
• 6'779
• 19'718
• Total

employment EP 24'557

• 5'636
• 13'468
• 43'661

Discussion: Gross IO modelling

• Strengths:
• Comprehensive and consistent framework
• Allows to calculate other economic impacts within the same

framework (e.g. value added)

• Open for integration of results from other sources (e.g.

enterprise surveys)

• Direct and indirect employment
• Limitations:
• Aggregation bias due to assumption: industries in the IO

model are adequate proxies for companies in the RE industry but: detailed technology specific information can be integrated in the framework

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Net IO model and full economic model
• Application of gross approach

Text

43

Net impact assessment studies

• net IO approach and full economic model

Text

policies impulses (prices) impulses (activities) positive / negative impact mechanisms impacts activities in RE (CE) technologies

P&D, MCI,O&M, fuel supply, ex/imports, ... expenditures for investment, O&M, fuel …. income from RE, prices for power, … direct, indirect induced and

• ther effects

Δ employment

life cycle phases & technologies

Functional chain: Examples: Steps: determine expenditures for RE, price RE income impulse assess domestic

• utput by

industry determine system boundaries determine activities and technologies document calculations and results calculate employment take differences

• f scenarios

Net impact assessment study – steps for net IO approach

• Determine economic activities as well as technologies
• Determine expenditures (investment, O&M) for RE and CE

(scenarios) use, allocate to cost components and industries

• Calculate direct, indirect and induced effect (type 1) by

running the IO partial closed quantity model  domestic

• utput
• Calculate electricity price impulse and impact of electricity

price on all other prices by running the IO partial closed price model

• Calculate the impact of price changes on consumption and

run the IO quantity model

• Take the difference of total outputs of the two scenarios

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Net impact assessment study – steps for full economic model

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Scenario development:

• without-

scenario,

• with-scenario
• assumption

about trade, prices, … Impact mechanisms:

• demand for RE and CE

technology products.

• consumption and non-RE

production sectors.

• trade, competitiveness

and innovation Model types:

• equilibrium
• macro-

econometric ,

• systems

analysis With-without comparison 1 2 4 3 impulses from RE impact mechanism s impacts development of scenarios

selection of model type

Net impact assessment study

Characteristics Net IO model Full economic model Approach Closed quantity model, closed price model Systems dynamic based, econometric, GE/CGE,... model Induced effects (every sector of the economy) RE (CE) income impulse Price impulse: limited to consumption RE (CE) income and price impulse: Other effects: could take into account merit

• rder effect, CO2 prices, crowding-out of

investments. Exports; imports Ex/imports: as a share of sector

• utput
• r sectoral input.

Ex/imports : as share of sector output or sectoral input, trade module Time horizon Present – future (simple assessment) Future Scenario development limited baseline or counterfactual scenario baseline Dynamics Limited Feedback loops, multiplier and accelerator, (endogenous) technical change. Price and quantity changes Changes in prices or quantity are completely passed through to total

• utput.

Price or quantity changes could be modelled as a result of output and price changes. Changes due to merit-order effect or CO2 prices can be depicted in the model. Economic relations

• -> input-output relations between

industry and final demand, payment sector (linear-limitational)

• -> input-output relations, national

accounting, trade, job market, fiscal, climate, energy sector, household consumption, ... policies

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Content

• Background information on the project
• Principal approach
• Types of impact assessment studies
• Deciding on approaches
• Gross impact studies
• Net impact studies
• Application of gross approach

Text

Application of gross IO modelling approach to RETD countries

• Aim: to test and demonstrate feasibility of approach
• Input data and results documented in annex to guidelines

and excel files

• Technology data on capacities, electricity generation,

biomass inputs and costs taken from Green-X database as default

• Country-specific data from existing studies used where

feasible (esp. data on expenditures, imports and exports)

• Simplifying assumptions for some data due to restricted

project resources (esp. on imports and exports of RE technology)

Application of gross IO modelling approach to RETD countries: tentative results

Country Direct employment Indirect employment Total RE related employment Share of total employment in the country Employed persons Employed persons Employed persons direct employment direct + indirect employment Canada 32'000 21'700 53'700 0.19% 0.32% Denmark 27'200 21'700 48'900 0.95% 1.71% France 29'800 19'100 48'900 0.11% 0.18% Germany 150'100 120'500 270'600 0.37% 0.67% Ireland 2'600 700 3'300 0.13% 0.17% Japan 27'600 33'000 60'600 0.04% 0.09% Netherlands 9'200 11'600 20'800 0.11% 0.24% Norway 10'200 6'200 16'400 0.39% 0.63% United Kingdom 16'200 11'000 27'200 0.06% 0.09%

For additional information on EID-Employ Online: http://iea-retd.org/archives/ongoing/employ or http://www.isi.fraunhofer.de/isi-de/x/projekte/employ_314927_bf.php Contact: IEA_RETD@ecofys.com or barbara.breitschopf@isi.fhg.de

THANK YOU!

Fraunhofer-Institut für Systems and Innovation Research (ISI), Karlsruhe, Barbara Breitschopf Rütter + Partner Socioeconomic Research + Consulting, Switzerland, Carsten Nathani Vienna University of Technology, Energy Economics Group (EEG), Austria, Gustav Resch