Jobs and Economic Development Impact (JEDI) modeling for Offshore Wind

Transcription

1 Jobs and Economic Development Impact (JEDI) modeling for Offshore Wind Jonathan J. Miles, Ph.D. Center for Wind Energy James Madison University 16 th January 2014

2 What is JEDI? The Jobs and Economic Development Impact (JEDI) models are user-friendly screening tools that estimate the economic impacts of constructing and operating power plants, fuel production facilities, and other projects at the local (usually state) level. JEDI results are intended to be estimates, not precise predictions. ( Based on user-entered project-specific data or default inputs (derived from industry norms), JEDI estimates the number of jobs and economic impacts to a local area that can reasonably be supported by a power plant, fuel production facility, or other project. For example, JEDI estimates the number of in-state construction jobs from a new wind farm. Jobs, earnings, and output are distributed across three categories: Project Development and Onsite Labor Impacts Local Revenue and Supply Chain Impacts Induced Impacts

3 What is JEDI? Users download the appropriate JEDI model and then enter basic information about a project, including the state, location, year of construction, and facility size. The model then estimates the project costs (i.e., specific expenditures), and the economic impacts in terms of jobs, earnings (i.e., wages and salary), and output (i.e., value of production) resulting from the project. The project-specific data include a bill of goods (costs associated with actual construction of the facility, roads, etc., as well as equipment costs, other services, and fees required), annual operating and maintenance costs, the portion of expenditures to be spent locally, financing terms, and local tax rates. While JEDI provides reasonable default values for each of the inputs and all of those necessary for the analysis, the user has the option to adjust project specific data for the following categories of inputs: Construction Costs Equipment Costs Annual Operating and Maintenance Costs Financing Parameters Other Costs

4 What is JEDI? JEDI model defaults are based on interviews with industry experts and project developers. Economic multipliers contained within the model are derived from Minnesota IMPLAN Group's IMPLAN accounting software and state data files. IMPLAN informs the JEDI model with appropriate economic data and state and regional multipliers. Users can incorporate project- and locationspecific data to further tailor model inputs, perform sensitivity analyses, and refine conclusions from model output.

5 The Mid-Atlantic Effort The Center for Wind Energy at James Madison University, was contracted by the National Renewable Energy Laboratory (NREL) and the U.S. Department of Energy (DOE) to perform a study that applies the new Offshore Jobs and Economic Development Impacts (JEDI) model to estimate the economic impacts associated with offshore wind power developed off the coasts of Delaware, Maryland, New Jersey, Pennsylvania, and Virginia.

6 The Mid-Atlantic Effort The major attributes associated with the region were identified and analyzed in order to define likely scenarios for offshore wind development in the region. Relevant data and justifiable assumptions were made to develop three scenarios for JEDI analysis that set upper and lower bounds for how the offshore wind industry could look for the Mid- Atlantic region, while JEDI analysis provides an estimate of the magnitude of the associated economic impacts.

7 The Mid-Atlantic Effort The following were researched thoroughly prior to JEDI analysis: federal and state activities; wind resource; electricity market; cost; transmission infrastructure; ports; existing supply chain; workforce potential. Experts in each state were consulted.

8 Model Inputs JEDI utilizes construction cost data, operating cost data as well as data pertaining to the percentage of goods and services acquired in the region to produce outputs. From a broad perspective, JEDI input variables can be classified into three main categories: Market and Deployment the number and size of wind turbines deployed each year; Regional Investment the percentage, for each component or service, which is being acquired or produced regionally; Cost the cost (per MW capacity) of an offshore wind project.

9 Model Outputs JEDI reports the local jobs (in Full-Time Equivalents or FTEs) and earnings and output supported as a result of projects, pertaining to both construction and operations phase. An FTE is considered equivalent to 2,080 hours of work, and could also mean 2 part-time jobs of 1,040 hours each.

10 JEDI Drivers The JEDI model is built around three major variables Market and Deployment, Regional Investment, and Cost Reduction. For each, three distinct paths with varying rates for how these variables change over time were developed. These paths are used to create a scenario of the offshore industry, determine how much money is being circulated through the regional economy, and through use of the JEDI model, how many jobs the industry can support. Three distinct scenarios, running from 2015 to 2030 for offshore wind energy in the Mid-Atlantic were created, and JEDI was run for each year.

11 JEDI Drivers For Market and Deployment, a conservative, a moderate and an aggressive approach to the deployment of offshore wind turbines in the Mid-Atlantic region were created. For example, For Low Market and Deployment, development of new offshore wind power plants was assumed to be very conservative, with the market being dominated by pilot/demonstration projects and small-scale wind power plants, meaning the growth of the industry is slow, reaching 400 MW in During this period of time, around 12% of all new power plants in the region were from offshore wind, meaning that it would still be a niche technology to complement conventional generating technologies.

12 JEDI Drivers For Medium Market and Deployment, a moderate level offshore wind development in the region was assumed; therefore more consistent growth is observed, reaching 750 MW in By 2030, the offshore wind market would have represented around 30% of all new power plant installations in the Mid- Atlantic region, establishing offshore wind as a mainstream technology.

13 JEDI Drivers For High Market and Deployment, an aggressive level of offshore wind power plant deployment was assumed, where the majority of new power-generating plants derived from offshore wind facilities, reaching a market of 1400 MW by Around 62% of all new power plants in the region are expected to be from offshore wind energy, meaning that it has become the dominant generating technology in the Mid-Atlantic. In addition to adding more generating capacity to the region, outdated and inefficient power plants would be decommissioned and replaced with newer technologies such as offshore wind, particularly because the offshore wind market approaches and exceeds the historical growth rate from 2027 through 2030.

14 JEDI Drivers Three different paths for how the Regional Supply Chain could develop were built. The higher the regional share percentage in a specific line item, say wind turbine blades, the more money is being circulated into the regional economy, thereby supporting more regional jobs. Each individual component was examined separately when determining its potential for regional sourcing. The regional share of many of these components and services were not expected to change over time, called static components and services. Components and services of which the regional investment is expected to vary over time are called dynamic components and services, generally those which are easily produced regionally, such as concrete or legal services

15 JEDI Drivers Three simple Cost Reduction models were established for application to the JEDI model, which may occur due to technological advancements, economies of scale, and other factors, such as improvement in manufacturing and deployment efficiency. For the Low Cost Reduction path, limited development in offshore wind energy technologies, manufacturing efficiencies and deployment efficiency was assumed. For the Medium Cost Reduction path, a more aggressive cost reduction model was applied, representing more significant technological advances, more efficient manufacturing, assembly and deployment of offshore wind turbines. For the High Cost Reduction path, optimal improvements technology improvements and efficiency was assumed. It was also assumed that favorable federal and state policies help further reduce the capital costs of offshore wind power plants.

16 Provided within Economic Impacts of Offshore Wind fact sheet published by the U.S. Department of Energy in January RESULTS

17 Mid-Atlantic Regional Resource Center Partnership between Kearns & West, Inc. (Washington, D.C.) Mid-Atlantic Renewable Energy Coalition (Delaware) Center for Wind Energy at James Madison University (Virginia)

18 Mid-Atlantic Regional Resource Center Address legal, regulatory, and financial challenges where novel solutions are needed through a regional regulatory toolkit and sustained stakeholder dialogue; Provide information and direct support to priority local and regional decision makers; Advance the distributed/community wind model; and Provide education and outreach regarding the need to develop transmission.

19 Mid-Atlantic Regional Resource Center Specific areas of engagement potentially of interest to VOWDA and VOW: polling legal and regulatory data analysis, visualization, dissemination comprehensive (one-stop shopping) web-based presentation of resources and tools