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1. 1 JEDI Jobs and Economic Development Impacts National Renewable Energy Laboratory NRECA Webcast Presentation April 10, 2006Presented by Marshall Goldberg, MRG & Associates Suzanne Tegen, NREL
2. 2 Energy and economic development are closely connected
3. 3 New wind power or other new renewable generation projects have economic impacts in rural communities and strengthen the local economy.
Increased dollar flows provide direct benefits to the rural economies. Before JEDI was available for comparing different sources of electricity and their economic impacts, I developed a more involved approach to economic impact analysis. I’ll talk about this method and show some results before we hear about JEDI.Before JEDI was available for comparing different sources of electricity and their economic impacts, I developed a more involved approach to economic impact analysis. I’ll talk about this method and show some results before we hear about JEDI.
4. 4 Construction
Operations and maintenance
Property tax revenues
Landowner revenues
Manufacturing
Multiplier effect
Net economic development impacts of wind vs. fossil fuels Economic Development Impacts
5. 5 Dollar flow analysis Calculating the direct economic impacts of new wind plants
in comparison to new coal and natural gas plants
Construction of the plant (parts and labor)
20 years of operation (parts and labor)
Fuel and fuel transport
Property taxes
Landowner revenues
Project financing
6. 6 As you can see, by putting in a coal, gas or wind plant, most of the money spent on construction and over the life of the plant will go out of state. This is because of out-of-state materials, workers, and financing. However, my research shows that a larger percentage of money stays in-state from wind plants, when compared to coal and gas plants, especially when the coal plants are using out-of-state coal. Note that this shows only DIRECT impacts, unlike what Marshall was showing you earlier with indirect and induced. As you can see, by putting in a coal, gas or wind plant, most of the money spent on construction and over the life of the plant will go out of state. This is because of out-of-state materials, workers, and financing. However, my research shows that a larger percentage of money stays in-state from wind plants, when compared to coal and gas plants, especially when the coal plants are using out-of-state coal. Note that this shows only DIRECT impacts, unlike what Marshall was showing you earlier with indirect and induced.
7. 7 Dollar flow analysis How will coal, natural gas and wind power effect your region’s economy?
These are just the in-state benefits from new wind, natural gas and coal plants. This analysis assumes that coal will come from out-of-state. However, even with in-state coal, the benefits do not exceed those of wind power. These are just the in-state benefits from new wind, natural gas and coal plants. This analysis assumes that coal will come from out-of-state. However, even with in-state coal, the benefits do not exceed those of wind power.
8. 8 Dollar flow analysis:in-state vs. out-of-state A new large wind project in Colorado will bring benefits to the state’s economy. Direct benefits are shown here.
These are the benefits from wind. If we remove the out-of-state portion, we’re left with what we see on the right – with most of the economic benefit of the wind plant coming from operations and maintenance and property taxes. Values vary with assumptions and location. These are the benefits from wind. If we remove the out-of-state portion, we’re left with what we see on the right – with most of the economic benefit of the wind plant coming from operations and maintenance and property taxes. Values vary with assumptions and location.
9. 9 Economic Impacts of Alternative Generation Michigan We have performed this analysis on four states – these three and also Virginia. But this methodology takes a long time and doesn’t represent the indirect or induced benefits of each resource. In order to have a more user-friendly tool and to incorporate those other effects, we worked with Marshall to create JEDI and JEDI II. We have performed this analysis on four states – these three and also Virginia. But this methodology takes a long time and doesn’t represent the indirect or induced benefits of each resource. In order to have a more user-friendly tool and to incorporate those other effects, we worked with Marshall to create JEDI and JEDI II.
10. 10 JEDI
Instead of using my very involved method which included months of interviews with power plant operators, county assessors, coal and gas associations, etc., NREL decided to use a new version of JEDI. JEDI had already been developed to determine economic impacts from wind. Now we have created JEDI II for natural gas and coal as well. The other advantage to JEDI is that it calculates the indirect and induced benefits of new power generation. Marshall is going to explain the details of this new input-output model.Instead of using my very involved method which included months of interviews with power plant operators, county assessors, coal and gas associations, etc., NREL decided to use a new version of JEDI. JEDI had already been developed to determine economic impacts from wind. Now we have created JEDI II for natural gas and coal as well. The other advantage to JEDI is that it calculates the indirect and induced benefits of new power generation. Marshall is going to explain the details of this new input-output model.
11. 11 JEDI: Key Design Elements Tool to easily identify local economic impacts of power plants (wind, natural gas and coal)
Available to a broad range of people
Developers, utility personnel, policy makers
User friendly format for all levels of spreadsheet users
Adaptable to access via the Internet
Online instructions
Default data that can easily be overridden by users
Flexible input options
User “Add-in” location feature
12. 12 Project Analysis: It all begins with a specific project. The User inputs..... Minimum Information or
Location (State or County*)
Year of construction
Type of power plant
Size of power plant
*requires additional input-output data More Detailed Information
Construction Costs
(materials and labor)
Equipment Costs (turbines, rotors, towers, etc.)
Other Costs (utility interconnection, engineering, land easements, permits, etc.)
Annual O&M Costs (personnel, materials, and services)
Other Parameters (financial: debt and equity, taxes, and land lease)
13. 13 To determine the total effect of developing a power plant …
Three separate impacts are examined for each expenditure:
Direct
Indirect
Induced
Impacts depend on
the structure of the local economy
spending in the local area
14. 14 Results Project Data
Project Construction Costs (total and local share)
Annual O&M Spending
Debt and Equity Payments
Property Taxes
Land Lease Payments Impacts
Construction Period
Jobs, Earnings, Output
Operating Years (Annual)
Jobs, Earnings, Output
15. 15 Some Important Points to Keep in Mind......
The assumptions that are input greatly impact the results.
Using the defaults gives a reasonable pattern of costs and benefits for constructing and operating a power plant in the United States, including the portion of expenditures that is spent locally.
Project size, location, financing arrangements and site-specific factors influence the construction and operating costs.
The availability of local resources, including labor, materials and locally manufactured components, is another key driver in determining local costs and benefits.
So, the more accurate the user is in providing project information and “local share” information, the better the model results will be!
16. 16 JEDI Jobs and Economic Development Impact ModelAvailable at http://www.windpoweringamerica.govFor More Information Contact:Marshall Goldberg, MRG & Associates530.432.9373 mrgassociates@earthlink.netSuzanne Tegen, NREL303.384.6930 suzanne.tegen@nrel.gov
17. 17 Appendix
18. 18 Methodology Input-Output - Multiplier Analysis
Input-output analysis can be thought of as a method of evaluating and summing the impacts of a series of effects generated by an expenditure (i.e., input).
19. 19 Direct EffectsThese are the on-site or immediate effects created by an expenditure. In constructing a wind plant, it refers to the on-site jobs of the contractors and crews hired to construct the plant. It also refers to the jobs at the plants that build the turbines and the jobs at the factories that produce the towers and blades, among others.
20. 20 Indirect EffectsThis refers to the increase in economic activity that occurs when a contractor, vendor or manufacturer receives payment for goods or services and in-turn is able to pay others who support their business. For instance, this includes the banker who finances the contractor, the accountant who keeps the contractor’s books, and the steel mills and electrical manufacturers and other suppliers that provide the necessary materials, among others.
21. 21 Induced EffectsThis refers to the change in wealth that occurs or is induced by the spending of those persons directly and indirectly employed by the project.
22. 22
State specific multipliers and personal expenditure patterns are used to derive the results. The state multipliers for
employment
wage and salary income
output (economic activity)
personal expenditure patterns
are derived using the IMPLAN Professional model.*
*IMPLAN (Impact Analysis for PLANning) Professional is a social accounting and impact analysis tool. Minnesota IMPLAN Group (MIG, Inc), Stillwater, Minnesota.
23. 23 Sensitivity Analysis
24. 24 Sensitivity ranges