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Premium member Presentation Transcript Using JEDI to Estimate Economic Development from Wind Energy : NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC Southern Alliance for Clean Energy Webinar Eric Lantz, NREL April 1, 2011 Using JEDI to Estimate Economic Development from Wind Energy Presentation Overview : Outline NREL’s JEDI Tools Methodology, definitions, & caveats Using JEDI Example Results Understanding variability/sensitivity in results Conclusions Relevant Questions How does JEDI estimate EDI? How should I interpret the results? What factors influence the results? 2 Presentation Overview The JEDI Analysis Tools : The JEDI Analysis Tools Currently public Utility-Scale Wind Natural Gas Coal Geothermal Ethanol Solar (CSP, PV) In process Transmission Water Biopower Offshore, small wind 3 JEDI is used by industry, government, academics, advocates, consultants, and others. Jobs and Economic Development Impacts (JEDI) Model Input Output Methodology : Input Output Methodology Aggregated economic data is used to recreate inter-industry transactions throughout the economy These data demonstrate how spending in one industry affects spending in other industries From inter-industry transaction data, industry specific multipliers are derived Multipliers are used to measure how changes in demand for goods and services in one industry result in changes in demand for goods and services throughout the economy Basic JEDI Methodology for States : Basic JEDI Methodology for States 5 Jobs and economic activity estimates are based on county, state, or regional multipliers; multipliers are grounded in empirical demand and the resulting economic activity for a specific year. Basic JEDI Methodology for Local/County Analysis : Basic JEDI Methodology for Local/County Analysis 6 Economic Development at Multiple Levels : Economic Development at Multiple Levels 2. Equipment production and supply chain On-site labor and professional services 3. Induced economic activity (household purchases due to injection of income) 7 Project Development & Onsite Labor : Project Development & Onsite Labor Sample Jobs: Truck drivers Crane operators Earth moving Cement pouring Management Support 8 Local Revenues, Equipment, & Supply Chain : Local Revenues, Equipment, & Supply Chain equipment manufacturing and sales - Property taxes - Financing, banking, accounting Steel mill jobs, parts, services - blade and tower manufacturers 9 Induced Economic Activity : Induced Economic Activity Money spent on local goods and services from increased revenue: sandwich shops, child care, grocery stores, clothing, other retail, public transit, new cars, restaurants, medical services 10 JEDI Caveats : JEDI Caveats Results are an estimate, not a precise calculation. Results are not a measure of project profitability or viability. Results report gross jobs, not net jobs They do not consider whether a specific project displaces development elsewhere nor do they account for potential changes in electricity rates. Assumptions around local sourcing and procurement are fundamental in determining local economic activity. JEDI default data are based on national industry data and trends for projects 50 MW to 200 MW. 11 The JEDI Model : The JEDI Model The models contain state multipliers, but county or regional multipliers can be acquired and input into the model to carry out analysis on entities other than states Basic User Inputs : Basic User Inputs The user can then accept the default descriptive data or enter their own project specific data. The user chooses the state where the project will be located from a drop down menu and provides basic project level information. Detailed User Inputs : Detailed User Inputs Line item cost inputs are shown here. In addition to construction cost inputs, default values are provided for operating and maintenance and financial parameters or the user can choose to enter their own project specific data. Local share values allow the user to adjust the percentage of local labor that is used in the project Results Summary : Results Summary JEDI then estimates the annual economic impact on jobs earnings and output during facility construction and operation. Interpreting the Results : Interpreting the Results JEDI reports jobs as full time equivalents or 2,080 hour units Projects may take more or less than a year to complete, in these cases construction can be adjusted to reflect the impact during the actual period of construction Example: JEDI reports 100 Construction period jobs. This could be 25 workers supported for 4 years or 200 workers supported for 6 months. Operations period impacts are also FTE’s but because they are reported as annual impacts you can interpret these as long-term jobs Earnings reflect the salaries and benefits to laborers Output is the sum value of all goods and services provided at each layer of the supply chain Example: For a wind turbine it is the cost of the iron ore, plus the cost of the rolled steel, plus the cost of the assembly, plus the cost of the final project This is in contrast to metrics like GDP or GSP which reflect only the sum of the value added (i.e. sale price less material input prices) or the market value of final goods and services JEDI analyses are a measure of Gross Economic Impacts Total Economic Activity to Texas (1,400 MW) : Total Economic Activity to Texas (1,400 MW) 17 Assuming construction and 20 years of operations, this equates to more than $1.7 billion in total economic activity.* *$150M x 4+$56M x 20 = $1.7B Preliminary Results Employment & Economic Activity to Texas by Year (1,400 MW) : Employment & Economic Activity to Texas by Year (1,400 MW) 18 Preliminary Results Total Local Results (100-Mile Radius) 1,400 MW : Total Local Results (100-Mile Radius) 1,400 MW 19 Assuming construction and 20 years of operations, this equates to nearly $950 million* in total economic activity to communities within 100 miles of these projects. *$33M x 4+$41M x 20 = $950M Preliminary Results Employment & Economic Activity to Local (100-Mile Radius) Communities by Year (1,400 MW) : Employment & Economic Activity to Local (100-Mile Radius) Communities by Year (1,400 MW) 20 Preliminary Results Default and Project-Specific Local (100-Mile Radius) Results (1,400 MW) : Default and Project-Specific Local (100-Mile Radius) Results (1,400 MW) 21 Preliminary Results Explaining variability in economic development impacts : 22 Explaining variability in economic development impacts Size and cost of the project Higher costs often results in increased impact for both construction and O&M Size and diversity of the local economy Level of analysis Multiplier effect Developer preferences Local share/local purchase coefficient Magnitude and allocation of project revenues e.g. community wind Conclusions : Conclusions 23 The JEDI model is a user friendly tool to estimate gross jobs, earnings, and economic output from wind power projects Download the model at: http://www.nrel.gov/analysis/jedi/ Results can vary significantly based on user/project specific inputs and the level of analysis Using data that accurately reflects your area and projects is critical to generating robust results Even rural, sparsely populated regions can experience surprisingly high levels of economic development activity. Economic development is a function of the ability to supply projects with goods and services, not simply population. Slide 24: 24 Eric Lantz Research Analyst Strategic Energy Analysis Center National Renewable Energy Laboratory http://www.nrel.gov/analysis/ http://www.windpoweringamerica.gov/ 1617 Cole Blvd. Golden, CO 80401-3393 P: (303) 384-7418 E-mail: Eric.Lantz@nrel.gov Questions NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.