EDR Group Compares Job Stimulus Impacts of Energy Programs


A series of studies by Economic Development Research Group, Inc. shows that the economic impact of energy programs can differ depending on the type of program, the setting, and whether the impact is being assessed for a metropolitan region, a state or the nation. Generally, energy efficiency programs that are well-run and cost-effective tend to generate roughly 35-55 job-years of employment per million dollars of investment, depending on the types of energy efficiency incentives offered and the market segments being targeted. Renewable power programs tend to generate roughly 10-35 job-years of employment per million dollars of investment, depending on the technology being used. (The job creation is at the low end of the range for wind and hydro power, as those energy sources require substantial equipment investment but require less operating labor. The opposite is true for biomass power generation, which requires less technology investment and more ongoing labor to produce the fuel and operate combustion generators). However, these findings do not indicate that energy efficiency programs are more cost-effective than renewable power programs, for the two types of programs have different goals and objectives.

Another important consideration is the quality of jobs. For instance, the wind and solar projects rely more on equipment and create fewer jobs than biomass energy projects, but they can also create higher paying and more technically-oriented jobs. The renewable power programs tend to have higher short-term job impacts (compared to energy efficiency programs) because they fund major construction efforts to build power generating facilities. These programs also promote energy independence and new technology investment, which may also be desirable goals. However, the energy efficiency programs have an advantage that they can sometimes create greater cost savings for businesses, which in turn can create greater cost-competiveness for business attraction.

There are additional differences in terms of energy program impacts on air quality. For instance, energy efficiency (reducing demand) has the most dramatic environmental impact, followed closely by wind power. Since each type of prgram has a unique profile in terms of job creation, income generation, cost implication and environmental improvement, it is quite likely that a combination of all of these different types of energy programs may be needed.

Case Studies

New York State - Economic Impact of a Renewable Portfolio Standard, by EDR Group for NYSDERA, 2008.

The study examined a program of thirty renewable energy projects with a cost of $2.06 billion for additional investment in wind, hydro and biomass generating equipment. Economic analysis by EDR Group showed that it would lead to $4.25 billion of added business output in the state, including $1.38 billion of business output during the construction period and $2.88 billion over the subsequent 20 years. The latter would support an average of 1,138 additional permanent jobs over the subsequent 20 year period (22,676 total added job-years).

Massachusetts - Economic Impact of Wood Biomass Energy, by the University of Massachusetts, Department of Resource Economics and EDR Group for Massachusetts Dept. of Energy Resources, 2007.

The study evaluated a program to develop wood biomass energy production at cost of $377 million (spread over five years). Economic analysis by EDR Group showed that it generate an increase of business output of $270 million over the five-year investment period, generating an average of 2,243 jobs over that construction period (11,215 total job-years). The long-term impact would supporting an average of 593 additional jobs for the following twenty years (total of 11,860 job-years). These numbers reflect the greater labor intensity of wood biomass energy production compared to the less labor-intensive wind and hydro sources).

Wisconsin Focus on Energy - Energy Efficiency and Renewable Energy Programs, by EDR Group and PA Consulting for the Wisconsin Public Service Commission, 2007.

The study evaluated a combination of energy efficiency and renewable energy programs. It showed that the program is leading to significant economic development benefits for Wisconsin's economy. Even without counting market effects, the first year of program operation caused a variety of household and business cost savings and spending changes that altogether supported over 351 jobs in the state, and that impact is growing to 1,417 jobs by the fifth year of program operation (for the low funding scenario). The disposable income generated in Wisconsin from program-generated savings and this additional business activity represents $12 million in the first year, and grows to $85 million by the fifth year of program operation. The impacts inclusive of market effects also grow over time, adding a small impact in the first five years, but then adding roughly three to four percent to jobs and income annually over the 25 year analysis interval. Altogether, the impact on jobs is projected to total 73,000 job-years spread over 25 years, leading to over 2,900 additional jobs in the state during an average year. Total program cost over this year (undiscounted) is estimated to be roughly $1.5 billion.

San Antonio Public Service - Energy Efficiency Program, by KEMA and EDR Group, 2005.

The study examined economic impacts of an energy program intended to promote efficiency and peak energy savings. The estimated program cost over a ten-year period was $34.2 million, including $19.2 million for administration and marketing costs, and $14.8 million of spending for equipment. The economic analysis by EDR Group showed a total economic impact on Bexar County, estimated to be $311 million of additional business sales over ten years supporting 1,753 additional person-years of employment in the county.

Other economic impact studies by EDR Group include natural gas pipelines and biomass power from trash and crops. These various studies span addtiional study areas in Iowa, Massachusetts, Connecticut and Michigan. For more information, see http://www.edrgroup.com/library/energy-environment