Alternative Energy Job Gains in Ohio

Background

Estimates of the effect of alternative energy on jobs vary wildly (e.g. 1, 2) and are controversial. In general, advocates only consider jobs created and opponents only consider jobs lost. Advocates need to realize that alternative energy displaces existing jobs at power plants and coal mines. Opponents need to recognize that alternative energy creates jobs; someone has to insulate the buildings and install the solar panels.

Renewable Energy

Since Ohio has less than two percent renewable energy (3), job changes should be small. This is confirmed by Table 1, which shows that even the largest estimates are well below one percent of the 5.2 million work force (4). There is a marked difference between the two parts of the table – job gains are from surveys (‘experiment’) while job losses are from computer analysis of the state’s economy (‘theory’).  There are problems with both approaches. The definition of green jobs is controversial (7) making the gains uncertain. The problems with losses are worse. The first two entries under ‘Computer Analysis’ use costs comparisons that are ‘misleading’ according to the leading authority on the subject (8). Analysis leading to the largest loss under ‘Computer Analysis’ uses a statistical model which answers the question, “What is my worst-case scenario?”(9). The last entry in Table 1 would only be valid if an extremely unfavorable cost difference between wind and fossil fuels persisted for a long time.

Table 1. Renewable Energy Job Changes

Jobs

Years

Analyzed

 

Reference
Survey
19,000 (a) 2012 (5)
14,400 (b) 2014 (1)
Computer Analysis
(9,753) 2008-25 (6)
(3,590) 2018 (c) (2)
(29,366) 2015

(2)

(a) out of 31,000 alternative energy jobs

(b) Out of 71,000 alternative energy jobs

(c) Uses a 2013 prediction of 2018 costs

 

We can estimate direct job losses due to coal plant closings at about 100 per plant (10), making a small dent in the job figures in Table 1. Ohio would need to quadruple its wind output to put one coal plant out of production.

 

Energy Efficiency

Efficiency job estimate are limited to the same surveys as above. Unlike renewable energy, I am unaware of any estimates of job losses due to energy, except for individual plants (10).  Between 2008 and 2013 Ohio lost about 3000 MW of coal plants and gained about 1500 MW of natural gas plants (11). At about 500 MW per coal plant, the job losses amount to about 300 workers.

 

 

Table 2 Efficiency Job Changes

Jobs Years

Analyzed

 

Reference
Survey
12,000 (a) 2012 (5)
57,000 (b) 2014 (1)

(a) Out of 31,000 alternative energy jobs

(b) Out of 71,000 alternative energy jobs

 

Combined

According to an OSU computer analysis, the combination of renewable energy and efficiency produce 3,200 jobs between 2008 and 2012 (13).

 

Discussion

The majority of the data shows job gains, which is not surprising. Since wind and solar are more labor intensive than fossil fuels, many more jobs are created by renewable energy than are displaced. Subtracting jobs displaced from the surveys (1, 5) makes no material change.

Conversely, subtracting survey results from the computer analyses (2, 6) changes the picture significantly.  Even if the 29,000 job loss in Ref. (2) were correct, the total job loss is halved. Further, subtracting the gain in efficiency jobs from it, turns a loss into a large gain. The other computer analyses turn into gains, even if efficiency is ignored.

I conclude that alternative energy in Ohio has resulted in job gains in the tens of thousands. In a separate report I pointed out that green energy has created more jobs in Ohio than shale mining (14).

References

(1) Environmental Entrepreneurs; Clean Jobs Ohio, May 2015;

http://www.cleanjobsohio.org/

(2) Randy T Simmons, et al., Renewable Portfolio Standards: Ohio, Utah State University, April 2015 http://emsc.legislature.ohio.gov/testimony

(3) PUCO, How does Ohio generate electricity? http://www.puco.ohio.gov/puco/?LinkServID=07FEA955-9818-B02E-9006A6E6834F7BA6#sthash.9CsGs2qI.dpbs

(4) Bureau of Labor Statistics, May 2014 State Occupational Employment and Wage Estimates

Ohio, http://www.bls.gov/oes/current/oes_oh.htm

(5) State of Ohio, Ohio Alternative Energy Job Survey Analysis, February 2013

http://www.lwvohio.org/assets/attachments/file/ODSA%20job%20survey%20(1).pdf

(6) American Tradition Institute, The Cost and Economic Impact of Ohio’s Alternative Energy Portfolio Standard, April 2011 http://www.atinstitute.org/wp-content/uploads/2011/04/ATI_OH_RPS_study.pdf

(7) Why don’t some state officials want you to read this report on ‘green’ energy jobs?, Columbus Dispatch, November 17, 2014 http://www.dispatch.com/content/stories/business/2014/11/16/report-on-green-energy-jobs-was-put-on-ice-during-debate.html

(8) The exact quote is “Since projected utilization rates, the existing resource mix, and capacity values can all vary dramatically across regions where new generation capacity may be needed, the direct comparison of LCOE across technologies is often problematic and can be misleading as a method to assess the economic competitiveness of various generation alternatives.”  Energy Information Administration, Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2015 http://www.eia.gov/forecasts/aeo/electricity_generation.cfm

(9) David Harper, An Introduction To Value at Risk (VAR), Investopedia, December 28, 2015

http://www.investopedia.com/articles/04/092904.asp?no_header_alt=true

(10) First Energy closing 6 coal-fired power plants, Ohio.com, January 26, 2012 http://www.ohio.com/news/break-news/firstenergy-closing-6-coal-fired-power-plants-1.257090

(11) EIA, Existing Electric Power Plant Generating Capacity By Energy Source by Producer by State Back to 1990, http://www.eia.gov/state/search/#?1=102&2=216

(13) Anon., Economic Analysis of Ohio’s Renewable and Energy Efficiency Standards, November 18, 2013 http://www.ohiomfg.com/wp-content/uploads/2013-11-22_lb_energy_deeps_nov_13_final.pdf

(14) A. R. Rosenfield, Green Energy Has Created More Jobs In Ohio Than Shale, January 6, 2016 https://alanpeg.wordpress.com/2016/01/06/green-energy-has-created-more-jobs-in-ohio-than-shale-2/

 

 

 

 

 

Green Energy has Created More Jobs in Ohio than Shale

Update of 12 Sept. 2015 posting:

The following quote from the latest Ohio shale jobs survey makes one wonder why the state is pushing shale and discouraging renewables, which provide many more jobs:

“Employment (2011 Q4 to 2014 Q4) … • Core shale-related industry employment (such as pipeline construction and well drilling) was up 7,207 (96.6 percent). • Ancillary shale-related industry employment (such as freight trucking and environmental consulting) increased 8,463 (5.0 percent)”.(a)

Comment: Total shale jobs created since the end of 2010 is 20,064which is far short of the Chamber of Commerce prediction of 65,680.(b)   At the same time there are 89,000 green energy jobs in the state(c) – over four times as many and up 58,000 since 2012(d).

References

(a) Ohio Department of Job and Family Services; Ohio Shale, Quarterly Economic Trends for Ohio Oil and Gas Industries, July 2015;

http://ohiolmi.com/OhioShale/Ohio%20Shale%20Report_4Q_2014.pdf

(b) Ohio Chamber of Commerce Educational Foundation; Economic Potential for Shale Formations in Ohio, n. d.

  http://www.slideshare.net/MarcellusDN/research-study-economic-potential-for-shale-formations-in-ohio

(c) Environmental Entrepreneurs; “Clean Jobs Ohio”, May 2015;

http://www.cleanjobsohio.org/

(d) State of Ohio,  Ohio Alternative Energy Job Survey Analysis February 2013, http://www.lwvohio.org/assets/attachments/file/ODSA%20job%20survey%20(1).pdf

Recent Data Questions Traditional LCOE Estimates

This post uses 2015 information to demonstrate that wind and solar power purchase agreements (PPA) are the best indicators of the renewables’ cost and should be used when comparing them to conventional sources.

When a company plans to construct a wind or solar project, they calculate the cost of building and operation over a long period, say 20 years. The also estimate the amount of electricity to be produced, divide the two results, add a small profit, and obtain a PPA. Errors are costly; too low an estimate and the company will lose money, too high an estimate and the company may lose a competitive bid.

Economic theorists use the same kind of process to calculate levelized cost of energy (LCOE). As shown in the Table, their results tend to vary wildly.

Wind

The differences among different researchers are huge. More importantly, only the spread in Lazard data straddles the actual cost. The lower bound of the EIA data, which have been used extensively by renewable energy opponents, is twice the true cost. And the IER cost is five times the true cost. If IER is correct, companies selling wind farms are losing over 80¢ on the dollar.

Industrial  Solar

Although the PPA data base is small, the same trends are seen as for wind. The Lazard spread straddles the actual result, while the EIA is a gross overestimate.

Table of Cost/Price of Renewable Energy

(All values in $/MWh; sources listed below)

A. Wind

PPA = 22, Ref. LBL
LCOE
Source Minimum Typical Maximum
EIA (a) 43 51 59
IER 96 105 113
LAZARD 14 39 63

(a) Includes subsidy; published value omits recently-renewed subsidy.

B. Industrial Solar

PPA = 55, Ref. SERA
LCOE
Source Minimum Typical Average
EIA 89 114 176
LAZARD 41 49 57

Sources

EIA: Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2015, http://www.eia.gov/forecasts/aeo/electricity_generation.cfm

IER: T.F. Stacy & G. S. Taylor, The Levilized Cost of Electricity from Existing Generation Resources, June 2015 http://instituteforenergyresearch.org/wp-content/uploads/2015/06/ier_lcoe_2015.pdf

LAZARD: Lazard, Levelized Cost of Energy Analysis 9.0, 17 Nov. 2015, https://www.lazard.com/media/2390/lazards-levelized-cost-of-energy-analysis-90.pdf

LBL: Ryan Wiser, et al., 2014 Wind Technologies Market Report, Aug. 2015 https://emp.lbl.gov/sites/all/files/lbnl-188167_1.pdf

SERA: M. Makyhoun, et al. Utility Solar Market Snapshot, May 2015 https://www.solarelectricpower.org/media/322918/solar-market-snapshot-2014.pdf