Offshore Wind Jobs and Economic Development...

0

E N E R G Y

Sponsored by

Offshore Wind Supply Chain Working Group Webinar

“Offshore Wind Jobs and Economic Development Potential”

May 30, 2012 1:00 PM- 2:00 PM (EDT)

Panelists: Bruce Hamilton, Director, Navigant Consulting Eric Lantz, Research Analyst, National Renewable Energy Lab Jay Paidipati, Associate Director, Navigant Consulting Faciltator: Fara Courtney, Executive Director, US Offshore Wind Collaborative

©2012 Navigant Consulting, Inc.

E N E R G Y

DISPUT E S & INVESTI GATI O N S • ECONOMI C S • F INAN CI A L ADVISO RY • MANAGEM E N T CONSULT I NG

Offshore Wind Jobs and Economic Development Potential

DOE Offshore Wind Assessment

Presented to:

US Offshore Wind Collaborative

Presented by:

Bruce Hamilton | Navigant

Eric Lantz| National Renewable Energy Laboratory

Jay Paidipati | Navigant

May 30, 2012

2

E N E R G Y

Content of Report

This presentation was prepared by Navigant Consulting, Inc. and the National Renewable Energy

Laboratory for the U.S. Department of Energy – who supported this effort. The work presented in this

report represents our best efforts and judgments based on the information available at the time this report

was prepared. Neither Navigant Consulting, Inc. nor the National Renewable Energy Laboratory is

responsible for the reader’s use of, or reliance upon, the report, nor any decisions based on the report.

NAVIGANT CONSULTING, INC. AND THE NATIONAL RENEWABLE ENERGY LABORATORY

MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED.

Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a

result of their reliance on the report, or the data, information, findings and opinions contained in the

report.

May 30, 2012

Disclaimer

©2012 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See www.navigantconsulting.com/licensing for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC.

http://www.navigantconsulting.com/licensing

3

E N E R G Y

4

E N E R G Y

Jobs And Economic Development » Table of Contents

Table of Contents

1. JEDI Analysis Background

2. Building and Assembling the Model

3. Summary of Preliminary Inputs

4. Forecast Scenarios

5. Economic Impacts

6. Discussion of Preliminary Inputs

5

E N E R G Y

»


Table of Contents





5. Economic Impacts


6

E N E R G Y

Jobs And Economic Development » Basic Methodology

Economic Development Results From Local Capture Of New Investment

Initial CapEx + Ongoing

Operations Expenditures

Local Expenditures

State/Regional Expenditures

International Expenditures

Initial Investment +

Multiplier Effect

Economic “leakage”

7

E N E R G Y

The Jobs And Economic Development (JEDI) Analysis Tools

Currently public • Utility-Scale Wind

• Natural Gas

• Coal

• Geothermal

• Ethanol

• Solar (CSP, PV)

• MHK

In process • Transmission

• Water

• Biopower

• Offshore Wind

• Small Wind JEDI is used by industry, government,

academics, advocates, consultants, and others.


8

E N E R G Y

Economic development impacts accrue at multiple levels.

2. Equipment production and supply chain

1. On-site labor and professional services

3. Induced economic activity (household purchases due to injection of income)


9

E N E R G Y

Jobs And Economic Development » Basic Inputs

10

E N E R G Y

Jobs And Economic Development » Detailed Inputs

11

E N E R G Y

Jobs And Economic Development » Results

12

E N E R G Y

Critical JEDI Caveats

• Results are an estimate, not a precise forecast.

• Results are not a measure of project profitability or viability.

• Results report gross jobs as opposed to net jobs.

• Assumptions around local sourcing and procurement are fundamental in determining local economic activity.

• Jobs are reported as Full-Time Equivalent (FTE) jobs.


13

E N E R G Y

»


Table of Contents





5. Economic Impacts


14

E N E R G Y

Assembling an offshore wind JEDI model presents unique challenges.

Some Critical Factors

• Cost data are limited and often confidential

• Cost data rarely distinguish labor from other goods and services

• Today’s supply chain is centered around onshore wind

• Remains to be seen how transferable existing skill sets are

Approach

• Develop cost and local content inputs based on best available data from the public sphere and within the project team

• Rely on scenario analysis to represent the potential range of impacts

• Present limitations transparently

Jobs And Economic Development » Model Development

Initial cost inputs have primarily been developed from bottom-up cost estimates for individual project elements, based on the expertise, experience, and opinions

of the collective Navigant Consortium.

15

E N E R G Y

Jobs And Economic Development » Model Development

• 500 MW Project

• 3-5 MW Turbines

• 25m Water Depth (Jacket Foundations)

• 100 miles to Staging Port

• 50 miles to Interconnection

• < 30 miles to Servicing Port

• Sited in the Mid-Atlantic

Ph

oto

fro

m T

alis

ma

n E

ne

rgy N

RE

L/P

IX1

78

85

Primary Assumptions Informing Cost Inputs

16

E N E R G Y

»


Table of Contents





5. Economic Impacts


17

E N E R G Y

Initial Construction Period Cost Inputs

Jobs And Economic Development » Summary Of Construction Cost Inputs

Equipment Costs Cost Cost Per KW Percent Of Total Cost

Turbine Costs $917,500,000 $1,835 29.8%

Foundation & Substructure $149,500,000 $299 4.9%

Collection System $78,490,000 $157 2.6%

HV Cable, Converter, & Substations $465,250,000 $931 15.1%

Labor Costs (for which data could be isolated)

Foundation & Substructure Installation Labor $510,964,750 $1,022 16.6%

Project Management (Developer/owners mgmt costs) $8,547,760 $17 0.3%

Development Costs

Insurance During Construction $67,000,000 $134 2.2%

Development Services (Engineering, Legal, PR, Permitting) $28,900,000 $58 0.9%

Ports & Staging $125,000,000 $250 4.1%

Erection/Installation (equipment services only) $189,231,600 $378 6.2%

Air & Marine Transportation $29,755,250 $60 1.0%

Other Costs

Decommissioning Bonding $100,000,000 $200 3.3%

Interest During Construction $162,695,880 $325 5.3%

Due diligence, Reserve Accounts, Bank Fees $160,636,060 $321 5.2%

Miscellaneous $17,394,000 $35 0.6%

Total Construction Cost $3,010,865,300 $6,022 97.9%

18

E N E R G Y

Initial Construction Period Local/Regional Content Scenarios (Mid-Atlantic Region)

Jobs And Economic Development » Summary Of Local Content Inputs

Equipment Costs Low Case Most Likely High Case

Turbine Costs 0% 0% 41%

Foundation & Substructure 2% 6% 66%

Collection System 0% 0% 0%

HV Cable, Converter, & Substations 0% 4% 7%

Labor Costs (for which data could be isolated)

Foundation & Substructure Installation Labor 0% 0% 90%

Project Management (Developer/owners mgmt costs) 10% 100% 100%

Development Costs

Insurance During Construction 0% 0% 0% Development Services (Engineering, Legal, PR, Permitting) 52% 100% 100%

Ports & Staging 100% 100% 100%

Erection/Installation (equipment services only) 25% 50% 100%

Air & Marine Transportation 25% 100% 100%

Other Costs

Decommissioning Bonding 0% 0% 0%

Interest During Construction 0% 0% 0%

Due diligence, Reserve Accounts, Bank Fees 0% 0% 0%

Miscellaneous 0% 0% 0%

Total Construction Local Content (labor, equipment, services) 7% 10% 45%

19

E N E R G Y

Initial Operations Period Cost Inputs (500 MW Plant; 30 Miles to Service Port)

Jobs And Economic Development » Summary Of Operations Cost Inputs

Cost (Annual)

Cost Per KW (Annual)

Percent of Total

Labor

Technician Salaries $2,700,000 $5.40 4.0% Administrative $500,000 $1.00 0.7% Management/Supervision $2,400,000 $4.80 3.5%

Materials and Services

Water Transport $14,000,000 $28.00 20.6% Site Facilities $7,000,000 $14.00 10.3% Machinery and Equipment $3,000,000 $6.00 4.4% Subcontractors $4,500,000 $9.00 6.6% Corrective Maintenance Parts $32,500,000 $65.00 47.8%

Sales Tax (Materials & Equipment Purchases) $1,420,000 $2.84 2.1%

Total Operations Expenditures $68,020,000 $136 100.0%

20

E N E R G Y

Initial Operations And Maintenance Period Regional Content Scenarios (Mid-Atlantic)

Jobs And Economic Development » Summary Of Local Content Inputs

Labor Low Case Most Likely High Case

Technician Salaries 50% 95% 100%

Administrative 95% 95% 100%

Management/Supervision 0% 0% 80%

Materials and Services

Water Transport 95% 95% 100%

Site Facilities 50% 95% 100%

Machinery and Equipment 50% 95% 100%

Subcontractors 50% 95% 100%

Corrective Maintenance Parts 0% 0% 0%

Sales Tax (Materials & Equipment Purchases) 100% 100% 100%

Total Operations Expenditures 35% 46% 52%

21

E N E R G Y

»


Table of Contents





5. Economic Impacts


22

E N E R G Y

» The high-growth scenario is based on total offshore capacity expected under DOE’s 20% Wind Energy by 2030 report.

» Moderate and low-growth targets were selected to assist in isolating the effects of aggregate demand changes.

» Annual capacity additions for four regions were developed, relying on several inputs:

– Reliance/need for enabling technologies (e.g., floating foundations, de-icing)

– Planned projects in each region

– Historical growth trends in the European offshore and U.S. onshore markets

– Supply chain ramp-up expectations

Three Capacity Deployment Scenarios Seek To Provide Insights On The Differential Effects Of Changes In Technology And Regional Demand

Analysis Scenarios » Background

Overall 2030 Demand Estimates

Technology Adoption Assumptions

Annual Regional Capacity Allocations

High (54 GW)

Moderate (28 GW)

Low (10 GW)

High High Low

Atlantic Coast (North & South)

Gulf Coast

Great Lakes

Pacific Coast

23

E N E R G Y

Deployment Scenario Assumptions and Regional Capacity Milestones

Analysis Scenarios » Background

24

E N E R G Y

» In the Low Case, installations are not anticipated to go above 200 MW/Year in this timeframe.

» In all scenarios, significant installations are not observed until 2015.

» The High Case represents a growth rate of 28% per year between 2015 and 2020.

Installations On The Atlantic Coast Could Range from 200 MW/year to more than 1 GW/year By 2020.

Analysis Scenarios » Forecast by Year

Forecasted Deployment Scenarios for The Atlantic Coast

Source: Navigant, 2012

0

200

400

600

800

1,000

1,200

2012 2014 2016 2018 2020

An

nu

al I

nst

alla

tio

ns

[MW

]

High Growth - High Tech

Low Growth – Low Tech

Moderate Growth – High Tech

25

E N E R G Y

»


Table of Contents





5. Economic Impacts


26

E N E R G Y

» We took the Atlantic Coast forecasts discussed and used the Offshore Wind JEDI model to calculate the employment and economic impacts over time.

– We will show the direct, indirect and induced impacts on the following slides.

» These results are still draft as we are still refining our market forecasts, cost inputs, and % local assumptions.

» At this stage, we did not have enough data to look at evolutions in the supply chain over time (that is part of an ongoing task we are also working on for the DOE), so we used the previously discussed % local content assumptions through 2020.

The economic impacts we have are still preliminary.

Economic Impacts » Background

27

E N E R G Y

Our 500 MW reference plant will support ~2,561 local job-years during construction and 260 local jobs during each year of operation.

Economic Impacts » Impact of One Project


Example JEDI Outputs For A 500 MW Plant In The Mid-Atlantic Completed In 2018

Output Jobs

(FTE)

Investment [$M]

During Construction

Project Development and Onsite Labor Impacts

385 $190

Construction and Interconnection Labor 0

Construction Related Services 385

Turbine and Supply Chain Impacts 1,432 $261

Induced Impact 744 $137

Total 2,561 $589

During Operation (Annual)

Onsite Labor Impacts 28 $3

Local Revenue and Supply Chain Impacts 172 $41

Induced Impacts 59 $9

Total 259 $52

28

E N E R G Y

» Employment levels are a function of the local supply chain

» If more of the labor and equipment comes from the region than was assumed, regional employment will increase.

» In the Low Case, employment is estimated to be on the order of ~1,500 FTE’s by 2020.

Offshore Wind Farm Construction And Operation Along The Atlantic Coast Could Support Employment For 7,500+ People By 2020.

Economic Impacts » Gross Employment

Annual Employment Supported by Offshore Wind Industry

Source: Navigant, 2012. Results include direct, indirect and induced employment

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2012 2014 2016 2018 2020

An

nu

al E

mp

loy

men

t [F

TE

’s]

Low

Medium

High

29

E N E R G Y

The Majority Of Offshore Wind Employment (And Economic Output) Impacts Are In The Supply Chain, Not Direct, Onsite.

Economic Impacts » Employment by Type

Employment by Type for the High Case


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

An

nu

al E

mp

loy

men

t [F

TE

’s]

On-site Impacts

Induced Impacts

Supply Chain Impacts

30

E N E R G Y

» These investment levels are directly a function of the local supply chain; if more labor and equipment are sourced from the region than, local investment will increase.

» In the Low Case, annual investment will likely be ~$350M/Year by 2020.

Annual Economic Output Could Be ~$1.7 Billion/year By 2020.

Economic Impacts » Economic Impacts

Annual Local Economic Impacts of Offshore Wind Construction and Operation On the Atlantic Coast

Source: Navigant, 20102. Results include direct, indirect and induced investment

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2014 2016 2018 2020

An

nu

al E

con

om

ic O

utp

ut

[$M

, 201

1$’s

]

Low

Medium

High

31

E N E R G Y

Similar to employment, most of the economic impact is in the supply chain, not direct, onsite.

Economic Impacts » Economic Impact by Type

Economic Impact by Type for the High Case

Source: Navigant, 2012.

0

200

400

600

800

1000

1200

1400

1600

1800

2012 2013 2014 2015 2016 2017 2018 2019 2020

An

nu

al I

nv

estm

ent

[$M

, 201

1$’s

]

On-site Impacts

Induced Impacts

Supply Chain Impacts

32

E N E R G Y

»


Table of Contents





5. Economic Impacts


33

E N E R G Y

Themes to address in discussion/Q&A:

» Reactions to cost input data

» Reactions to local content data

» Do you envision a limited number of regional hubs or more dispersed manufacturing and assembly efforts scattered along the coasts?

» Do you anticipate the bulk of supply chain activity to be driven by investment in new facilities or existing businesses expanding to support the offshore wind industry?

» In your experience what types of existing suppliers might be most interested in serving the offshore wind space?

» Apart from demand, what barriers would you see to additional investment, either in existing or new facilities?

NREL’s JEDI platform offers a robust starting point for estimates of offshore wind employment and economic impacts

Jobs And Economic Development » Final Considerations And Conclusions

Key C O N T A C T S


Confidential and proprietary. Do not distribute or copy.

Key C O N T A C T S



Key C O N T A C T S



Key C O N T A C T S


. 34

E N E R G Y

Bruce Hamilton Navigant Consulting Director Portland, OR (503) 476-2711 [email protected] Eric Lantz NREL - Strategic Energy Analysis Center Research Analyst Golden, CO (303) 384-7418 [email protected] Jay Paidipati Navigant Consulting Associate Director Boulder, CO (303) 728-2489 [email protected]

mailto:[email protected]




Offshore Wind Jobs and Economic Development...

Documents

Transcript of Offshore Wind Jobs and Economic Development...