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Wind & Efficiency Promise Economic Benefit

Mark Ohrenschall
Con.Web, June 26, 2003

Wind, Energy Efficiency Promise Much Greater Economic Benefits
than Gas-Fired Power, Report Says

Energy efficiency and wind power development would create substantially more economic benefits in Washington state than natural gas-fired plants for future power supply, a new study reports.

Developing 1,700 average megawatts each of efficiency and wind power to meet anticipated load growth by 2020 would create 2-1/2 times more jobs than 3,400 aMW of gas-fired generation, according to "Energy for Washington’s Economy: Economic Development from Energy Efficiency and Wind Power in Washington," by WashPIRG Foundation.

That new wind power would also bring in more than $100 million in lease payments for landowners by 2020 and generate twice as much property tax revenue as natural gas plants with twice the capacity, conclude Brad Heavner, Robert Pregulman and Travis Madsen.

"Washington utilities will definitely be able to meet new demand for power. The question is, how will they meet it?" they write. "One path leads deeper into fossil fuel dependence, with associated environmental and fuel costs, and the reality of limited fuel supplies and periodic price spikes. The other path leads toward efficient use of resources, tapping the energy blowing around us, cleaner air and water, reduced climate disruption, and a new source of revenue for rural economies searching for support. The efficiency and wind power course offers a unique opportunity to unite economic development, environmental concerns and industrial interests around a common vision for the future of Washington."

The report advocates statewide conservation and renewables standards, as WashPIRG Foundation also did in a February report on efficiency and renewables potential in the Evergreen State.

"A secondary goal [of the new report] is to generate support for portfolio standards, but the primary goal is just to make people understand the benefits of wind energy and energy efficiency to Washington, not just from a power diversification point of view, but also from an economic point of view," Pregulman told Con.WEB.

Economic Benefits of Wind, Efficiency
"Energy for Washington’s Economy" touts the prospective economic benefits for the Evergreen State of large-scale wind development and energy efficiencies as an alternative to gas-fired power.

Heavner, Pregulman and Madsen project the 3,400 aMW wind/efficiency combination would by 2020 create more than 37,000 jobs (in person-years), provide landowners with $103 million from leasing land for wind turbines, and generate $371 million in property taxes. The same amount of natural gas-fired generation would lead to 15,600 jobs, no landowner revenue and $192 million in property tax payments.

For energy efficiency, the authors anticipate Washington could achieve a cumulative 12-percent decline in projected electricity consumption by 2020, roughly half the cost-effective savings potential identified in a Tellus Institute study released last fall. That amounts to 1,700 aMW.

Using a 1993 University of Washington study as a basis for gauging the economic benefits of efficiency investments in different sectors, WashPIRG Foundation came up with 11,440 jobs (person-years) by 2020 and a total payroll of $237 million.

For 1,700 aMW of new wind energy--equaling 4,600 MW capacity, or 13.6 percent of projected total statewide generation by 2020--WashPIRG Foundation assumed 20 percent of components for these wind farms would be made in Washington. The authors acknowledge wind manufacturing is primarily an out-of-state industry for the near future, but they forecast this 20-percent share would provide 3,870 direct and indirect jobs (person-years) and a $135 million total payroll by 2020.

Another $174 million in salaries would derive from 4,830 direct and indirect jobs in wind project installation, while wind farm operations and maintenance would provide 600 jobs and $26 million in total payroll. "I don’t think people realize what a significant income generator [wind] is and how many dollars it puts in the local economy," said Pregulman. Many also are unaware wind energy is competitive in price with natural gas, he added.

Building 3,400 aMW of gas-fired power (3,800 MW capacity) by 2020 would lead to about 2,700 jobs (person-years) in manufacturing and installation, and nearly 3,000 indirect jobs, for a total of 5,700 jobs, plus another 320 long-term jobs, according to the study. Property taxes from these plants would generate $192 million.

WashPIRG Foundation used a variety of sources, including the Electric Power Research Institute, to develop employment estimates. The $103 million in projected landowner income from wind development came from calculating 2.5 percent of annual electricity sales at 3 cents per kilowatt-hour. "The intent is to give a relatively simple estimate of the economic value of various activities supported by wind and efficiency, as if all the activity happened in the present," the authors wrote. "Accordingly, future dollar values do not include inflation or discount estimates."

Heavner, Pregulman and Madsen also wrote that the wind/efficiency strategy would save 31 billion gallons of water by 2020, compared to natural gas development.

They cited--but did not quantify--potential macroeconomic benefits from lower electricity costs as a result of wind/efficiency development compared with gas-fired generation. "Diversifying Washington’s generation portfolio, just like investments in the stock market, can insulate consumers from unpredictable price fluctuations." It is "nearly certain that gas costs overall will gradually rise over time," they wrote, while "wind energy prices … are projected to decline as the industry matures, takes advantage of economies of scale, and deploys more advanced technologies. And the fuel for wind is free." Efficiency, meanwhile, "has consistently proven to be the most cost-effective means of addressing power needs."

The report also outlined Washington’s energy efficiency and renewable energy industry, and promoted its strengths: "Washington has a wealth of assets, including: experienced consulting firms, engineering companies, and manufacturers; a growing wind power industry; strong trade relationships that could lead to the export of clean energy technologies to other states and countries; extensive government and university research and development support; and a highly trained and skilled work force."

Policy Push
In the policy arena, WashPIRG Foundation advocated state conservation and renewables standards for utilities, as well as tax incentives for renewable energy equipment and denial of permits to pending fossil-fueled power plants. With 860 MW of capacity built in Washington the last two years, 787 MW more under active construction and 2,031 MW under development, nearly all natural gas, "the state risks decreased reliability due to over-dependence on volatile fossil fuels," the authors wrote.

Now, said Pregulman, "We hope to take this report out to policy-makers and a number of other important political folks between now and the upcoming [legislative] session to try to put some meat behind the arguments we’ve been saying all along: wind energy and renewables and energy efficiency are good for Washington’s economy. Now we actually have a document that shows that in concrete terms. We hope to convince more people to put policies in place to ensure these technologies take hold."

Related Sites:
"Energy for Washington’s Economy: Economic Development from Energy Efficiency and Wind Power in Washington"

Mark Ohrenschall
Wind & Efficiency Promise Economic Benefit
Con.Web - June 26, 2003

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