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Section X Economic Benefit of Wind

Section X Economic Benefit of Wind. Wind Energy Value. Value of wind is the direct savings that would result due to use of wind rather than the most likely alternative (e.g. fossil fuel generation) Ξ Avoided Costs. Avoided Costs.

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Section X Economic Benefit of Wind

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  1. Section XEconomic Benefit of Wind

  2. Wind Energy Value

  3. Value of wind is the direct savings that would result due to use of wind rather than the most likely alternative (e.g. fossil fuel generation)ΞAvoided Costs

  4. Avoided Costs • Result primarily from reduced fuel consumption in a generating plant. • Also from a decrease in total conventional generating capacity that a utility requires.

  5. Environmental Benefits • No mercury,NOx, SOx, CO2 • No Water usage Converting environmental benefits into monetary form plus avoided costs make many wind projects economically beneficial !

  6. Incorporating Environmental Benefits into Market • Quantify benefits • Identify net positive effects to society • Moneterization (assign financial value) of some of those benefits. • Moneterization usually accomplished by government regulation. • This process often considers cost of alternative measures to reduce emissions (e.g. scrubbers on coal plants) to assign a monetary value to the avoided emissions.

  7. Moneterization of environmental benefits creates two categories of potential revenue: • Revenue based on avoided costs • Revenue based on moneterization of environmental benefits

  8. Avoided Cost-Based Value of Wind Energy – Fuel Savings • Fuel Savings, depends on: • Mix of different fuels • Requirements for spinning reserves • Operating characteristics of fossil fuel components • Efficiency • Heat rate as a function of component load • Total fraction of wind energy delivered to system Whole electrical systems should be modeled Avoided fuel is calculated in terms of energy content of fuel (MJ) avoided per energy provided by wind (kWh) Avoided fuel costs decrease over time because of increase in wind energy capacity and higher generation efficiency of new fossil fuel plants.

  9. Generating Capacity Value • Capacity value: • the amount of conventional capacity which must be installed to maintain the ability of the power system to meet the consumers’ demand if the wind power installation is deleted. • Capacity value calculated by: • Contribution of wind system during peak demand on a utility is assessed over a period of years and the average power at these times is defined as the capacity value • Loss of Load Probability (LOLP) or Loss of Load Expectation (LOLE) is calculated with no wind generators in the system. LOLP is recalculated with wind generation on the system and conventional plant capacity subtracted until initial value of LOLP is obtained. This subtracted power is the capacity value of the wind system. • NOTE: for small penetration of wind systems, the capacity value is generally close to the average output of the wind system.

  10. One way utilities historically have thought about generation reliability is loss of load probability. LOLP is the probability that generation will be insufficient to meet demand at some point over some specific time window. • For example, define the winter months, December to February as the time window, and in 500 simulations, examined 1,080,000 hours. About 1300 had some level of un-served demand. • Any reliability event in any hour of a winter (regardless of size or duration) causes a winter to be recorded as one in which load was lost. • Out of the 500 winters simulated, load was lost at some point in 120 of them, resulting in an LOLP for Winter, 2003 of 24 percent.

  11. Environmental Value of Wind Energy • Wind offsets emissions from conventional generating sources. • No SOx or NOx • No particulates • No mercury • No CO2 • No water usage

  12. Market Value • Market value of wind energy is the total amount of revenue that one will receive by selling wind energy, • Or will avoid paying through its generation and use. • Depends on: • Market Application (system into which the wind project is located) • Project owner or developer • Types of revenue available

  13. Market Application • Traditional Utilities • Investor Owned (IOU) • Considered a “natural monopoly” and regulated by state or national government • Publicly Owned (POU) • Municipal Electric Companies • Rural Electric Co-operatives • De-regulated Entities • Generating Companies, Wires Co., Marketing Co. • Customer-owned • Generally “behind-the-meter” (turbine connected on the customer side of the meter) • Grid-independent systems

  14. Project Owners or Developers • Traditional Utilities • Independent Power Producers, IPP (CBED in Nebraska) • Typically require a multi-year power purchase agreement to secure project financing • Customer-generators • Typically a behind-the-meter project • Residential and small business, and farm customers

  15. Types of Revenue • Based on Avoided Costs • Reduction in purchase of electricity, fuel, capital equipment • For utility the avoided costs are $0.03 to $0.04/kWh • For owner of behind-the-meter project, value of reduced purchases are $0.07 to $0.14/kWh • Sale of electricity (price reflects avoided costs) • Based on Moneterized Environmental Benefits • Sale of Renewable Energy Certificates, REC (also called Green Tags) • Benefits of producing power from non-polluting, renewable sources has a value beyond the electricity generated. Typical value is few cents/kWh • Carbon Offset • Tax benefits • Investment Tax Credit (credit for cost of project instead of production) • Production Tax credit is more common • Guaranteed above-market rates • Some European countries guarantee above-market rates for purchase of wind power • Net Metering • For small generators (typically 50 kW or smaller, though CA has limit of 1 MW or smaller) • Net energy produced over energy consumed over some extended time (months or annually) is considered. As long as the net generation is less than consumption, then all the generation is valued at retail price. • Any generation in excess of consumption would be subject to same rules as applies to Independent Power Producers.

  16. Renewable Energy Certificates (RECs) • When a renewable energy facility operates, it creates electricity that is delivered to the grid. The grid is segmented into regional power networks called pools. To help facilitate the sale of renewable electricity nationally, a system was established that separates renewable electricity generation into two parts: • the electricity or electrical energy produced by a renewable generator and • the renewable “attributes” of that generation. These attributes include the tons of greenhouse gas that were avoided by generating electricity from renewable resources instead of conventional fuels, such as coal, nuclear, oil, or gas. • These renewable (“green”) attributes are sold separately as renewable energy certificates (RECs). One REC is issued for each MWh unit of renewable electricity produced. The electricity that was split from the REC is no longer considered "renewable" and cannot be counted as renewable or zero-emissions by whoever buys it. • RECs contain specific information about the renewable energy generated, including where, when, at what facility, and with what type of generation. Purchasers of RECs are buying the renewable attributes of those specific units of renewable energy, which helps offset conventional electricity generation in the region where the renewable generator is located.

  17. Carbon Offset • A greenhouse gas emission reduction (offset) represents the reduction of a specific quantity of greenhouse gases. • When you purchase an offset, you alone have the right to all associated claims about the environmental benefits it embodies. • An offset is to be regarded as real environmental commodity, not a donation or investment in a future project.

  18. Production Tax Credit, PTC • Companies that generate wind, geothermal, and “closed-loop” bioenergy (which is powered by dedicated energy crops) are eligible for the production tax credit (PTC), which provides a 2.1-cent per kilowatt-hour (kWh) benefit for the first ten years of a renewable energy facility's operation.

  19. Exercise 15 1). One of the benefits of using wind energy for a utility company is quantified as an avoided cost. Avoided cost • counts as a decrease in total conventional generating capacity that a utility requires. • is typically around $0.03 to $0.04/kWh . • results from reduced fuel consumption in a generating plant. • is the direct savings that would result due to use of wind rather than the most likely alternative. • All the above

  20. Exercise 15 2). Environmental benefits are also very important in wind energy economics. Some of these involve reductions in (e.g. compared to coal plants) • Nitrous oxides, NOx • Mercury emissions • Sulfurous oxides, SOx • Use of water • All the above

  21. Exercise 15 3). Ways to generate revenue based on attaching monetary value (monetarize) to the environmental benefits of wind energy are(list all that apply) • Reduction of capital equipment purchases • Production tax credit • Net metering • Sale of green tags

  22. Exercise 15 4). The federal production tax credit is • set at $0.021/kWh produced by a qualifying renewable generating facility. • available for the first ten years of a renewable facility’s operation. • Only available for wind energy facilities. • A. and B. • A. and C. • B. and C. • A., B., and C.

  23. Net Metering • Net metering or net billing is a term applied to laws and programs under which a utility allows the meter of a customer with a residential power system (such as a small wind turbine) to turn backward, thereby in effect allowing the customer to deliver any excess electricity produced to the utility and be credited on a one-for-one basis against any electricity consumed. • Many utilities have argued against net metering laws, saying that they are being required, in effect, to buy power from wind turbine owners at full retail rates, and are therefore being deprived of a profit on part of their electricity sales. However, wind energy advocates have successfully argued that what is going on is a power swap, and that it is standard practice in the utility industry for utilities to trade power among themselves without accounting for differences in the cost of generating the various kilowatt-hours involved. 44 states have enacted it in some form, and others are considering it.

  24. Nebraska (as of Sept. 1, 2008) • Eligible Renewable/Other Technologies: Photovoltaics, Wind, Biomass, Hydroelectric, Municipal Solid Waste, CHP/Cogeneration, Anaerobic Digestion, Small Hydroelectric, Other Distributed Generation Technologies • Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Fed. Government, Agricultural, Institutional • Limit on System Size: 25 kW • Limit on Overall Enrollment: 1% of peak annual demand of retail customers • Treatment of Net Excess: Carried over monthly at varying rates depending on season and technology; accumulated NEG credits paid to customer at the end of the calendar year. • Utilities Involved: ALL Nebraska Utilities

  25. Nebraska Net Metering Law • The legislation, introduced by Sen. Ken Haar, applies to both residential and business utility customers with on-site power generation systems that produce electricity from methane, wind, solar, biomass, hydropower, or geothermal. It sets an across-the-board cap of 25 kilowatts (kW) per location, higher than most of the current, individual net metering programs in the state. • Customers will earn monetary credits, at the retail rate, for the amount of electricity they produce beyond what they consume. Credits will roll over from one month to the next until the end of the year, at which point the balance will be reconciled and a new, 12-month cycle will begin. • Utilities must provide qualifying customers with a metering system to measure the flow of electricity in both directions. Customers are responsible for the cost and installation of their own power generation systems. • The law went into effect in September 2009.

  26. Net Metering Example • During a one-month period, Jerry Hudgins’ wind turbine generates 300 kWh. Most of the electricity is generated at a time when equipment in Hudgins’ household (refrigerator, lights, etc.) is drawing electricity and is used on site. • However, some is generated at night when most equipment is turned off. At the end of the month, the turbine has generated 100 kWh in excess of Hudgins’ instantaneous needs and that electricity has been transmitted to the utility system. • During the month, the utility also supplied Hudgins with a total of 500 kWh for his use at times when the wind turbine was not generating or was insufficient for his needs. • Since the meter ran backward while 100 kWh was being transmitted to the utility, the utility will only bill Hudgins for 400 kWh, rather than 500 kWh. • However, Hudgins’ avoided cost of electricity purchases is $0.07/kWh x 300 kWh = $21.00 for the month

  27. Other Important Wind-Related Concepts - Renewables Portfolio Standard • The Renewables Portfolio Standard (RPS) would require each company that generates electricity in the U.S., or in a given state, to obtain part of the electricity it supplies from renewable energy sources such as wind. To meet this requirement, the company could either generate electricity from renewables itself or buy credits or electricity from a renewable generator such as a wind farm. This "credit trading" system has been used effectively by the federal Clean Air Act to require utilities to reduce pollutant emissions. • Aside from the "minimum renewable content" requirement, the RPS imposes very few other requirements on companies--they are free to buy, trade, or generate electricity from renewables in whatever fashion is most efficient and economical for them. The RPS is therefore often described by its supporters as being "market-friendly," because it allows market forces to decide which renewable energy sources will be developed where, and also allows price competition. • Several federal restructuring bills have included an RPS, and at least 29 states have also adopted RPS laws. One federal proposal, for example, would require 20% of U.S. electricity to come from non-hydro renewable energy sources (wind, solar, biomass, geothermal) by the year 2020. Typically, the RPS gradually increases over time, by 1% per year or some such number, in order to provide a foundation for the sustained, orderly development of renewable energy industries.

  28. RPS Policies www.dsireusa.org / June 2011 ME: 30% x 2000 New RE: 10% x 2017 VT: (1) RE meets any increase in retail sales x 2012; (2) 20% RE & CHP x 2017 WA: 15% x 2020* MN: 25% x 2025 (Xcel: 30% x 2020) MT: 15% x 2015 NH: 23.8% x 2025 MA: 22.1% x 2020 New RE: 15% x 2020(+1% annually thereafter) MI: 10% & 1,100 MW x 2015* ND: 10% x 2015 OR: 25% x 2025(large utilities)* 5% - 10% x 2025 (smaller utilities) SD: 10% x 2015 WI: Varies by utility; 10% x 2015 statewide RI: 16% x 2020 NY: 29% x 2015 CO: 30% by 2020(IOUs) 10% by 2020 (co-ops & large munis)* CT: 23% x 2020 NV: 25% x 2025* OH: 25% x 2025† IA: 105 MW PA: ~18% x 2021† IL: 25% x 2025 WV: 25% x 2025*† NJ: 20.38% RE x 2021 + 5,316 GWh solar x 2026 IN: 15% x 2025† CA: 33% x 2020 KS: 20% x 2020 UT: 20% by 2025* VA: 15% x 2025* MO: 15% x 2021 MD: 20% x 2022 AZ: 15% x 2025 OK: 15% x 2015 DE: 25% x 2026* NC: 12.5% x 2021(IOUs) 10% x 2018 (co-ops & munis) NM: 20% x 2020(IOUs) 10% x 2020 (co-ops) DC DC: 20% x 2020 PR: 20% x 2035 TX: 5,880 MW x 2015 HI: 40% x 2030 29 states + DC and PR have an RPS (8 states have goals) Renewable portfolio standard Minimum solar or customer-sited requirement * Renewable portfolio goal Extra credit for solar or customer-sited renewables † Solar water heating eligible Includes non-renewable alternative resources

  29. Public Utilities Regulatory Policy Act of 1978 (PURPA) • The Public Utilities Regulatory Policy Act of 1978 (PURPA) was enacted as part of the National Energy Act of 1978, during a time of unprecedented energy supply instability in the United States. • The law requires utilities to purchase energy from non-utility generators or small renewable energy producers that can produce electricity for less than what it would have cost for the utility to generate the power, or the "avoided cost." Although once considered a key incentive for renewable energy, PURPA is less helpful for renewables today due to lower fossil energy prices.

  30. PURPA • Wind power plants are considered “qualifying small power production facilities.” Section 210(m) was added to PURPA in 2005 to permit an electric utility to stop purchasing energy from qualifying small power production facilities at “avoided cost” rates if the Federal Energy Regulatory Commission (FERC) finds that the facility has non-discriminatory access to wholesale electric markets. This would end the non-competitive guarantee of payment to wind plants for electricity connected to the grid. • PURPA is implemented by state public utility companies (PUC). An electric utility must apply to the state PUC (or FERC if no state PUC has been federally approved) for relief from the obligation to purchase from wind plants. • Wind plants with a capacity less than 20 MW continue to enjoy the presumption that they cannot survive in a open market and thus must get the guaranteed rate and must not be charged for the load balancing services wind energy necessitates. • The unreliability or uncertainty of wind energy has led other states to impose penalties on wind power plants if actual output varies substantially from forecasted electricity production. • FERC has, however, moved in the opposite direction. In March 2007, FERC issued Order 890, which exempts intermittent energy sources from imbalance penalties.

  31. Community-Based Energy Development C-BED • C-BED legislation specifically addresses the two primary barriers to wind energy development that previously existed in Nebraska. First, public power, as a result of its tax-exempt status, is not able to qualify for federal wind energy support in the form of the federal Production Tax Credit (PTC).31 • As a result, wind power owned by Nebraska’s public power utilities is less competitive with traditional power generation resources. Projects that qualify for the PTC are generally competitive with wholesale energy markets around the country. This conflicts with public power’s least-cost mandate because it hinders the competitive nature of wind power. C-BED projects are owned and operated by taxable entities and therefore, are theoretically capable of providing power at rates that are competitive with prices observed at wholesale trading hubs. • Second, the vast majority of wind power development around the country has been carried out by Independent Power Producers (IPPs) who contract power sales with retailers through Power Production Agreements (PPAs). While IPPs selling power to Nebraska’s public power districts would allow the public power retailers to capture the PTC, IPPs have been hesitant to invest in Nebraska due to legacy statutes that date back to Nebraska’s transition to a 100% public power state. During this era, the legislature gave public power districts and municipalities the authority of eminent domain over privately owned power assets in order to move the state to public power. With these statutes still a part of the Nebraska code, IPPs have not been willing to undertake the potential risk of asset condemnation by Nebraska’s public power districts (PADD 2006). • However, C-BED legislation requires that electric suppliers in the state limit their power of eminent domain when they have contracted a PPA for 10 years or more from a C-BED project (Nebraska Revised Statutes 70-1909). • Further, as C-BED projects are shown to have enhanced economic development impacts, encourage Nebraskan ownership, and potentially reduce costs through additional state sales and use tax exemptions, they support public power mandates of economic development and least-cost power production. • C-BED projects require 33% of wind farm gross sales revenues to flow to qualifying Nebraska individuals or businesses. Frequently this is accomplished by obtaining local equity to finance a portion of the project, and it ensures that Nebraskans continue to maintain a stake in new power.

  32. What is Eminent Domain • Eminent domain refers to the power possessed by the state over all property within the state, specifically its power to appropriate property for a public use. In some jurisdictions, the state delegates eminent domain power to certain public and private companies, typically utilities, such that they can bring eminent domain actions to run telephone, power, water, or gas lines. In most countries, including the United States under the Fifth Amendment to the Constitution, the owner of any appropriated land is entitled to reasonable compensation, usually defined as the fair market value of the property. Proceedings to take land under eminent domain are typically referred to as "condemnation" proceedings. Ordinarily, a government can exercise eminent domain only if its taking will be for a "public use" - which may be expansively defined along the lines of public "safety, health, interest, or convenience". Perhaps the most common example of a "public use" is the taking of land to build or expand a public road or highway. Public use could also include the taking of land to build a school or municipal building, for a public park, or to redevelop a "blighted" property or neighborhood. • The Process of Eminent Domain • The government attempts to negotiate the purchase of the property for fair value. • If the owner does not wish to sell, the government files a court action to exercise eminent domain, and serves or publishes notice of the hearing as required by law. • A hearing is scheduled, at which the government must demonstrate that it engaged in good faith negotiations to purchase the property, but that no agreement was reached. The government must also demonstrate that the taking of the property is for a public use, as defined by law. The property owner is given the opportunity to respond to the government's claims. • If the government is successful in its petition, proceedings are held to establish the fair market value of the property. Any payment to the owner is first used to satisfy any mortgages, liens and encumbrances on the property, with any remaining balance paid to the owner. The government obtains title. • If the government is not successful, or if the property owner is not satisfied with the outcome, either side may appeal the decision. • Easements and Rights-of-Way - It is also possible to bring an eminent domain action to obtain an easement or right of way. For example, a utility company may obtain an easement over private land install and maintain power lines. The property owner remains free to use the property for any purpose which does interfere with the right of way or easement. • Fair Value • Fair value is usually considered to be the fair market value - that is, the highest price somebody would pay for the property, were it in the hands of a willing seller. The date upon which the value is assessed will vary, depending upon the governing law. If the parties do not agree on the value, they will typically utilize appraisers to assist in the negotiation process. If the case is litigated, both sides will ordinarily present expert testimony from appraisers as to the fair market value of the property.

  33. Summary of Wind-Related Issues • Renewable Energy Credits, REC (also called Green Tags) • Salable quality of renewable energy systems beyond the electricity generated • Renewable Portfolio Standards, RPS • State laws mandating renewable energy target values and dates • Production Tax Credit • Federal tax credit for producing energy from renewable sources • Community-Based Energy Development, C-BED • Independent Power Producers (IPP) can make a “power purchase agreement” with utility to buy electric power from independent generation projects. C-BED defines who is eligible to be an IPP and how utilities interact with them. • LB1048 – Wind Export Bill • Nebraska law allows renewable energy generating plants/farms to be developed by private investors if 90% of the energy produced is exported and sold out of state. • Net Metering • Wind turbine system connected on customer-side of meter so that energy can flow both directions with customer billed for net energy use. Nebraska state law requires utilities to connect generating sources for systems rated for less than 25 kW.

  34. Some Wind Projects in Nebraska The 14 Vestas V90 turbines are capable of producing 3 MW each. • Crofton Hills Wind Farm – 42 MW • Bloomfield, Nebraska • Expected online date: Unknown • Stably priced electricity for approximately 13,000 Nebraska residences • Lifetime local property tax payments of $3.2 million • Work for 50 construction workers • 4 permanent, direct, O&M jobs • Landowner lease and project revenue payments in excess of $300,000 annually • Project revenue payments to Nebraska individuals and businesses that are at least 33% of gross power production revenues • 20 Year PPA with NPPD • Elkhorn Ridge Wind Energy Project – 82 MW • Bloomfield, Nebraska • Stably priced electricity for approximately 25,000 Nebraska residences • Total investment of $140 million with initial estimates that 15% ($21 million) will be invested specifically in Nebraska goods and services • Lifetime property tax payments of $5.7 million • Annual Land-lease payments in excess of $325,000 ($12,000 a year per turbine). • More than 100 construction workers over the 9-month construction period • Project revenue payments to Nebraska individuals and businesses that are at least 33% of gross power production revenues • 20 Year PPA with NPPD Substation for interconnection to Wind Farm The 27 Vestas V90 turbines are capable of producing 3 MW each.Nacelle is 410 ft. elevation

  35. Economic Benefits in Neighboring States • 240 MW of wind in Iowa • $640,000/yr in lease payments to farmers ($2,000/turbine/yr) • $2 million/yr in property taxes • $5.5 mil/yr in O&M income • 40 long-term O&M jobs • 200 short-term construction jobs • Doesn’t include multiplier effect • 107 MW wind project in MN • $500,000/yr in lease payments to farmers • $611,000 in property taxes in 2000 = 13% of total county taxes • - 31 long-term local jobs and $909,000 in income from O&M (includes multiplier effect)

  36. Economic Development Impacts - Summary • Land Lease Payments: 2-3% of gross revenue $2500-$4000/MW/year • Local property tax revenue: 100 MW generates $500K-$1 million/yr • 100-200 jobs/100 MW during construction • 2-6 permanent O&M jobs per 50-100 MW • Local industry: concrete, towers, electrical services • Manufacturing and Assembly plants expanding in U.S. (e.g. IL, CA, ND, PA) A large amount of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency can be found at http://www.dsireusa.org/

  37. Exercise 16 1). Net Metering is • applicable for installed generating facilities rated at a maximum power output of 25 kW. • net credit for power sales to the utility are logged at the end of each month with settlement back to the wind turbine owner at the end of each year. • applicable for small wind systems. • All the above.

  38. Exercise 16 2). A Renewables Portfolio Standard (RPS) is a requirement adopted by a state that each utility company obtain a specified part of the electricity it supplies from renewable energy sources such as wind. • False • True

  39. Exercise 16 3). Nebraska has an RPS. • True • False

  40. Exercise 16 4). Community-Based Energy Development (C-BED) law in Nebraska(List all that apply) • allows projects that are owned and operated by certain taxable entities. • requires 33% of wind farm gross sales revenues to flow to qualifying Nebraska individuals or businesses. • Allows Investor Owned Utilities to compete with public power in the state. • requires that electric suppliers in the state limit their power of eminent domain when they have contracted a power purchase agreement for 10 years or more from a C-BED project.

  41. Exercise 16 5). Land lease payments to land-owners from wind farm owners is • 2 to 3% of gross revenues each year. • $100 per acre per kWh produced. • tax exempt. • not allowed by Nebraska law.

  42. Estimating (Modeling) Economic Benefits From NREL Report: Economic Development Impacts of Wind Power: A Comparative Analysis of Impacts within the Western Governors’ Association States • S. Tegen and M. Milligan, Consultants, National Renewable Energy Laboratory • M. Goldberg, Nevada City, California Presented at the American Wind Energy Association WindPower 2007 Conference and Exhibition, Los Angeles, California, June 3–7, 2007

  43. Jobs and Economic Development Impact (JEDI) • Model Description • The Jobs and Economic Development Impact (JEDI) model was developed in 2002 for NREL to demonstrate the economic development impacts associated with developing wind power plants in the United States. Economic development impacts include jobs created, wages and salaries earned, and increases in overall economic activity in the community in which the wind power project is located. • JEDI was designed as a state-specific model and shows the economic impacts resulting from new wind power development in each state. JEDI can be adjusted to perform county, regional and national analyses as well. This particular analysis focuses on the economic benefits for individual states within the WGA region. • To calculate economic impacts, the spreadsheet-based model relies on input-output or “multiplier” data to trace supply linkages in the economy. For example, the analysis shows how purchases of wind turbines not only benefit turbine manufacturers, but also the fabricated metal industries and others businesses that supply those manufacturers.

  44. The model analyzes the economic impacts of developing a wind power project by evaluating three separate impacts: direct, indirect and induced impacts. • Direct impacts are the on-site or immediate effects created by spending money for a new wind project. For example, constructing a wind plant includes the on-site jobs of the contractors and crews hired to construct the plant as well as their managers and staffs. It also includes the jobs at the manufacturing plants that build the turbines and the jobs at the factories that produce the towers and blades. • Indirect impacts refer to the increase in economic activity that occurs when a contractor, vendor or manufacturer receives payment for goods or services and, in turn, pay others who support their business. This includes the banker who finances the contractor, the accountant who keeps the contractor’s books, and the steel mills and electrical manufacturers and other suppliers that provide the necessary materials. • Induced impacts are the changes in wealth that occur as a result of the spending by people directly and indirectly employed by the project. For example, when workers/households receive income, they may purchase higher quality food, more expensive clothes and other goods and services from local business.

  45. JEDI InputsThe following lists the detailed categories JEDI uses to determine economic impacts. For each category, the expenditure is tracked along with the part of the expenditure that goes to the local area. In this case, the “local” area is the whole United States. Project Cost Data • Construction Costs • Materials • Construction (concrete, rebar, equip, roads and site prep) • Transformer • Electrical (drop cable, wire, ) • HV line extension • Labor • Foundation • Erection • Electrical • Management/supervision • Equipment Costs • Turbines (excluding blades and towers) • Blades • Towers • Other Costs • HV Sub/Interconnection • Engineering • Legal Services • Land Easements • Site Certificate/Permitting • Wind Plant Annual Operating and Maintenance Costs • Personnel • - Field Salaries • - Administrative • - Management • Materials and Services • - Vehicles • - Fees, Permits, Licenses • - Utilities • - Insurance • - Tools and Misc. Supplies • - Spare Parts Inventory • Financial Parameters • Debt Financing • - Percentage financed • - Years financed (term) • - Interest rate • Equity Financing/Repayment • - Percentage equity • - Individual and Corporate Investors (percent of total equity) • - Return on equity (annual interest rate) • - Repayment term (years) • Property Tax Parameters • Land Lease • Payroll Parameters - Field Salaries, Administrative, Management

  46. JEDI Program • JEDI has two output categories: construction and operations. The construction period numbers are reported for the entire time of the construction (typically one year for a utility-scale wind project). The operations numbers are reported per year. First, the number of jobs created and the earnings for those jobs during the construction period are reported. The “economic output,” which is the sum of the direct, indirect and induced payments for work, and other expenditures (such as money spent on parts, e.g., blades and services, e.g., boom truck rental) is also reported. For the operations output, jobs, earnings and economic output are also reported. In the operations category, economic output is hourly wages, annual salaries and other expenditures such as new part purchases for turbine maintenance and payments for accounting services. This category also includes property taxes and landowner royalties. • The JEDI Spreadsheet can be downloaded as an EXCEL file at www.windpoweringamerica.gov. Click on “Economic Development”

  47. Typical output from JEDI Model

  48. Exercise 17 1). The Jobs and Economic Development Impact (JEDI) model can • has inputs that include construction costs. • be adjusted to perform county, regional and national analyses. • has two output categories: construction and operations. • A. and B. • B. and C. • A. and C. • All the above

  49. Exercise 17 2). Which statement/s are true. • Debt financing is one of the project cost data inputs included in the JEDI analysis. • Induced impacts are the changes in wealth that occur as a result of the spending by people directly and indirectly employed by the project. • Indirect impacts are the on-site or immediate effects created by spending money for a new wind project. • JEDI was not developed for the National Renewable Energy Laboratory (NREL).

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