Quantifying the economic benefits of generation alternatives.
Donald Harker is a director in Navigant Consulting’s energy practice. Peter Hans Hirschboeck is a senior consultant in the firm’s energy practice and also serves on the NERC solar data collection working group.
Around the world, countries look to the electric power industry to create good jobs and be a fundamental force in their local economies. Green, clean and renewable forms of power production are seen by some to be harbingers of the so-called “new” economy by providing both growth and reliable jobs as the industry transforms itself. Traditional forms of power generation lack the panache of the new economy and face economic, environmental, and regulatory uncertainties, yet through their incumbency they provide the vast majority of current industry jobs.
Clear, concise, and unambiguous economic comparisons across all forms of generation technologies appear to be extinct. Numerous tools and models allow decision makers to assess prospective benefits and account for direct, indirect, and induced economic effects, but no one appears to have looked across the spectrum of generation technologies and asked, “What does current actual data show?” To put it another way, if a county economic developer asked, “What would be the employment impact of this generation technology on my community?” where might he or she find a simple answer?
Producing that simple answer requires performing a complex analysis.
Jobs Per Megawatt
To analyze the economic and workforce contributions of various energy technologies, the authors began by reviewing the contribution of permanent direct local jobs per megawatt of installed electric capacity for the most common types of generation technologies, starting at the commercial in-service date of the power plant. The technologies compared were coal-steam, concentrating solar, combined cycle, hydro (multiple constructions), nuclear, photovoltaic (PV) solar, and wind. Direct local jobs were compared with MWe installed capacity, because these jobs don’t depend on plant operations; they depend solely on the existence of the plant as a going concern. In fact, an argument can be made that a power plant undergoing an outage produces more local economic activity than a steady-state operating plant due to contractors and shift work required to restore a plant to operating status.
The analysis ignored the indirect and induced jobs used in various models, because from the point of view of a local economic developer, these jobs might be transitory or outside the local area. Also ignored were taxes—for the sake of simplicity—because local taxing entities frequently provide various levels of tax relief for projects.
In performing the analysis, actual data on various technologies were used for plant staffing and sizes from various information sources. The data were drawn from Navigant Consulting’s annual staffing surveys, benchmarking services, plant staffing databases and discussions with industry experts.
The first step in the analysis compared direct local permanent jobs per MWe of installed capacity for each of the technologies reviewed (see Figure 1). The data showed that various technologies produce vastly different levels of employment.
Utility-scale PV facilities provide the most jobs per MWe of installed capacity, because they generally require a large on-site staff to clean the solar panels and provide plant security. However, there are very few on-site skilled labor jobs for these facilities due to the fact that most PV plants acquire skilled transitory labor through long-term service agreements with original equipment manufacturers.
By comparison, nuclear power is a very labor-intensive technology when it comes to permanent direct job creation. Large support staffs and security personnel augment operations staffs to create many local employment opportunities. Improvements in the design of next generation nuclear power plants might lead to smaller staffs in the future. Also, nuclear power has some of the longest lead times to create permanent local jobs due to lengthy construction schedules.
Concentrating solar power (CSP) facilities are fairly labor intensive and create a significant number of jobs per MWe installed capacity. Similar in nature to utility-scale PV plants, CSPs have a significant land area footprint and need O&M personnel to maintain a large number of labor-intensive solar collectors, as well as perform standard steam plant O&M activities.
Using the jobs per MWe installed capacity metric, micro hydro (i.e., smaller than 20 MW) plants create almost as many jobs as nuclear and CSP plants. However, by definition, they aren’t scalable in size and their ultimate economic impact on a community is quite limited. By comparison, small hydro plants (i.e., between 20 MW and 500 MW) and coal plants are nearly identical in this metric and create slightly less than half as many permanent direct local jobs as nuclear plants on a MWe capacity basis.
A review showed that combined-cycle and wind power are the most labor efficient and create the fewest number of jobs per MWe installed capacity. Unlike other technologies, the labor efficiency of wind isn’t directly related to the overall capacity of the wind farm; rather it’s related to the number of wind turbines. One would expect labor efficiencies to increase—resulting in fewer jobs per MWe—as individual wind turbines grow in capacity. Wind is unique also in that it provides lease payments to landowners. While not direct jobs, these payments go directly to the residents of the community, rather than a government entity, as do taxes.
Direct permanent local jobs per MWe installed capacity is a useful metric to compare the labor efficiency of generating technologies, but it neglects to account for the scalability of each technology. A high-level review of currently operating plants was conducted that determined an average size plant for each technology (see Figure 2). Combining this information with average wages across technologies allowed for the determination of the direct payroll impact each technology brings to a community. Using information from the earlier identified sources combined with public data, the average hourly wage rates for an average plant employee across technologies was determined. The scalability of traditional generation technologies derives its advantage over renewable technologies from creating larger local economic impacts.
Nuclear plants create the largest workforce annual income based on both large capacity and being a labor-intensive technology (see Figure 3). The average wages in the nuclear industry compare favorably with other power generation technologies. While nuclear power plant operator wages may approach $50 an hour, the large support staff and security force wages tend to lower the overall average below that of other technologies.
PV and CSP technologies have the lowest average wage rates compared with other technologies. This reflects the nature of the tasks associated with solar collector upkeep. Wind and micro hydro plants have the highest wages. This is consistent with the small staff that is skilled in a number of different disciplines needed to provide direct support to these plants.
Other important considerations for economic developers in comparing different technologies beyond direct economic impact include plant footprints, construction timelines, resource availability and local environmental sensibilities.
A review of operating plant footprints showed wide variability within and across technologies. Acreages were averaged from a sample of actual plant data (see Figure 4). For example, two 1,175 MWe nuclear plants operate on 84 acres at the San Onofre nuclear generating plant (SONGS) and three plants totaling 3,739 MWe installed capacity on 4,000 acres at Palo Verde Plant. Hydro plant footprints proved impossible to compare, because while the powerhouse, dam and ancillary equipment have a measurable footprint, the size of the watershed makes comparisons effectively meaningless. In many instances, power plant sites allow dual-use of portions of the footprint. Cooling lakes serving as heat sinks can support recreational activities, and land used for wind farms also can continue to simultaneously support traditional agricultural activities.
Construction timelines proved to be important differentiators among technologies because timelines affect how quickly permanent direct jobs materialize. Wind and solar power plants are the quickest at developing direct permanent jobs in a community. However, their cumulative construction schedule advantage, versus coal or nuclear plants, disappears after approximately three months of plant operations. With regard to hydro plants, while a review of the data didn’t show lead time, anecdotal information indicates these facilities approach or exceed nuclear power plant lead times (see Figure 5).
Last, resource availability and local environmental sensibilities constrain the options from which an economic developer can choose. For the foreseeable future, traditional generation technologies will have an advantage over alternative generation technologies as engines for local economic growth. The development of larger scale wind farms (i.e., larger than 500 MWe) holds the greatest promise for alternative generation to surpass combined-cycle plants in local job creation, but the large footprints of such facilities might limit potential sites.
While this analysis focused on actual data from current operating sites for direct local permanent jobs, all technologies have the potential to become much more labor efficient over time. For instance, future small-scale nuclear plants (see ,“The Incredible Shrinking Reactor”) might employ tens of personnel rather than hundreds, and current advances in PV technology might reduce required labor by a third of current requirements in new installations. This trend across all technologies will be good for the environment and for electricity consumers, but it will bring fewer economic benefits to supporting communities.