One of the great debates when it comes to renewable energy is that these projects all require some sort of incentive for developers to actually build them. Yes it’s true that the economics work far better for solar, wind, and the various other technologies when some sort of incentive is attached to it. However, be it renewables, coal, natural gas, petroleum, or nuclear, all of these energy types are receiving some sort of incentive from the government to offset the large capital cost involved with construction.
Recently Americans For Prosperity (AFP) of New Jersey, the anti-big government group, released a report (by the Beacon Hill Institute) on the economic impacts of offshore wind in New Jersey. The study looks at the impact 1,100 megawatts (MWs) of offshore wind would have on the state’s economy based on the current policy initiatives that Governor Christie has in place to attempt the grow the industry. Here are some of the highlights of AFP’s report (please hold you skepticism until the end):
• The project(s) would be at a net COST of $3.245 billion to the state.
• Electric prices would increase by 2.1% in 2017.
• And as a result of these higher energy prices:
o NJ will lose approx 2,219 jobs
o Annual wages will drop by approx $111 per worker
o NJ disposable income will fall by $330 million in the state
o Net investment in NJ will fall by $48 million
• Also the report notes that it is “unclear” if wind and solar power significantly reduce greenhouse gas emissions.
While all these numbers are well and good, because yes, the projects will be expense to create and are going to get large amounts of incentives, the study decides to ignore other factors which completely skew this data to be anti-wind power.
Before I get into the biggest omission from this data let me address two points listed above. First would be the increase in electric prices. Here is the problem with this point; yes the installed cost of offshore wind is high, however wind energy production has no fuel cost associated with it. Sure there are maintenance costs for offshore wind energy, but any fossil fuel or nuclear powered plant is going to require upkeep and maintenance as well. So while wind energy may create an initial bump in energy prices, it should by all accounts remain flat from that point on. Fossil fuel costs will impact, and if history is an indication, will only increase electric prices in the long term. Does a onetime 2.1% increase in electric costs really sound that awful compared to the almost certain consistent increase in prices due to fossil fuel costs?
The second point made in the report I want to address is that it is unclear to what extent wind and solar power reduce greenhouse gas emissions. If you read the full report it claims the reduction in emissions is uncertain because wind is an intermittent source (it will only generate power when the wind is blowing) and therefore when it is not producing power it must be replaced by coal, natural gas, etc. This is true, however this does not mean there is any uncertainty in wind power’s ability to reduce emissions. It’s pretty simple, when the wind farms are producing power they displace fossil fuels, and thus eliminate the emissions that would have occurred from the use of those fossil fuels. There is very little uncertainty here; simply take the projected annual generation from one of these projects, find out how many tons of greenhouse gases would have pumped into the atmosphere if it was produced by the typical New Jersey energy load, and there are your emissions reductions. No uncertainty from my perspective!
Now comes the biggest mistake in this report; at no point does it mention job creation! In fact rather than providing any data on job creation the report blatantly scoffs at the notion. But here’s the thing, New Jersey is not going to be the only state with offshore wind. There are wind projects proposed from New England down to the Carolinas. To assume that once New Jersey’s projects successfully demonstrate the technology that no other state will have offshore wind is naïve. The benefit of NJ being first is that the industry to create these projects will locate itself here (not to mention that NJ is located pretty centrally within the areas targeted for offshore wind on the east coast). Now consider the size of wind turbine parts, equipment, and all related things needed to install these wind farms. It makes the most sense to build everything in very close proximity to the port it will ship out to sea from. If you are going to be creating a part for thousands of windmills planned, why would you build your new factory 300 miles away from the port they will depart from, rather than in the same industrial complex? Having heard many veterans of the offshore wind industry in Europe speak they all say the same thing; if you are really going to be starting a new offshore wind industry in the United States, whatever port the ships are deployed from is going to be the hub of the majority of the equipment manufacturing.
So while AFP’s report doesn’t want to look at job creation, fortunately the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory has done their homework on this. Here are their highlights about jobs (mind you this is based on a full scale industry at 54 gigawatts installed):
• $200 billion in economic activity associated with the projects creating 43,000 PERMANENT well paying technical jobs.
• 20 direct jobs will be created for every megawatt installed.
• In addition to permanent jobs associated with operations and maintenance, 1.1 million job-years would be needed to manufacture and install the projects.
Those numbers are certainly not something I would ignore at when considering the impact of offshore wind in New Jersey.
To roam beyond the topic of wind energy for a moment, I absolutely believe one of the biggest drags on our economy now is the lack of those “middle class / blue collar jobs”. We simply don’t build as much as we used to in this country. So for that segment of the population that had jobs in the manufacturing industry, where do they turn to now to get those wages based on their skill sets? Offshore wind creates an entirely new industry that can put several thousands of people to work. So not only are we reducing emissions, creating stable electric rates, and reducing our dependence on foreign sources of energy, we are also developing an entirely new industry that could be based in New Jersey.
For whatever reason some people do not want the government involved in developing energy projects, but that’s just ridiculous.
What does the government do a lot of?
Why do people accept government’s role in building roads?
Because they are necessary infrastructure.
Is the generation of electricity as necessary as roads?
Using incentives to develop the offshore wind industry in New Jersey will not only have lots of benefits for the state, but it just makes practical sense if you believe the government is here to ensure its citizens AND businesses receive the basics needed to live, work, and proposer.
AFP / Beacon Hill Institute report:
DOE National Renewable Energy Laboratory report: