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Renewable Energy: Economic Powerhouse?

New research suggests that industry growth could generate hundreds of thousands of jobs for U.S. workers.

By Roger H. Bezdek


According to new research, the number of U.S. jobs created as a result of rapid growth in the renewable energy and energy-efficiency (RE/EE) field as of 2006 is estimated to exceed 450,000. The vast majority of these positions were employed in private industry. What does this new source of jobs and tax-base growth signal for the U.S. and state economies, especially in regions having ready, skilled labor pools?

Last year the total number of jobs created by the renewable energy industry exceeded 450,000, according to new research. Photo courtesy of Evergreen Solar.

The answers to such questions are of vital interest to the educators and workforce trainers, policy makers, regulators and urban planners charged with responding to projected growth in this industry. Yet despite widespread interest in the size of the renewable energy industry, its potential economic impacts and the number of jobs involved, a comprehensive study of this industry has never been conducted — until now. The American Solar Energy Society (ASES), ASES chapter Green Energy Ohio and the Washington, D.C.-based economic research firm Management Information Services Inc. (MISI) are conducting a major study of the economic potential of the RE/EE industries at the national level and for Ohio. The study is titled “Defining, Estimating and Forecasting Employment in the Renewable Energy and Energy-Efficiency Industry in Ohio.” Ohio was selected as the focus of this initial study because of its strong but underutilized manufacturing base and for the potential economic benefits that growing industries in RE/EE could have there. Other states are being considered for future studies. The study will disaggregate the industries by technology and focus particularly on potential job creation.

Why is this study important?

Although analysts have conducted RE/EE industry studies and forecasts for more than two decades, no rigorous definitions exist for either of these industries or for their current size, structure and composition. For example, many studies have been conducted on the potential for specific components of the RE industry (e.g., wind, photovoltaics, biomass, and so on), and experts have established long-term forecasts of the economic impacts of major proposed RE initiatives and spending programs. However, such analyses are of limited usefulness until we have a better idea of the size and characteristics of the existing RE industry. What does it mean to say that “experts predict that the number of jobs in the RE industry will increase threefold by 2015,” when we do not know what the current employment base is? What does it mean to say that “implementation of a certain set of policy incentives will create X thousands of RE jobs by 2020” when we do not know how many jobs there were in RE in 2006?

The study will serve as a guide to local leaders for attracting and responding to renewable energy businesses eager to establish new manufacturing facilities.

At present, there is not even a rigorous, generally agreed-upon definition of what constitutes the RE “industry.” Obviously, the RE industry includes technologies such as wind energy, photovoltaics (PV), solar thermal energy and biomass. But should all hydropower technologies be included, even large, environmentally threatening systems? What about geothermal energy? Daylighting? Climate-responsive buildings? Hydrogen?

One of the major contributions of the ASES/GEO/MISI project will be to develop a rigorous definition of the RE industry, estimate its current size and composition and forecast its growth. ASES hopes that the findings will become the standard for any type of economic analysis of the RE/EE industry conducted by future researchers.

Examining Initial Findings
Here we summarize some study findings based on research conducted as of this spring.

Table 1 (right) shows estimates of 2006 jobs in the RE industry and the total (direct plus indirect) jobs created by RE in that year. The latter represent the “multiplier” effect of the RE jobs. For example, jobs in a factory producing PV systems create secondary employment in firms providing inputs and products to the factory and in support service firms such as food services, entertainment, dry cleaning, and so on. Table 1 shows that, in 2006:
• Nearly 200,000 people were employed in RE jobs in the United States.
• The total number of jobs created by the RE industry exceeded 450,000.
• Ninety-five percent of the jobs were in private industry.
• Nearly 70 percent of the jobs were in the biomass sector — primarily ethanol and biomass power.
• The second-largest number of jobs was in the wind sector, followed by the hydroelectric and the geothermal sectors.
• Relatively few jobs were in the solar thermal and biodiesel sectors.
• More than half of the RE jobs in government (at the federal, state and local levels) were R&D-oriented jobs at U.S. Department of Energy laboratories.

It is also important to get an idea of the numbers of jobs and types of skills and occupations being created in the RE industry. While these will differ by technology and sector, the data in table 2 (below) offer insight. This table details the typical occupational distribution for a wind turbine-manufacturing company with 250 employees. It illustrates, first, that RE firms typically employ a wide range of workers at all educational and skills levels and at widely differing earnings levels.



Second, at RE companies few employees are classified as “renewable energy specialists.” Rather, most of the workers are in occupations such as engineers, machinists, assemblers, laborers, clerks, bookkeepers, accountants, maintenance workers, purchasing agents and so on. All of these employees owe their livelihoods to the deployment of renewable energy technologies but, in general, they perform the same types of activities at work as employees in firms that have little or nothing to do with renewable energy.

Thus, table 2 shows that the job distribution of a typical RE manufacturing company may differ relatively little from that of a company that manufactures other products. The production of wind turbines and wind turbine components requires large numbers of engine assemblers, machinists, machine tool operators, mechanical and industrial engineers, welders, tool and die makers, mechanics, managers and purchasing agents. These are “renewable energy” workers only because the company they work for is manufacturing a renewable energy product.

Forecasting an RE-Powered Economy
In addition to its value in defining the RE/EE industry and estimating its characteristics and projected growth, the study will serve as a guide to state and local leaders for attracting and responding to RE/EE businesses eager to establish new manufacturing facilities and sales offices. It will also help educators establish the curriculum requirements needed to train an emerging RE/EE workforce. Preliminary study findings will be presented at SOLAR 2007, the ASES National Solar Energy Conference in Cleveland in July (see www.solar2007.org for conference details). The free report will be available this summer for download at www.ases.org.

In a time of national angst concerning the erosion of the U.S. manufacturing sector and the loss of U.S. manufacturing jobs, there is powerful potential in the rapid growth of many renewable energy technologies. Wind power, for example, is the fastest-growing source of electrical power in the world. In Ohio, as in many other states, renewable energy firms can help revitalize the manufacturing sector and provide the types of diversified, high-wage jobs that all regions seek to attract.

Roger H. Bezdek is president of Management Information Services Inc., a Washington, D.C.-based economic research firm specializing in forecasting, energy and environmental issues. Contact Bezdek at rbezdek@misi-net.com.

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