This document summarizes a presentation about tools for assessing the economic effects of renewable resource projects. It discusses how economics studies can provide information on the financial impacts of renewable energy investments for communities and the economic impacts in terms of jobs and wages. It outlines three principal tasks for economic analyses: examining financial costs and revenues, economic impacts, and compensation to host communities. The presentation illustrates existing spreadsheet tools like CREST and RETScreen that can evaluate project costs and revenues, and the JEDI model for assessing economic impacts in terms of jobs, wages, and other indicators.

1. Tools for Assessing Economic Effects
of Renewable Resource Projects
James J Opaluch
Edson Okwelun
Georges Sfinarolakis
Environmental & Natural Resource Economics
University of Rhode Island
URI Environmental and
Natural Resource Econ

2. Organization of Talk
• Background and Purpose
• Methods
• Illustration of Tools
• Conclusions
• Questions?
URI Environmental and
Natural Resource Econ

3. Organization of Talk
• Background and Purpose
• Methods
• Illustration of Tools
• Conclusions
• Questions?
URI Environmental and
Natural Resource Econ

4. Renewable Energy Siting Partnership (RESP)
Hydroelectric
URI Environmental and
Natural Resource Econ

5. URI Environmental and
Natural Resource Econ

6. URI Environmental and
Natural Resource Econ

7. RESP Project Goals
“… provide technical expertise about
the effects that renewable energy
facilities may have on the people,
wildlife and natural resources of
Rhode Island”
RESP Website
URI Environmental and
Natural Resource Econ

8. RESP Project Goals
“… make state and municipal
information accessible to the public …”
RESP Website
URI Environmental and
Natural Resource Econ

9. Relation of Economics
Studies to RESP
• Provide information to communities on
financial effects renewable energy investments
• Provide Statewide information on economic
impacts (jobs, wages, etc) of renewable energy
• Create common ground for agreements
between developers and communities
URI Environmental and
Natural Resource Econ

10. Existing Tools Available
• Federal Gov. created tools to help communities
w/economics of renewable energy
• Easy to apply, use industry standard data, or
site specific data
• National Renewable Energy Labs (NREL)
URI Environmental and
Natural Resource Econ

11. URI Environmental and
Natural Resource Econ

12. URI Environmental and
Natural Resource Econ

13. Economic Analyses:
Three Principal Tasks
• Financial Costs and Revenues
– e.g. identify promising investment opportunities
• Economic impacts (jobs, wages, expenditures)
– Jobs in new Green Economy
• Examine case studies of compensation to
community for hosting projects
URI Environmental and
Natural Resource Econ

14. Economic Analyses:
Three Principal Tasks
• Financial Costs and Revenues
• Economic Impacts (jobs, wages, expenditures)
• Compensation to host communities
URI Environmental and
Natural Resource Econ

15. Organization of Talk
• Background and Purpose
• Methods
• Illustration of Tools
• Conclusions
• Questions?
URI Environmental and
Natural Resource Econ

16. Methods:
• Provide information on financial effects of
communities investing in renewable energy
• Provide information regarding economic
impacts (jobs, wages, etc) of renewable energy
• Provide common ground for agreements
between developers and communities
URI Environmental and
Natural Resource Econ

17. Financial Costs and Revenues
• Cost of financing, building, operating and
maintaining renewable energy facilities
• Discounted revenues, internal rate of return,
etc.
• Cash Flow, Debt‐Service Coverage Ratio
URI Environmental and
Natural Resource Econ

18. Existing Spreadsheet Tools: CREST
• Cost of Renewable Energy Spreadsheet Tool
• Spreadsheet‐based model developed by NREL.
• Calculates project net present value, levelized
cost etc.
• Used to determined feed‐in‐tariffs (FIT), cost‐
based incentives, etc.
• Solar, geothermal and wind, but not hydro.
URI Environmental and
Natural Resource Econ

19. Existing Spreadsheet Tools: RETscreen
• Spreadsheet‐based model developed by
Natural Resources Canada
• Analysis of energy production, cost, emissions,
financial analysis, and sensitivity/risk analysis
• Solar photovoltaic, solar thermal electric,
geothermal, wind, fuel cell, hydropower,
wave, reciprocating engine, tidal power, etc.
URI Environmental and
Natural Resource Econ

20. Methods
• Provide information on financial effects of
communities investing in renewable energy
• Provide information regarding economic
impacts (jobs, wages, etc) of renewable energy
• Provide common ground for agreements
between developers and communities
URI Environmental and
Natural Resource Econ

21. Economic Impacts
• Effects of activity on the region’s economy
– Direct Effects
– Indirect Effects
“Multiplier” Effects
– Induced Effects
URI Environmental and
Natural Resource Econ

22. Direct Effects: Project Development
Expenditures and Onsite Labor
• Truck drivers, crane operators, earth moving,
cement pouring
• Construction, management, and support
URI Environmental and
Natural Resource Econ

23. Indirect Effects:
Supply Chain and Finance
• Blade and tower manufacturing
• Steel mill jobs, parts, services, equipment
manufacturing,
• Sales, finance, banking and accounting
URI Environmental and
Natural Resource Econ

24. Induced Effects:
Local Expenditures
• Local area purchases of goods and services
due to the activity
• Restaurants, grocery stores, retail
expenditures, etc.
URI Environmental and
Natural Resource Econ

25. JEDI Model: Jobs and Economic
Development Impact Model
• Developed by National Renewable Energy Labs
(NREL)
• Based on IMPLAN (IMpact analysis for PLANning)
– A leading regional economic model
• Turned into spreadsheet tool, customized for
renewable energy
• Project‐specific data or industry average defaults
• Freely available
URI Environmental and
Natural Resource Econ

26. JEDI Models
• Wind
• Solar Photovoltaic
• Biofuels
• Natural Gas
• Marine & hydrokinetic
URI Environmental and
Natural Resource Econ

27. JEDI Models
• All JEDI models use same user interface
• Users enter basic information about a project,
– State, year of construction, and capacity
• Model estimates:
– Project costs (i.e., specific expenditures)
– Economic impacts: jobs, wages and salary
– Output (i.e., value of production)
URI Environmental and
Natural Resource Econ

28. JEDI
• Default information can be used, assuming
wind industry averages
• Or project‐specific values, as available
• Basic vs. Detailed Inputs
URI Environmental and
Natural Resource Econ

29. URI Environmental and
Natural Resource Econ

30. Organization
• Background and Purpose
• Methods
• Illustration of Tools
• Conclusions
• Questions?
URI Environmental and
Natural Resource Econ

31. Jedi Photovoltaic Basic Inputs
Base System Cost does
not include batteries,
Operations and
generators, or any
Maintenance Cost does
additional electical
not include debt or
materials and
equity financing, land
equipment beyond
easement or taxes
those necessary for the
base system.
URI Environmental and
Natural Resource Econ

32. JEDI PV Detailed Inputs: Installation Costs
Installation Costs
Subtotal $7,100,000 $7,100
URI Environmental and
Natural Resource Econ

33. JEDI PV Detail Inputs:
Operating and Maintence Costs
PV System Annual Operating and Maintenance Costs
URI Environmental and
Natural Resource Econ

34. JEDI PV: Other Parameters
URI Environmental and
Natural Resource Econ

35. Jedi PV Project Summary
URI Environmental and
Natural Resource Econ

36. Jedi Economic Impacts
URI Environmental and
Natural Resource Econ

37. URI Environmental and
Natural Resource Econ

38. Methods
• Provide information on financial effects of
communities investing in renewable energy
• Provide information regarding economic
impacts (jobs, wages, etc) of renewable energy
• Provide common ground for agreements
between developers and communities
URI Environmental and
Natural Resource Econ

39. Summarize Siting Agreements
• Identify and summarize criteria for
agreements elsewhere
URI Environmental and
Natural Resource Econ

40. Next Steps
• Identify additional tools?
• Validate model inputs and results against
existing RI case studies
• Provide on‐line “back of envelope” calculator
for web site?
URI Environmental and
Natural Resource Econ

41. Conclusions
• Exceptional Tools Available for Assessing
Financial Aspects of Renewable Energy
• Can provide “quick and dirty” results with
minimal information requirements
• More accurate estimates can be obtained with
project‐specific data
URI Environmental and
Natural Resource Econ

42. Questions?
URI Environmental and
Natural Resource Econ