Estimating the potential impact of a greening economy on job creation
Day Month Year
Green Economy SummitSandton, 19 May 2010
Jorge MaiaHead: Research & InformationIndustrial Development Corporation
Introduction to the IDC/DBSA research project
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• High expectations around green jobs:– Rapid growth sector with enormous multi-sectoral potential.– Determinant of future competitiveness.– Economic crisis imperative – one of the main solutions.
Need for greater clarity around job creating potential.
• Existing figures on green jobs:– High variability from one study to another - mainly sector- or technology-specific, no macro-economic estimates.– Often weak reliability / uncertainty about the sources.
Uncertainty = criticism = credibility issues.
• Inform optimal technology mix to meet energy demand, highlighting relative jobs potential:– Not “green jobs” in isolation, but strong employment emphasis/balance when greening the economy.– Policy trade-offs (long-term economic growth, emissions reduction, job creation, sustained competitiveness).– Acknowledge and face the various constraints.– Prioritise sectoral emphasis, sequencing policies over time.
Maximise job creation as we green the SA economy.
Moving away from an overwhelming dependency on fossil fuels (especially coal) for energy generation in SA, towards alternative energy
sources:
• Mining
• Transport (logistics)
• Environmental impact such as pollution levels (air, water, soil etc.)
• Economic linkages (GDP, jobs, investment, etc.)
• Impact on output levels, investment & jobs in coal mining (expansion at slower pace, substitution in the L-T)
• (New investment, jobs and output through alternative energy sectors, incl. const., manufacturing, O&M.)
• Improvement in soil and land quality
• Reduced economic activity in several sectors (e.g. machinery & equipment, chemicals etc.), via linkages, due to lower coal mining production over time
• Improved water and air quality• Increased water availability
• Increased economic activity due to linkages arising from expanding renewable energy sector & introduction of cleaner technologies .
• Potential growth of export sector associated with renewables & cleantech.
• Transportation of cleantech materials• Transport of export coal to ports. • Road usage: reduced congestion &
infrastructural damage.
• Transportation services activity (rail & road) from coal mines to power stations
• Regional shifts i.t.o. investment, GDP, jobs
- ve impact + ve impact
Introduction to the IDC/DBSA research project (cont.)
Estimating the economy-wide impact
Assessing the impact of introducing alternative/renewable energy sources & cleantech
New investment required
Demand for investment related
goods and/or materials during
construction phase
Increased construction activity, as well as higher production activity in
existing/new domestic supplying sectors (GDP, jobs, investment, etc.)
Adverse BoP implications due to increased import demand for
specialised goods not available in SA, particularly in the S-T, gradually +ve
Cleaner energy generation/technology
application and operational phase
Increased economic activity associated with cleaner energy generation /
technology application, with direct impact on job creation
Increased economic activity in associated industries through linkages /
multiplier effects (e.g. business services, components manufacture)
Adoption of “greener”
technologies
4
Export potential
Export potential
Process of determining employment potential
Technological application/resource management (energy generation, energy efficiency, emission control, biodiversity)
Construction Manufacturing Operation & maintenance
Short-term jobs opportunities
Local potential
Export potential
Local potential
Export potential
Local potential
Export potential
Medium-term jobs opportunities
Long-term jobs opportunities
• Technically, wind power has the largest RE generation potential after solar.
• Growth in global wind power generation capacity has been almost exponential.
• Some slowdown since late 2008 (with a few exceptions such as China).
• Significant contribution in more than 70 countries, both industrialised and emerging/ developing.
• Major challenges include: – Not yet competitive, although continuously improving;– Depend on available wind power, backup capacity
needed;– Logistics for construction; – Grid connection.
Case study – wind power generation: Growth and challenges
Cumulative global wind power generation capacity
0
100
200
300
400
Gig
awat
t
Cumulative capacityForecast GWEC scenario
Source: Global Wind Energy Council
6
Case study – wind power generation: Potential and challenges
5.6 – 8.0
Average speed m/s
4.6 – 5.6
3.6 – 4.6
0 – 3.6
SA’s wind power potential:• Recorded potential is only moderate at best, though
data is insufficient ;• Potential contribution to power generation in SA may
be significantly higher – improved wind atlas being developed;
• Potential (average speed) directly affects unit cost;• Some areas in east and north Africa seem to have
higher wind power potential than South Africa.
Major challenges facing the domestic wind power industry:
• Transmission infrastructure / grid connection;• Regulatory framework, progress, support ;• Wind energy expected to be competitive by 2020.
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Case study – wind power generation: Opportunities and strengths
General opportunities & strengths include:
• Promising REFIT tariff, ‘free’ power source, little water needed.
• Tested technologies, improving competitiveness.• Commissioning – short period, generating units
separately completed.• Strong investor interest – many proposed projects in
pipeline, involving both global & local players.• Existing manufacturing capacity, demand-driven
expansion potential.• New components manufacturing potential.• African markets.• Support from global institutions (UNDP, GEF, IFC).
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Case study – wind power generation: Potential involvement of local industries
Local industries: Potential capacity to contributeIndustry Product Capacity
Construction & civil engineering Foundation laying, tower erection, housing SufficientManufacturing:
• Steel & metal products• Glass fibre & composites• Electrical equipment• Machinery
Towers, frames, hubs, brakes, other partsRotor blades, nacelle housingGenerators, transformers, cables, other partsShafts, bearings, gears
Very goodGoodGoodLimited
Electricity distribution Grid connection GoodElectricity generation Operation & maintenance GoodLogistics Transporting mega-parts on rough terrain Challenging
• Local manufacturing capacity (see next slide) can be promoted through engagement with established global manufacturers.
• Significant opportunity exists in construction and manufacturing activities targeting other African markets with higher/good wind power potential.
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Case study – wind power generation: Manufacturing wind turbines
Composition of typical 5 MW wind turbine in terms of cost sharePart Purpose % share Material usage
TowerRotor bladesGearboxPower converterTransformerGeneratorMain framePitch systemMain shaftRotor hubNacelle housingBrake systemYaw systemRotor bearingsScrewsCablesAll parts
Provide heightWind force surfaceIncrease rotational speedConvert to alternate currentIncrease voltage to grid'sConverts energy to electricitySupports entire turbine trainAdjusts blade anglesTransfer rotational forceHolds bladesCovers whole drive trainBring turbine to a haltRotates nacelle to face windCarry axesHolds components in placeLink turbine to sub station
29.424.914.5
5.64.03.93.13.02.11.51.51.51.41.41.21.1
100.0
Sections of rolled steel, lattice structure or concreteMoulded glass fibre/carbon & epoxy/pol. compositesSpecial steelVarious metals and other materials (electronics)Various metals and other materials (electronics)Various metals and other materials (electronics)SteelVariousSpecial steelCast ironGlass fibreSteel and compositesSteelSpecial steelMetalCopper and plastics
Source: EWEA 10
Case study – wind power generation: Estimating the job creation potential in SA
Job creation potential: A range of research resultsCountry / area Number of
jobs per MWNote
Global 3.3 Aggregate 400 000 jobs in a 120 GW industryUSA 3.4 Aggregate 85 000 jobs in a 25 GW industryEuropean wind industry 2.5 Aggregate 160 000 jobs in a 64 GW industryEurope (WWF) 0.4 Only operations & maintenanceLiterature averages (AGAMA)
• Manufacturing• Installation• O & M• Other
4.83.20.51.00.1
Derived from a range of sources
South Africa:DME / UNDP / GEFDME
3.1*3.6 - 7.4*
SA Wind Energy Programme, 2003Capacity Building in Renewable Energy, 2004
* Jobs per GWh including indirect jobs11
New capacity created in terms of wind farmsDomestic Other
Africanprojects
Conservative scenario
Optimistic scenario
Short-term 1 x 100MW 3 x 100MW 0Medium-term 4 x 150MW 5 x 200MW 3 x 150MWLong-term 7 x 200MW 9 x 300MW 5 x 150MWAggregate 2 100MW 4 000MW 1 200MW
01,0002,0003,0004,0005,000
O & M Con Man O & M Con Man
Conservative Optimistic
Num
ber o
f job
s Short-term job creationDomesticAfrica
01,0002,0003,0004,0005,000
O & M Con Man O & M Con Man
Conservative Optimistic
Num
ber o
f job
s Medium-term job creationDomesticAfrica
01,0002,0003,0004,0005,000
O & M Con Man O & M Con Man
Conservative Optimistic
Num
ber o
f job
s Long-term job creationDomesticAfrica
• Jobs estimates using employment intensity/MW of 3.2, 1.0 & 0.7 for manufacturing, construction and O&M, respectively.
• Manufacturing numbers based on:– Share of parts in turbine cost (see composition of parts table);– Competitiveness of their domestic industries (high, medium, low);– Increasing penetration of local manufacturing (40%, 60%, 80%).
• South Africa’s future capacity ceiling will determine – Depends on IRP, expectations being only 2 000MW – 2 500MW
Results:
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Case study – wind power generation: Estimating the job creation potential in SA
Number of jobs (conservative scenario)Short-term Medium-term Long-term
O & M 70 490 1 470Construction 120 890 1 890Manufacturing 92 1 081 3 626Totals 282 2 461 6 986
Number of jobs (optimistic scenario)Short-term Medium-term Long-term
O & M 210 910 3 010Construction 360 1 310 3 410Manufacturing 277 1 635 6 027Totals 847 3 855 12 447
Case study – wind power generation: Potential jobs estimates
Concluding remarks
• Substantial, yet preliminary, estimation work undertaken on :– Energy generation: solar PV; solar CSP; wind; hydro (small & large); wave and tidal;
landfills; pyrolysis; biomass combustion; biofuels; and nuclear.– Energy efficiency: solar water heaters; light bulbs; insulation; cleaner stoves.
• Estimation work yet to be undertaken on:– Emissions control.– Biodiversity.
Need for substantial testing with key role players.
Day Month Year
The Industrial Development Corporation19 Fredman Drive, SandownPO Box 784055, Sandton, 2146South AfricaTelephone (011) 269 3000Facsimile (011) 269 2116E-mail [email protected]
Thank You