Measuring the economic impact of offshore wind projects is often fraught with difficulties. Assessments generated by industry “insiders” tend to be unrealistically high and met with cynicism, especially if they are impossible for a non-economists to comprehend.
If the offshore wind sector is to cultivate political support and play a responsible role in the wider energy debate, it needs to have a transparent and straightforward methodology that produces credible figures.
Economic “multipliers” to estimate the impact of investment on total economic activity are often based on standard industry classification (SIC) codes. SIC codes haven’t yet caught up with offshore wind’s unique supply chain. For example, a SIC-code based analysis for UK offshore wind would be likely to show that offshore wind development would have a substantial impact on UK steel production. But the UK has little capacity to produce the type of steel used for offshore wind turbine towers and monopile foundations. So, estimates need a comprehensive understanding of the supply chain just as much as knowledge of economic models.
The right approach for offshore wind needs to remove the mystique out of economic analyses so results can be generated and understood by a wide range of stakeholders. If the method is comprehensible to the general industry, “surprising” outputs are easily explored and explained.
That is why we teamed up with the University of the Highlands and Islands to produce the “A new economic impact methodology for offshore wind” white paper <<LINK>>. The paper outlines a new approach to measure the economic impact, including job creation, of offshore wind.
The approach in the white paper produces assessments of economic impact that are reliable, believable and replicable. The simple but robust methodology in this white paper will allow renewable energy decisions to be made with greater confidence and for better evidence-based policy.
Although the paper is focused on the impacts from investments in offshore wind and the method applied first to UK regions, there is no obstacle, however, to its application in other sectors and other territories.
Alun Roberts Associate Director BVGA