Energy and Environmental Tools and Project Evaluation. Lecture 3: Employment and balance of trade analyses

Transcription

1 Energy and Environmental Tools and Project Evaluation Lecture 3: Employment and balance of trade analyses Poul Alberg Østergaard Course programme 1. Fundamental investment theory (h + h - PAØ). Feasibility studies, Discount rates and the time perspective (h+h - FH) 3. Employment and balance of trade analyses (h+h - PAØ). Environmental problems in energy supply (h - PAØ) 5. Environmental Impact Assessment (h + 1h - IL). Strategic EIA in energy projects (h IL) 7. Externalities (h + 1h - FH). Feasibility studies and public regulation (h + 1h - FH) 9. Introduction to mini projects (1/ h PAØ). Mini project case on biogas plant in groups (h) 11. Presentation and discussion of mini projects (h - PAØ & FH) 1

2 Programme Methodology, assumptions and conditions Method of data collections and calculations Examples: Green Energy Plan for Denmark Danish Economic Council Aalborg Energy Vision (Energy and employment in Europe) (PKK in Thailand) 3 Some definitions Costs: Either Import or Domestic added value (Labour or production factor income) GNP (Gross National Product) = Domestic production in market prices Public Finances: Government income and expenditures (Tax, subsidies, etc )

3 Import Present Value Methodology All costs are divided into a) import costs and b) domestic labour costs Only import costs are included in the calculation (domestic labour enters at zero) Assumptions/Condition Knowledge of import shares Unemployment in all categories in all the period (watch out for bottlenecks!) Strict Income policy / monetary policy (all surplus used to pay back foreign debt). Deficit on the balance of payment / foreign debt. 5 Example: What is the cost of building a power plant? From a company perspective? From a society perspective? 3

4 Gas engine incl. installation ( DKK) 3 Gas engine units 5 Cooling system and exhausting exchange 571 Sound reduction, pipes ect. 15 Ventilation system 15 Management and control system 15 Chimney 355 Installation Sum MW CHP plan ( DKK) Engine (incl. installation) 115 m3 heat storage m building 3 Transformer and grid connection 95 Ground ect. 35 Consultancy Sum 1395 Building (DKK) Bricks etc., Concrete etc. 93, Mortar, Carpenter materials 19, Iron, Metal material, Electrical articles 15,17 Pipes and fittings 7,1 Digging and drain, Sum 5,5 Bricklayer,5 Electrician 53,1 Blacksmith 7, Carpenter 1, Sum, Sum 1,51,7 7 Data collection methodology Employment Consumption scheme Materials share Materials prices Raw materials Employment Entrepreneur profit Work share Work share

5 Type of result Import and added Danish value: 3 MW CHP plant: Percent Import 37 Added value (Danish) Production factor income Sum Employment: 3 MW CHP plant (Person year per million DKK) Construction Production Total Trainee Unskilled Skilled Functionaries.1.. Sum Table.1: Schedule of results for the employment investigation 1995 (preliminary edition) Energy technology: Persons per mill. kr. Importshare Technical building I (Dronninglund - cogeneration)..1 Technical building II (updated from 19) 3.1. Technical building III (updated from 19) Technical building IV (Horsens cogeneration).7. Coal fired district heating 19 figures (small plant).5. Straw fired district heating (updated from 19)..1 Wood fired district heating (updated from 19)..1 Gas fired district heating (updated from 19)..19 5

6 Electrical heat pump (Danish) (updated from 19)..13 Electrical heat pump (imported) (updated from 19) 1..9 Natural gas motor driven plant (3 MW decentral cogeneration).1.37 Waste fired combined cycle plant 1.. Waste fired steam turbine plant.1.33 Natural gas combined cycle plant 1.. Affaldsforbrændingsanlæg.3. Coal fired cogeneration (Vestkrafts - Block 3) 1.5. Block 3 in Vendsyssel Power Station=s budgetted boiler investment Block 3's estimate for a natural gas fired boiler Examples I Green Energy Plan

7 Urban modernization Conversion from electrical heating A general activity for improving insulation (including large urban areas where low-temperature district heating can be established) Change from individual natural gas fired boilers to CHP district heating Decentralised use of straw and wood fuels Large-scale biogas plants 3 MW wind power in year 15 % reduction in electricity consumption in the industrial sector by means of employee training 13 Analyses in the Green Energy Plan: Technical analysis: Energy System and investment analysis Employment analysis: Jobs and the balance of Payment Public finance (Government budget) 7

8 Reference: Danish national energy plan Energy Persons Billion DKK Billion DKK Costs Foreign exchange costs Employment Reference: Energy - increasing fuel prices Billion DKK Billion DKK Costs Foreign exchange costs 1 1 Persons Employment Green Energy Plan - increasing fuel prices Costs Billion DKK 1

9 Green Energy Plan - increasing fuel prices Foreign exchange costs Billion DKK 17 Green Energy Plan - increasing fuel prices Employment Persons 1 9

10 New Jobs Cause No. of persons Conversion from electrical heating Additional insulation 7 Change from natural gas to district heating 1 More decentral cogeneration plants 15 Biogas and straw gasification plants Wind generators Fewer central power generating stations - Power saving Total for plants and installations Operation and maintenance Total Impact on public finances Billion DKK Year 5 Year 15 Additional costs Foreign exchange costs Employment effect Reduced benefits Increased tax revenues Natural gas company deficits Energy levies Energy subsidies Secondary effects,7, ,5 1,3 -, - 1,1-1,1 +, 5, -, 1797, 1,7 -,5-1, - 1, +, Effect on public finances + 1, + 1,

11 Green Energy Plan Conclusions: Fulfilment of CO emission targets - 17 new additional jobs in Denmark Neutral for the balance of payment Neutral for the public finances 1 Example : Danish Economic Council 11

12 Danish Economic Council Case of Cost Benefit Analysis Sunk Costs Employment - Import Analysis 3 Costs Env Total Benefit Billion kroners Flue gas purification Small-scale cogeneration of heat and power Privately owned in-land wind turbines Utility-owned inland wind turbines Use of biomass Subsidies for renewable energy Subsidy for connection to district heating networks Refiting old house for district heating Refitting old and electrically heated houses for district heating Subsidies for commercial energy savings Agreements with industry about savings (lowered CO-tax) Energy labelling og buildings Total costs of energy policy measures NPV199-1 referenced to Discount rate of %

13 Conclusions Danish 199 Energy Policies have not been cost effective Recommendation: Socio economic feasibility studies (Cost Benefit Analysis) should be used more in the Energy and Environmental Sector. 5 Consequences of calculation methodology: Case: MW small CHP constructed in the period : Construction costs in marked prices: 5.3 billion DKK. In the CBA calculation: Cost = app. billion DKK. 13

14 Important Assumption - Sunk Cost Electricity production from wind turbines only save fuel cost, since excess capacity is assumed in the calculation 7 Results of the cost benefit analysis Cost-Benefit Analyse Milliader kroner 5 Cost Benefit Small Dec scale k/v CHP Privately Vind owned (privat) wind power Vind Utility (elværk) owned wind power Invest. d&v Skatteforvrid. Miljøfordel Brændsel Sparet d&v Sparet Inv. Invest O&M - Tax Distortion - Env benefit - Fuel - Saved O&M - Saved Inv

15 Results - if capacity costs and maintenance are included Milliader kroner Cost-Benefit Analyse Small Dec scale k/v CHP Privately Vind owned (privat) wind power Vind Utility (elværk) owned wind power Invest. d&v Skatteforvrid. Miljøfordel Brændsel Sparet d&v Sparet Inv. Invest O&M - Tax Distortion - Env benefit - Fuel - Saved O&M - Saved Inv 9 About the employment consequences of 1 persons: We assume in the calculations, that workers in the wind industry have alternative employments with the same pay 3 15

16 About the export of wind technology of annual approximately billion DKK: It is of no importance, whether a given production is made for domestic or export markets Nowadays international capital markets are rather well functioning. Thus any need for foreign currency to pay for import can be available via foreign loans. 31 Case 3: The Aalborg Energy Vision 5 Yearly costs [Million ] 3 Electricity trade CO-tax Operation and Maintenance Fuel Investment - rail Investment 5 % RE 5 Reference - 3 1