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How Much Does a Solar Job Cost in Ontario?

While it is vital for any society to have reasonably priced electricity, any discussion about energy policy must recognize that investments in energy infrastructure have wide reaching economic and social outcomes beyond price and availability. These outcomes range from job creation and economic development to include health, environmental and social impacts.

In a recent study titled Economic Impacts of Solar Energy in Ontario we examined the consequences of including solar PV in Ontario’s energy mix – with a primary focus on economic impacts. Specifically, we wanted to consider solar PV in relation to some of the objectives that led Ontario back in 2009 to introduce its FIT Program in the first place, which were job creation, the creation of a “green economy,” and the phasing-out of coal from the energy mix.  In addition, the government of Ontario wanted to be sure that the cost of energy produced would not be a burden on ratepayers.

Approach

Our forecasts for job creation and ratepayer impact were generated through a ClearSky Advisors model that incorporates established and recognized 3rd party tools with in-house modelling. A range of sources contributed data to our model, including our own market forecast for the Ontario PV market, which was published in September this year. See end of article for further notes on our methodology.

Job Creation

 Figure 1 - Source: Economic Impacts of Solar Energy in Ontario, ClearSky Advisors (2010)

Quantifying the number of jobs that can be expected on the basis of the FIT program was our starting point. Ontario’s economy was hard hit by the recession and downturn in the automotive industry. Job creation was therefore a key political motivation behind the introduction of the FIT program. Our key findings include:

  • Installing 3 GW of solar PV capacity in Ontario from 2010-2015 (our market forecast)  will result in 72,429 person-years of employment (PYE) in the province;
  • Solar PV in Ontario creates 12 times more jobs than nuclear and 15 times more jobs than natural gas or coal per unit of energy produced; and
  • Jobs created by solar PV cost 4 - 6 times less than jobs created by nuclear, natural gas, or coal.

Figure 2 - Source: Economic Impacts of Solar Energy in Ontario, ClearSky Advisors (2010)

To compare job creation across various technologies, the most useful metric is to measure the number of PYE created per unit of energy produced. Figure 2 demonstrates PYE/GWh by different technologies. The findings are taken from recent University of California, Berkeley research that synthesizes data from 15 job studies. ClearSky Advisors has adapted this research to reflect Ontario-specific PV conditions such as insolation in Ontario and the duration of FIT contracts in the province.

Coal Phase-Out

Another objective behind Ontario’s FIT program was the desire to shut-down the coal generation plants in the province. While not a straight replacement we found that Solar PV can be a strong substitute for a significant portion of coal-fired generation in Ontario. Solar PV imposes minimal externalized health and environmental costs relative to other forms of peaking power including coal.

Cost of New Energy

A key aspect of any power generation is the cost to the ratepayers. For a province that needs to replace 43% of it’s current power generating capacity by 2030, comparing the cost of solar PV to existing (subsidized) power generation would not accurately reflect the choice the policy makers are facing. For Ontario, we therefore compared the cost of investing in solar power to the cost of investing in other forms of new generation (i.e. new natural gas, new nuclear etc.). Here’s what we found:

  • 3 GW of solar PV will increase costs to the average Ontario household by the equivalent of  0.7% of their electricity bill annually from 2010-2015 compared with alternative ways of replacing coal power, in this case we chose new natural gas; and
  • A $1,000,000 investment in solar PV will create 30% - 42% as much energy as other forms of peaking power but 2.4 – 6.4 times more jobs .

Other Economic Benefits

Ontario is poised to become the second largest solar PV market in North America (after California) in 2011; as an early mover, the province has a unique opportunity to develop a robust local PV industry that can serve markets in the rest of Canada and the United States.  

By developing local experience from 2010-2015, future solar PV capacity can be installed at a much lower cost to Ontarians. (Note: The Average Annual Cost Increase graph is based on 6 GW of solar PV by 2021. This number is only used to illustrate one of the outcomes of investing now in PV, ClearSky Advisors is not forecasting 6 GW of solar PV by 2021.) 

Finally, solar PV will result in $7.9 billion of spending in Ontario between 2010-2015 and generate  hundreds of millions of dollars in tax revenue for both Ontario and Canada.

Source: Economic Impacts of Solar Energy in Ontario, ClearSky Advisors (2010)

Source: Economic Impacts of Solar Energy in Ontario, ClearSky Advisors (2010)

 Conclusion

Though more expensive than other forms of power generation, there are strong reasons to support solar PV as an important part of Ontario’s energy future.

Building out solar power using a FIT program in Ontario is proving to be an extremely efficient job creation vehicle. Installing 3 GW of solar PV in Ontario from 2010-2015, the figure that Clear Sky Advisor’s forcast in it’s PV Market Forecast 2010-2015, will create over 70,000 person-years of employment while increasing costs to the average Ontario household by the equivalent of less than one percent of their electricity bill per year.

Further benefits include cleaner energy and the opportunity to establish Ontario as a leading jurisdiction for the PV industry in North America.

 


 

Sidebar: Methodology

Forecasts for job creation and ratepayer impact were generated through a ClearSky Advisors model that incorporates established and recognized 3rd party tools with in-house modelling.

Inputs for the model were taken from ClearSky Advisors’ Ontario PV Market Forecast 2010-2015 as well as trusted 3rd party sources. In particular, economic multipliers specific to Ontario were obtained from Statistics Canada, job creation data was taken from peer reviewed publications, and price data was taken from sources such as the Ontario Power Authority and Ontario’s Ministry of Energy. Please note the following:

  • Cost data for fossil fuels includes environmental and health externalities;
  • Additional costs for nuclear (including waste management and insurance) are not included; 
  • Ratepayer impact and job creation outcomes are tailored to reflect domestic content requirements in the province and other characteristics of Ontario’s Feed-in Tariff program;
  • Person-years of employment (PYE) include only direct and indirect jobs (induced jobs would be additional to figures reported here); and
  • The primary research was done through in-depth interviews (more than 150 conducted since May 2010) with renewable energy stakeholders throughout the province.
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