How Much Does a Solar Job Cost in Ontario?

Jon E. Worren and Brennan Louw, ClearSky Advisors
December 02, 2010 | 14 Comments

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)

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.

14 Comments

Allen Gerhardt
November 11, 2011

So many professional liars visiting here, too bad they can't read the article and digest the information. The same old clique's and bumper sticker remarks, with no association to the facts. Nuclear power is not cheap, not safe and not wanted. Coal power is a major loser all around. Renewable energy is the only sustainable answer. The numbers tell the story; solar power has brought economic development, has not raised costs significantly, in fact lowers costs over time as shown by the chart included in the article. Fuel costs for fossil fuel and nuclear power rise every year, but wind and sun do not. Check with Japan for the real cost of nuclear power. Abandoned homes and farms and dead and cancerous relatives is worth how much? What is the value of birth defects? Greedy poison peddlers can tell all the lies they want, but obviously no one is listening to them.

John Jaronski
December 8, 2010

And I suppose nuclear energy has a much lower taxpayer and ratepayer subsidy than solar or wind? At least with solar or wind generation you don't have to spend half a billion dollars or more per year just to operate each facility.

rolf westgard
December 7, 2010

Nuclear is the lowest cost and most reliable source of energy in the US power grid. Solar and wind are taxpayer subsidized trivial and erratic sources

ANONYMOUS
December 7, 2010

Keller, Do you really think reducing the cost of energy is the answer? How can you reduce the cost of energy when the province has an ever increasing demand? Its inevitable for the cost of energy to increase to maintain this supply and demand. I don't think coal is going to get much cheaper than it already is. The electrical grid infrastructure will always need maintenance and improvement regardless of the source of power feeding it. Perhaps you meant reduce the consumption of energy?
To say solar PV is going to be a major contributor to high energy costs is ludicrous. Realistically speaking, solar PV and wind energy combined will not even reach 50% of the current nuclear supply to the province. It's only meant to offset peak demands, eliminate harmful coal plants and create over 75,000 new jobs.

Michael Keller
December 7, 2010

Comparing Ontario to other areas (e.g. Germany) with somewhat worse incoming solar energy is comical.

The physics and economics of solar energy in Ontario are poor and there is no way to get around that fact. The dismal capacity factor and high capital cost invariably lead to very expensive power.

If you want to increase employment, reduce the cost of energy, thereby allowing industry and consumers to keep more of their money and spend it as they see fit.

Bruce Sharp
December 7, 2010

I left a less-than-flattering but reasonable comment yesterday and don't see it. Is REW now filtering comments ?

Jim Stack
December 6, 2010

Excellent facts D and G. If we remove all the subsidies for fossil fuels and nuclear the naswers would be clear. If we took all the pollution they cause and cap and trade them the cost would be higher still.

The amazing batteries and starage to level power needs are in the new lithium batteries vehicles. Most EVs sit 23 hours a day and can regulate the loads, store excess night power and drive and still provide power during the day. V2G is here and work with the EV's and GRID.

It a new EVworld with vehicles that help the GRID. You can't ramp down a nuclear or COAL plant so let plugin store that excess.

Gerry Wootton
December 6, 2010

Thanks to Dunnison for shedding some light. Dunnison underestimates Ontarious insolation -- You have to go to Moosonee to find as little insolation as southern Germany. When you factor in cloud cover, northwestern Ontario has way more sun than Germany or Japan. Eastern Ontario is also a very productive location.

Here's my advice to coal fans -- connect a large pipe from the nearest coal-fired plant to your house; inhale; enjoy. Coal fired power is estimated to cause 16,000 premature deaths in Ontario every year. Thanks for all the mercury, cadmium, arsenic, dust, asbestos, etc. that coal spews into the environment. Anyway, it's time to call out the coal guys -- almost nobody scrubs and when they do they only catch 75-80% of the harmful crud. Hardly anybody does CCS and when they do, generation is 15-20% less efficient and 40-50% more expensive and only captures 90% of the effluent which, when stored escapes at a rate of 5% per year -- after 18 years the GHG emissions reach an equilibrium with non-CCS generators. Also, thanks very much for acid rain and the demolition of decent fishing in southern Ontario. Coal is cheap because they never pay the bill for all the collateral damage. The reality is that 'clean coal' is effective PR but just science fiction - hasn't been done; won't be.

If you care, look at the Ontario load line. In summer, solar can and will offset most of the peak demand. In winter, peaks are lower and the problem area is the evening peak which is better served by windpower which happens to have peak capacity at that time.

Ontario has a choice -- spend many billions on transmission (which they neglected to do in the past) so that they can have renewable capacity comparable to Quebec or greatly improve the renewable energy portfolio.

Firm capacity is also good - so start investing in storage capacity. One might ask, why does Ontario have less than Norway?

BTW: NG-fired peaking costs ~$0.17 per kWh - who's subsidizing that?

David Dunnison
December 3, 2010

These negative comments are surprising & misleading.

Any agenda?

Tom, your site points out how the support for the nuclear energy industry. Welcome to power generation. No level playing field. Conventional generation – especially fossil – receives tremendous subsidies.

Please explain how PV is a net energy drain in winter – no sunlight? Did Ontario move above the Arctic Circle?

You advocate for smart meters & time-of-use pricing. Isn't time of use effectively a rate hike for daytime consumption? If the sun shines in your backyard for an hour you can help reduce mid & on-peak demand. Period.

The Ontario FIT program is about job creation – sustainable jobs, sustainable industries, sustainable generation.

The PV industry is the biggest growth industry ever, while the auto industry is in a 30 yr decline.

We have spent $B's supporting the auto industry. The FIT program generates billions of dollars of solar industry support. One industry takes, solar provides.

Ontario's 2011 GDP growth will lag the Cdn avg. Ontario lags in jobs recovered since the recession. The FIT program generates jobs, not welfare recipients.

Rolf, the US solar industry is now growing at an incredible rate – with tremendous job growth.

The US is taking advantage of rapid cost reduction in solar. Are we afraid to do the same in Canada?

Rolf, why support coal, oil & gas?

Anonymous, please do the real math on the actual real cost to the electricity consumer in Ontario of the solar PV FIT. Telling old jokes about statisticians is fear-mongering.

Keller, Ontario's insolation is similar to the two largest solar markets in the world – Japan and Germany.

The Ontario FIT program is not perfect. It has had its implementation challenges and some inconsistency issues. But, it is good for Ontario and is better than trying to hang onto low-value jobs in declining industries.

Regards, David (http://d-bits.com)

tom clark
December 3, 2010

As an retired grid operator I can honestly say that intermittent power such as solar or wind is a waste of time and money that could be better spent on coal plant scrubbers etc.
Also I agree with the four existing comments.

Michael Keller
December 3, 2010

Try looking at a map of the incidence of solar energy in Ontario. It is poor.

Taking money out of the pockets of the consumer to subsidize an extremely poor means of providing energy is nothing more than theft, aided and abetted by the government. Even worse, it drives up the cost of providing goods and services for no rational reason.

ANONYMOUS
December 3, 2010

With actual electricity production of 15% (generous for Ontario) compared to capacity and contracted FIT electricity prices at almost 11 times current prices (HOEP + Global Adjustment) + lost revenue for OPG + backup power, the ratepayers will be paying dearly for each and every kWh of solar produced. When calculating the job creation powers of green energy it is incumbent that the purveyors of that information, at the very least, ensure that they don't gloss over or ignore inputs that distort the facts! Someone once asked a mathematician, a statistician & an economist: what is 2 + 2 . The mathematician gave the answer 4 immediately, the statistician pondered for a while and said the answer is somewhere between 3 & 5 and the economist simply said what answer do you want? This study appears to have been prepared by latter!

Tom Adams
December 3, 2010

ClearSky Advisors claim that PV can be a strong substitute for a significant portion of coal-fired generation in Ontario. Hang on. The role of coal in Ontario is to firm nukes and to provide seasonal capacity. PV will do nothing for firm nukes but will give us some intermittent power in summer. However, during the winter peak hours the PV output will be zero while exacerbating the winter morning down ramps and afternoon up ramps. The capacity value in winter of a large PV fleet may well be negative. Where are those magic batteries?

Apparently following the ClearSky numerology train of thought, the Ontario government used to claim that green power will only increase rates 1% per year. With rates now rising 10% per year, the government is now refusing to provide supporting calculations for their rate analysis or to discuss the impacts on all rate classes. See: www.tomadamsenergy.com

rolf westgard
December 3, 2010

If all those solar jobs are really true, it will push solar costs even higher compared to much lower cost coal, gas, and nuclear.
There's a reason solar currently provides about one tenth of one percent of US electric energy.
Dream on.

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Jon E Worren

Jon is the co-founder of ClearSky Advisors. He has more than 18 years of experience in the clean technology and IT industries. Jon has worked with clean technology companies operating in both North America and Europe and his experience...