Do wind farms have a "major economic benefit"?

Published: 9th May 2012

"Onshore wind supported 8,600 jobs and was worth £548m to the UK economy in 2011, says the report, by consultancy BiGGAR Economics. Of this figure 1,100 jobs were created at local authority level, with £84m of investment."

The Independent, 7 May 2012

Recently the Campaign to Protect Rural England criticised the number of wind turbines being built - a number checked by Full Fact. On Monday both the Independent and the Daily Star commented on a report that outlined the economic benefits of onshore wind farms.

The papers reported that onshore wind farms created 8,600 jobs and generated £548 million for the UK economy in 2011 and that of this figure 1,100 job and £84 million benefited local communities.

Analysis

The Independent and the Daily Star were reporting on the findings of a report produced by the Department of Energy and Climate Change (DEEC) and RenewableUK - the body that represents the wind and marine power industry.

The report calculated the economic benefit of wind farms by asking 27 onshore wind farm projects across the UK to provide information about the total investment costs of an onshore wind farm project. 

They were also asked to estimate the proportion of their investment spent in the local area, that is the local area where the wind farm was being placed. This data was then used to make an estimate of the direct and supply chain economic impact of onshore wind farms in 2011.

As the report makes clear, the 18 wind farm projects that provided sufficient data were broadly representative of the wind farm industry in the UK in terms of the size of the project and what part of the country they were located.

The table above shows that, in 2011, onshore wind farms supported 8,640 jobs and £547.7 million in 'Gross Value Added' (GVA) to the UK economy in 2011. The Independent and the Star accurately reported these figures as 8,600 jobs and £548 million.

The report breaks down the investment costs into four categories: development costs, construction costs, operation and maintenance costs and decommissioning costs. In 2011 there were no decommissioning costs since many wind turbines are not old enough to have reached the end of their operating life. In the future there will be decommissioning costs but it is unknown how much of that will be spent in the UK.

But how much of these investments supposedly benefit local areas? The tables below outline what the Government estimates:

The top table suggests that onshore wind farms supported 1,078 local jobs and generated £84.5 million for local communities where wind farms were located. A similar picture is provided of the regional picture.

However, these figures alone don't tell us very much about the investment that doesn't go to local areas. The report also provides information breaking down how much of the costs are spent locally (in the local authority where the wind farm is located), nationally and outside the UK.

Eight per cent of development costs, seven per cent of construction costs and 29 per cent of maintenance costs are spent locally. Furthermore, two per cent of development, 55 per cent of construction and 10 per cent of maintenance costs are spent overseas.

What the figures show is that a relatively small proportion of initial spending actually takes place in the local authorities where the wind farms are located.

In addition, the majority of the construction costs are not even spent in the UK, although the opposite is the case for development and maintenance.

As is illustrated by the chart below - derived from the report's estimates - the vast majority of the costs associated with wind farms in 2011 were construction costs (although maintenance costs can be expected to add up over time).

The fact that construction sees the lowest proportion of local spend and highest proportion of spend overseas gives us some indication of where the early spending on wind farms is actually going.

Conclusion

Both the Independent and the Star accurately reported the findings of the report produced by the Department for Energy and Climate Change and renwable UK.

The report's findings were based on responses from 18 projects weighted to be representative of the UK national picture, although the size of the sample should always be taken into account when assessing the likely accuracy of the figures.

While the economic benefits to local areas - and indeed to the UK as a whole - were explained in the report, it is worth bearing in mind that the proportion of spending that actually goes to local areas varies considerably depending on whether the projects are under development, construction or seeing maintenance. 

Furthermore, the majority of the construction costs - which in 2011 was by far the largest component spend on a wind farm - were spent overseas in the sample of projects covered in the report. 

The report, at least, provides some justification that wind farms have economic benefits. Whether or not these are 'major' will still be a matter for debate.


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