By Jack Knudson
A recent study conducted by the George V. Voinovich School of Leadership and Public Affairs presents data indicating potential economic benefits that could stem from increased utility-scale solar energy projects in Ohio.
The study, titled Measuring the Economic Impacts of Utility-Scale Solar In Ohio, analyzed these economic impacts through three hypothetical scenarios: a “low” scenario of 2.5 gigawatts, a “moderate” scenario of 5 gigawatts, and an “aggressive” scenario of 7.5 gigawatts. The study was conducted by Gilbert Michaud, Ph.D., Christelle Khalaf, Ph.D., Michael Zimmer, JD, and David Jenkins, MS.
Three elements comprise the overall impact of utility-scale solar projects. At the top of the chain comes direct effects, generated by manufacturing, construction and operations and maintenance employment that is required to build and sustain the solar projects. Next comes the indirect effects, generated by the demand for manufacturing, construction, and maintenance materials. Finally, there are the induced effects, which are generated through the participation of workers in the local economy as they spend their income. This wave of effects combines to create a total economic impact analyzed by the study.
The study authors incorporated economic assessment models to find the impacts of the construction phase and the operations and management phase. With the addition of inputs such as the size and wattage of the three scenarios, as well as assumptions of local costs and wages in Ohio, the models were able to produce promising outputs for the state.
Including the construction phase and assumed 40-year operations phase, the aggressive scenario of 7.5 GW could have a total economic impact of around $16 Billion. In addition, it could create at least 54,731 new jobs in the Ohio workforce.
These total results include a combination of direct, indirect, and induced effects.
What do these numbers mean for Ohio?
As the study states, all three scenarios have found that an increased presence of solar power in Ohio will provide several benefits, such as “economic growth, diversification, durable job creation, new economic clusters and stable income generation across the state.”
Gilbert Michaud, a professor at the Voinovich School, says one clear advantage of increased solar production is that it will expand an already prodigious supply chain in Ohio.
The popularity of solar power is rapidly growing in Ohio as more applications for large scale solar projects are being considered by the Ohio Power Siting Board, which is a state agency that oversees the approval of energy installation. Michaud noted that the approved and pending projects make up for more energy production than that of the study’s low scenario of 2.5 GW.
In addition, Ohio has a strong network of solar manufacturers. In one case, Perrysburg, Ohio, is home to a manufacturing plant of First Solar, one of the leading solar manufacturers in the U.S. Since Ohio is in a strong position, it will reap profits by expanding the in-state supply chain instead of relying on imports from other states.
“We have this really strong network already. And it is sort of piggybacking off of the automotive and glass industries. There’s been a lot of these big plants that they have already and these glass manufacturers realized that they could manufacture photovoltaic panels. So we have this cool, unique advantage where if we build a lot of these projects in Ohio, we’re keeping those big economic impacts within the state,” Michaud said.
Ohio is on the verge of a major transition from nonrenewable energy to renewable energy. As more coal plants shut down, an energy production void has appeared, needing to be filled. While natural gas has primarily taken a leading role as a cheap way to generate electricity, it still stands as a “bridge fuel” that will inevitably need to be replaced by renewable energy sources in the distant future. When asked about this transition, Michaud stated that solar energy is starting to become more prominent in Ohio.
“I think it’s happening now. We’re going to see more of the fruits of it in the next two, three years, and then it’s really going to take off and accelerate,” Michaud said.
Getting a head start on this transition is a smart judgment for Ohio, as renewable energy – including solar – is beginning to drive markets when it comes to Fortune 500 technology companies like Amazon, Google and Facebook, all of which have or will have large data centers in Ohio. A crucial part of these companies’ mission statements is the commitment to use 100% renewable energy by a certain date. If Ohio continues the trend towards increased solar projects, it could become a more favorable location for companies.
Additionally, as part of the tremendous boosts to Ohio’s economy demonstrated with each model, the study projects an increase in the Ohio workforce and additional tax revenues that could go towards local communities. Technically, there are sales and property tax exemptions for solar energy in Ohio, so these “tax revenues”’ that the study refers to are not acquired by traditional state taxation. Instead, solar project developers are offered the chance to participate in a payment in lieu of taxes (PILOT) program. With this program, a local county commissioner or another state group can leverage a dollar amount to a solar project developer – for example, a $9,000 per megawatt charge. The aggressive scenario of 7.5 gigawatts estimates up to $2.7 billion in PILOT tax revenues over 40 years. This money will then flow into the county to fund school systems, hospitals, libraries and other local amenities. The PILOT program, Michaud said, can allay the fears of those who are reluctant about accepting solar projects into their community.
“When it comes down to it, I think money has been a key driver for a lot of these rural counties,” Michaud said.
With an assumed lifespan of 40 years, solar installations can become a resilient and long-lasting energy resource in Ohio, despite not supporting as many jobs during the operations and management phase.
As more solar farms pop up in Ohio, the new challenge of land usage will eventually rear its head. While sunlight will be accessible forever, free land is not so much an infinite commodity. However, new innovations are being made to ensure that solar farms do not interfere with necessary agricultural productions. Called agravoltaic, this new way of co-developing land for both agricultural and solar purposes has many iterations, such as letting farm animals graze around panels or having panels provide shade to certain types of crops. However, these innovations are not yet common in Ohio.
“We haven’t really seen much of this emerge in Ohio yet. But these might be things that do emerge over the next decade that can better accommodate for some of the challenges that might happen,” Michaud said.
Energy discussion will be crucial to Ohio’s success, both economically and sustainably. Alongside the possible net financial gain and job growth, solar energy has a clean and efficient impact on the environment that makes it a trustworthy source of energy. While solar energy is experiencing significant growth, the transition to completely renewable energy will not happen overnight. While Ohio patiently awaits a day when renewable energy can safely assume a leading role in energy production, there are important tasks to prepare for the future. This study, for instance, has the potential to reach enough Ohioans, especially state legislators, and prompt greater discussion of solar energy.
“We can do theoretical reserves and write other sets of papers,” Michaud said, “but to do a very applied report; that is obviously, in my mind, going to make a difference in what happens for Ohio’s energy policy.”