Figure 4-15 Employment impacts and cumulative capacity over time, Low case
Table 4-7 below shows the estimated total employment effect for both the Low and Ambitious deployment cases, with CAPEX employment disaggregated into the different supply components based on each component’s share of CAPEX. By considering where these elements of the supply chain might be located geographically, we can begin to get a sense of the total employment impact in different countries.
Table 4-7 2020 and 2050 employment estimates by deployment case and supply chain segment
Employment 2020 low 2050 low 2020 high 2050 high
CAPEX
Wind turbine 2,400 3,200 6,100 5,800
Foundation 1,000 1,300 2,500 2,400
Electrical equipment 600 800 1,500 1,400
Operation and maintenance 2,300 15,300 2,300 28,900
Total 6,300 20,600 12,400 38,500
In considering the geographic location of different elements of the supply chain, it should be noted that the bulk of the CAPEX-related employment relates to turbine supply. Germany and Denmark already have an existing turbine supply chain and account for a large share of the anticipated regional offshore wind deployment. Furthermore, any turbine deployed in the region will need to be transported by sea, and sea transport cost considerations are unlikely to be an important reason for sourcing the turbine from one BEMIP member state relative to another.
For all these reasons, we anticipate that a disproportionate share of the wind turbine supply jobs associated with Baltic Sea offshore wind deployment would be located in Denmark and Germany. This is especially true under the low deployment case, as the levels of deployment envisaged are unlikely to encourage turbine manufacturers to establish new turbine manufacturing facilities far from their existing production sites. That said, and as we discuss further below, other elements of the supply chain are likely to offer greater employment opportunities for the wider BEMIP region, notably since they can make use of the existing heavy-manufacturing base in some BEMIP countries.
0 2000 4000 6000 8000 10000 12000 14000 16000 18000
0 5000 10000 15000 20000 25000
MW
Man-years
Employment from CAPEX Employment from OPEX Accumulated capacity
In general, the extent to which an offshore wind supply chain is fostered outside of Germany and Denmark, where it already exists, is likely to depend both on the relative attractiveness of investment in these other markets and on whether the industry has sufficient confidence in the scale of future orders to justify investment in new production lines or facilities. This confidence depends, in turn, on the credibility of commercial or political commitments to support offshore wind deployment.
Job creation under the different deployment scenarios
Low deployment case
The low case corresponds to 400-500 MW of offshore wind deployment per year and annual investment of 1.1-1.4 bn €, as described above. The development in total employment for the whole region is illustrated in Figure 4-15 above.
This case implies support for approximately 4,000- 5,000 man-years of CAPEX-related employment annually. Given the scale and nature of the deployment described in this case, we expect most of this work to fall to the existing supply chain in Denmark and Germany, as we do not expect the level of activity described would motivate manufacturers to invest in new local production capacity elsewhere in the region. Planning and installation activities could, however, be sourced more widely from within the region.
Installation activities, which might be provided by suppliers outside Denmark and Germany, cover approximately 10% of the total CAPEX cost of a project. Assuming the number of jobs supported is roughly proportional to the total cost of the relevant activity, the total number of jobs supported for this type of supply is 400- 500 over the projection period to 2050. Assuming that 20 % of the preparation and installation activity is locally-provided by BEMIP countries other than Denmark and Germany, the added employment in other BEMIP countries corresponds to an annual employment of 80-100 man-years.
The low case also implies support for an increasing number of OPEX-related jobs, with the total amount of work supported reaching 15,300 man-years annually in 2050. Operation and maintenance should be performed from ports located close to the major wind farm areas and the location of the supported jobs is therefore tied more closely to the physical location of the wind farms themselves than is true for CAPEX-related employment.
Ambitious deployment case
In the Ambitious case, offshore wind capacity increases by 1,000 MW per year in the region, corresponding to annual investment of €2.7bn. This implies support for CAPEX-related employment of approximately 10,000 man-years. In this case, wind turbine manufacturers and sub-suppliers might plausibly establish manufacturing and assembly facilities in BEMIP countries other than Denmark and Germany. The Ambitious case may also encourage the development of new port facilities with the capacity to handle a large number of wind turbines.
Looking in greater detail at the number of jobs that might be supported outside of Germany and Denmark, the installation activities that were the focus of employment outside Denmark and Germany in the Low case might be approximately twice as high in the Ambitious case, corresponding to an annual employment of approximately 200 man-years during the period 2020-2050. However, the Ambitious case would also make possible the local sourcing of other types of input, such as those related to preparation. Preparation activities account for
approximately 12% of total costs and this implies possible support for another 240 man-years of annual CAPEX-related employment in the BEMIP countries excl. Denmark and Germany.
Supply costs account for approximately 78% of the total CAPEX cost and therefore the majority of the supported employment. This type of activity would be expected to support CAPEX- related employment of 7,800 man-years in the region. BEMIP member states with heavy industry and offshore industries, e.g. Poland, Finland and Sweden, could potentially undertake a large amount of the manufacturing activity associated with major wind farm components like foundations and rotor blades. If we assume that 20% of this activity takes place in BEMIP countries other than Denmark and Germany, this implies CAPEX-related manufacturing employment in the other BEMIP states of a further 1,600 man-years annually.
Finally, the Ambitious case also implies support for an increasing number of OPEX-related jobs.
29,000 man-years of OPEX-related employment are supported across the region in 2050.
Again, these activities should be performed from ports located close to the major wind farm areas and will therefore be tied to the location of the farms.