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Economic impact of solar thermal electricity deployment in Spain

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Economic impact of solarthermal electricity deployment in Spain
Natàlia Caldés, Manuel Varela, Rosa Saez CIEMAT- Centro de Investigaciones Energéticas Medioambientales y Tecnológicas Avenida Complutense 22, Madrid 28040, Spain. Tel.: +34.91.3466350. Fax.: +34.91.3466433. E-mail: natalia.caldes@ciemat.es Keywords: energy policy, solar energy, input-output analysis. Abstract- A favourable regulatory framework for the deployment of solarthermal power plants currently exists in Spain. Thanks to this regulatory environment, the installed capacity of current and future promotion projects at different stages of the development process exceeds 500 MW. Given this background, the goal of this study was to estimate the economic impacts derived from the development of solarthermal power plants in Spain. Using an input-output analysis, the socio-economic impacts considered were measured by the gross added value as well as the employment generated by the construction and operation of such power plants. Two different scenarios were assessed: first, individual impacts of two solarthermal power plants and second, the impact derived from the compliance of the solarthermal power objectives stated by the Spanish Renewable Energies Plan 2005-10. Under the first scenario, a parabolic through plant of 50 MW would produce a total economic impact of 884 M€ (18 M€ per MW installed), being its multiplier effect 1,83. A solar tower power plant of 17 MW would generate an economic impact of 498 M€ (29 M€ per MW installed), with a multiplier effect of 1,87. Under the second scenario, the economic impact derived from the compliance with the Renewable Energies Plan would amount 3710 M€, equivalent to an average 17 M€ / MW. The economic impact of parabolic through plants would come close to 6,300 M€ (16 M€ / MW) and the effect of solar tower plants would amount 2,400 M€ (24 M€ / MW). Based on this second scenario, total direct employment generated would be 220 while the indirect employment generated would reach 47000 equivalent full-time jobs of one year of duration. 1. Introduction During the next decades, solar energy is likely to be one of the most promising sources of clean energy. This fact is especially relevant for some countries like Spain, where solar radiation is high and solar electricity generation potential is remarkable. There exist several solarthermal power technologies (parabolic through, central tower and parabolic dish) and despite the fact that most of them are in a development stage, their recent decline in costs and technological advances are striking. The vast majority of economic impact studies of solarthermal electricity only account, at the most, for direct effects. Most of these studies fail to account for the indirect effects on both gross added value and employment, which certainly make a difference and should be
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considered to fully understand the effects derived from the construction, operation and maintenance of a plant. This study enlarges the current body of literature and represents a significant step forward in solar thermal power research because, in the first place, it was possible to gather data from different sources regarding construction and operational costs of ongoing solar thermal power plants. In the second place, based on this data and using the Input-Output (I-O) method, an economic impact analysis was conducted that not only takes into account direct effects but also accounts for the indirect effects on both gross added value as well as employment. Partly due to the favourable current Spanish regulatory scheme, a remarkable promotion of the solar thermal industrial activity has taken place in Spain. A 0,18 €/kWh premium for the electricity generated by any of the three types of solar thermal technologies -parabolic through, central tower and parabolic dish-, added to the possibility to construct mixed plants with gas (between 12% to 15%) has generated a great interest for solar concentration technologies among investors and the Spanish industrial sector. Given this environment, an increasing number of projects are currently under different stages of the development process. These plants – which most of them use either a central receiver or a parabolic through-, reach a potential future total capacity of more than 500 MWe -the latter coinciding with the Renewables Energy Plan´s (P.E.R) for solarthermal installed capacity by 2010-. Based on this favourable regulatory environment, the goal of this study was to estimate the economic impacts derived from the construction of solarthermal power plants in Spain. The types of socio-economic impacts studied in this report are the gross added value as well as the employment generated from the construction and operation of such power plants. In order to estimate the economic impacts generated by the development of solarthermal power plants in Spain, two different scenarios were considered: I) The first scenario considers the individual impact derived from the construction and operation of two solar thermal power plants with the following specifications: • A power plant consisting of 624 parabolic through collectors with 50 MW of installed capacity. This plant uses synthetic oil as transfer fluid and molten salts to create a seven hours storage system. Following the current regulatory framework, 15% of total output is generated by natural gas. • A central solar tower power plant consisting of 2750 heliostats with 17 MW of installed capacity. This plant uses molten salts both as a transfer fluid and storage system. This power plant occupies 150 Has. As in the previous case, the power plant generates 15% of electricity from natural gas. II) The second scenario replicates the objective of the P.E.R. for solarthermal power. Based on this objective, the upcoming favourable initiatives and investments would lead to 500 MW installed capacity by 2010. According to this hypothetical scenario, it was assumed that 80% of such capacity would be met with parabolic through plants while 20% would be met by solar tower power plants. When conducting a study of this kind, several types of economic effects may be analysed: direct effects -originated due to the investment and employment generated from the new construction as well as the operation of the plant-, indirect effects –originated due to the effect that the new investment has on new flows of purchases and/or sells among other productive sectors in the economy -, and induced effects -related to the expansion of private expenditure in goods and services (food transportation, health, services, etc.) from the workers employed –

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in a direct or indirect way- by the project. Due to the lack of precise data on employment and salary figures, induced effects were not estimated. Actual 2005 cost data provided by firms currently active in the promotion of solarthermal power plants in Spain was used to compute the direct effects derived from the construction and operation of the plants. The official Spanish Input-Output table was used to further compute the economic effects generated by the increased demand derived from the new investments. The most recent complete Spanish I-O table dates 1995. This table reflects the transactions taken place across economic sectors in the form of increased demands as well as intermediate and final productions across 71 national economic sectors. Based on the 71 sectors original table, a reduced table consisting of the 22 most relevant economic sectors for this analysis was constructed. Based on this reduced I-O table, it was then possible to estimate the indirect effects in terms of gross added value as well as new jobs creation. It is important to highlight the fact that the obtained results suffer from certain level of uncertainty. The first reason for that is the lack of accuracy and detail that some of the cost data upon these results is based. In order to overcome this limitation, it was necessary to assume certain working hypothesis. The second reason is the limitation associated to the use of the Input-Output method. Such limitation is described in detail in the following section which dwells on the methodology. 2. Input-Output Methodology Since the Russian economist Wassily Leontief started to develop the input-output (I-O) method in early last century, these models have been widely used since they allow -among other things-, to analyse the existing links between different sectors within an economy. Moreover, I-O models are used to estimate the multiplying effect that a certain investment produces in the production of different goods and services as well as in the employment. A key instrument upon which is based the I-O methodology is the Input-Output symmetric table. This table is an economic analytical tool that reflects the value of the different goods and services that are exchanged in an economy. The structure of the I-O table is such that along the different rows and columns of the matrix, one can find the different sectors within the economy set in a symmetrical way. The different elements displayed along each row describe the different uses of each sector production. In a similar manner, for each sector in the economy, the elements along the columns of the symmetric input-output table account for the resources that have been consumed from other sectors in order to obtain a certain production in each sector. Thanks to matrix calculus, the I-O table allows the researcher to estimate what will be the total increase in demand generated across different sectors of the economy in response to a certain project development. The relationship between the expenditure generated by a certain project and its impact in the economy in terms of increased gross added value is depicted by the following relation: [1] ∆ Q = (I-A)-1 ∆ D , where: ∆ Q: Total production increase (direct and indirect) I: Matrix unit A: Technical coefficients matrix. ∆ D: Direct increase in the demand of goods and services generated by the development of a certain project.

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The different elements included in matrix A(nxn) are called technical coefficients (aij). Such coefficients reflect the percentage of goods or services from sector “i” that are required to produce one good or service unit from sector “j”. Said in another way, the technical coefficients indicate the amount that sector “j” requires from sector “i” in order to produce one unit of product or service j (both quantities should be expressed in their monetary value at constant prices). A= {aij} where aij = Xij/Σ(xij) ; i = 1, 2, 3...n j = 1,2,3...n , where: Xij is the amount (in monetary terms) of goods or services that sector j requires from sector i. Xj is the total production from sector j. Usually, public administrations such as the National Statistics Institute (I.N.E. in Spain), are the ones in charge of regularly publishing the technical coefficient matrix A (also called symmetric table Input-Output). Once the matrix (I-A)-1 has been constructed, it is then possible to estimate the impact derived from a certain project by multiplying (I-A)-1 by the investment vector ∆D associated to such project. The result from this operation is a column vector ∆Q (n*1) whose elements sum is the total impact of the investment, which includes both direct and indirect impacts. Besides increasing the demand of certain goods and services, the development of this type of project certainly generates impacts on the employment. When a project is being developed, it generates a direct effect on the employment (new jobs are being created) in those industries that provide goods and services required to construct, operate and dismantle the plant. On the other side, the indirect effect on the employment consists in all those other jobs created in other sectors in the economy that are required in order to supply goods and services to the industries that are direct providers of goods and services for the project. In this case, the table I-O also helps estimate the effects that a certain project development of this kind has in the employment. In the first place, a column vector Ls must be constructed. This vector is obtained from the number of employed people1 over each sector production in the economy (number of employed people for every million Euros produced in each sector). Secondly, one must multiply vector Ls by ∆Q (which represents the previously obtained vector that accounts for the total economic impact). The result from this multiplication is the number of employments that have been created each year in each sector. Each element of the resulting vector shows the total number of new jobs in each sector created both in a direct or indirect way. [2] Ls * ∆ Q = Direct and indirect impact over employment. During the construction phase of each solarthermal power plants, part of the goods and services required were imported from outside the Spanish territory. When estimating the economic and employment impact of the project, it was possible to distinguish the national from the exterior effects: Total effect (project)= Total National effect + ∆ Total Exterior Effect Which, using the former notation: [3]

1

One must consider the equivalent full time employed number of people (source: INE- Total Employment by

sector www.ine.es)

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∆ TD(project) = ∆ NTD(project) + ∆ ITD(project) , which can be decomposed in the following manner: ∆ TD(project) = ∆ NTD(project) + (∆ diD(direct imported demand) +∆ iiD(indirect imported demand)) [4] In order to obtain [4], the following steps should be taken: The first step, when computing the total national effect, consists in multiplying the Leontief´s inverse matrix by the investment vector that only accounts for those investments made within the Spanish Territory (national direct demand generated by the project). ∆ TND(direct+indirect) = ( I-A)-1 * ∆ dND(national goods and services) [5] From the resulting vector from expression [5] -which accounts for the total effect on the national demand-, one must subtract the direct increase in the national demand in order to obtain the indirect increase in the Spanish demand. ∆iND(indirect nacional demand) = ∆TND(direct+indirect) - ∆dND(direct national demand) [6] In order to compute the exterior or foreign effect of the project -which is made of the total sum of the direct and indirect imports-, the following steps must be taken: ∆ TID(total imported demand) =∆ diD(direct imported demand) +∆ iiD(indirectly imported demand) [7] The direct import demand vector is obtained from the information regarding the country of origin of all goods and services purchased during the construction and operation phase of the project. Put it in another way, it is possible to identify what part of the directly increased demand related to the project is purchased from outside the Spanish territory. ∆ diD(direct imported demand) = ∆ D(Total direct demand) - ∆ ND(national goods and services) [8] Finally, in order to compute the increase in indirect imports, one must identify (from the symmetric I-O table) what is the percentage of the indirectly generated demand that is imported. From this information, the indirectly imported demand vector will be obtained by multiplying the indirect demand vector by the percentage rate that is imported in each sector of the economy. ∆ iiD (indirectly imported demand) = ∆ iND (indirect national demand) * (% (Import i /Demand i)) [9] After these computations are done, it is then possible to estimate the total impact of the project being able to distinguish between the effect on the national and foreign economy. ∆ TD(project) = ∆ TND(project) + ∆ diD(direct imported demand) +∆ iiD(indirect imported demand) [10] Based on the previous results, it is then possible to compute the multiplying effect of a certain project. A multiplier is a number that indicates by how much a certain economy is going to grow due to a certain project development (taking into account both direct and indirect effects). The general formula to compute the multiplying effect (M) is: Multiplier = Total effects / Direct effects [11] Therefore, from the results obtained, three different multipliers can be computed: o Total multiplier = ∆ Q / ∆ D o National multiplier = ∆DNT(total national dem¡and)/∆ DNd (direct national demand) o Foreign multiplier = ∆TID (total imported demand) / ∆diD (direct imported demand) Compared to other methods, the I-O methodology has many advantages, like its simplicity and intuitive understanding. Moreover, in order to correctly use this method, it is not required to have a wide previous knowledge in economics nor have sophisticated statistical packages. Nevertheless, despite this method is widely accepted, there are some limitations that are worth mentioning and should be take into account when interpreting the results. One of the greatest
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limitations of this method is that the coefficients used to obtain the results are constant or static and not always account for technological improvements, import substitution, change in consumption patterns, or relative prices variations over time (Holland & Cooke 1992). Another limitation is that, when using this methodology, homogeneity among sectors is assumed. This assumption implies that the different activities within a certain sector are considered equal (in terms of consumption of goods and services during the production process as well as later utilization of its production). Finally, another assumption upon which this methodology is based is the absence of production capacity limitations. This assumption implies that there are no limits to the amount that a certain sector can produce in response to an increased demand (either in a direct or indirect way) generated by a new investment. 3. SCENARIO RESULTS 3.1. Individual Impacts Parabolic Through Power Plant Table 2 shows the detail of the investment costs associated to a 50 MW solarthermal power plant2: solar field accounts for 46% of the total investment cost, power block 21%, storage 12%, construction 10% and the remaining 10% accounts for engineering costs and contingencies.
Concept Solar Field Solar Field HTF field Spare parts and other expenses (50%) Power Block Natural Gas Boiler Vacuum generador BOP Generation Plant Spare parts and other expenses (50%) Terrain Storage Storage system Salts Construction Engineering Contingencies TOTAL .................................. Investment (k€) 123487 105163 14437 3887 55690 3051 4767 13173 30811 3888 1211 33187 19837 13350 26584 12839 12839 265837 Investment (%) 46% 40% 5% 1% 21% 1% 2% 5% 12% 1% 0% 12% 7% 5% 10% 5% 5% 100%

Table 2. Breakdown of investment costs associated to the parabolic through plant. With respect to the operation and maintenance costs, an exploitation time expand of 25 years with an annual discount rate of 2% was considered. Both total annual operation and maintenance costs and those accumulated during 25 years can be viewed in table 3. Within the fixed operation and maintenance costs, it was assumed that 80% of such costs accounts for the payment of employees´ salaries while the rest accounts for administration services, insurance, etc. Similarly, the expenses associated to natural gas and electricity consumption

2

According to ECOSTAR, the investment cost would be split in the following fashion: solar field (51%), power

block (22%), storage (8%), land (2%) and contingencies (17%).

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were accounted for. The estimation of the financing expenses has been computed considering a 12 year repayment loan with a 7% interest rate.
Concept Fixed operation Maintenance Financing
4

Annual Cost (k€) 1292 2761 5432 1563 1252 12300

Annual Cost (%) 11% 22% 44% 13% 10% 100%

Total Cost3 (k€) 25250 53958 106158 30546 24468 240380

Natural gas Electricity TOTAL ..........

Table 3. Operation and maintenance costs of the parabolic through plant. In order to compute the effect on the employment, the following steps and assumptions were made: If it was assumed that 80% of the fixed costs are assigned to pay employees, such concept (salaries) would amount to 1033,6 k€/year. According to INE data, the average salary of a Spanish employee working in the electricity generation and distribution sector amounts 46,3 k€/year. Consequently, the estimated annual direct employment generated by the operation of this plant would be 22 people. If this figure is translated to permanent employment generated for every MW installed, this would result into 2,3 jobs for every MW installed. The increased direct demands -in form of investment, operation and maintenance costs-, were later assigned to the different sectors in the economy that are contemplated in the InputOutput table that was constructed for this purpose. The increase in the total direct demand (investment and operation) associated to the construction and operation of the parabolic through plant amounts 486 M€, which represents an annual demand of 17,4 M€/year (assuming a construction period of 3 years and an useful lifetime of 25 years). This direct demand can be expressed as a function of the size of the solar thermal plant, which amounts to 9,7 M€ for every MW installed. By using the I-O methodology, it was possible to compute the indirect effects generated from the construction and operation of the parabolic through plant. It must be reminded that the total indirect effect over the Gross Added Value is the result of the sum of the national and foreign indirect demand (being the latter the indirect imports). The total indirect effect generated during the construction and operational phase amounts 398 M€, of which 261,6 M€ are indirect national demands and 136 M€ are indirect demands generated outside the Spanish territory. The associated multiplying effect is 1,83 which means that for every Euro invested during the construction and operation phase of this type of plants, an aggregate demand of 1,83 euros is generated over the whole national economy. The national multiplier would be 1,64 and the foreign multiplier would be of 2,8.

3

The exploitation period considered was 25 years and the annual discount rate used when discounted future

operation and maintenance costs was 2%.
4

It has been assumed that the investment will be financed over 12 years with an annual interest rate of 7%. The

payment of the interests of the loan were considered as financial costs but not the repayment of the principal of the loan.

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At the same time, the above mentioned increased demands generate 5295 additional indirect jobs of one year of duration, implying that for every 92 thousand euros directly invested during the construction and operation phases of the parabolic through plants, one new job is created. Solar Tower Power Plant Table 4 shows the detail of the total investment cost associated to a 17 MW Tower plant. When disaggregating the total investment cost of the plant, it was necessary to assume that the construction works represent 6% of such investment. According to this assumption, total investment can be disaggregated in the following manner5: solar field accounts for 42% of the investment, power block 20%, tower and receptor 16%, storage system 6%, construction 6% and the remaining 8% accounts for engineering and contingencies costs.
Concept Solar Field Heliostats Piping system Cables Spare parts and other expenses Tower Tower Receiver Power Block Natural gas boiler Vacuum Generator BOP Generation plant Spare parts and other expenses Land Storage Storage RT Pump ST Pump Salts Construction Engineering Contingencies TOTAL .................................. Investment (k€) 62384 54186 2826 2021 3351 23753 3821 19932 29686 1973 2438 6814 15110 3351 1423 9412 4126 1358 591 3337 9414 5472 5472 147016 Investment (%) 42% 37% 2% 1% 2% 16% 3% 14% 20% 1% 2% 5% 10% 2% 1% 6% 3% 1% 0% 2% 6% 4% 4% 100%

Table 4. Breakdown of investment cost associated to the solar tower plant. In terms of the operation and maintenance costs associated to a solar tower plant, it was assumed that the operational period lasted 25 years and a 2% annual discount rate was used. Table 5 provides the detail of the annual and the total aggregated operation costs for a period of 25 years. Within the fixed operation costs, it was assumed that 80% of such costs were originated due employees´ salaries payment and the rest accounted for administrative services, insurances, etc. Both gas and electricity cost required to operate the solar plant were also taken into account. When computing the financing expenses, it was assumed that investments cost

5

According to ECOSTAR, the investment breakdown of an scaled solar tower power plant of 50 MW would be the storage (3%), land (2%) and

following: solar field (36%), power block (24%), receiver (15%), tower (3%), contingencies (17%).

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were financed with a loan that would be repayed over 12 years with an annual interest rate of 7%.
Concept Fixed operation Maintenance Financing Natural Gas Electricity TOTAL .......... Annual Cost (k€) 1292 1455 2812 771 824 7154 Annual Cost (%) 18% 20% 39% 11% 12% 100% Total Cost (k€) 25250 28435 54955 15068 16103 139811

Table 5: Operation and maintenance costs of the solar tower power plant. Since 80% of the fixed costs are assumed to come from the payment of salaries, this implies that such concept amounts 1033,6 k€/year. According to INE 2000´s data, the average annual salary of an employee within the electricity sector in Spain is 46,3 k€/year. Consequently, given the total annual amount spent in this concept, we would get an estimation of 22 permanent employed people each year. If this number is translated in terms of installed capacity, the project would get 1 new employee for every 0,8 installed MW. As in the previous case, the direct demands generated by the construction, operation and maintenance of the tower plant were assigned to the different sectors of the economy included in the reduced form of the Spanish Input-Output table. The increase in the total direct demand generated by the construction and operation of a solar tower plant would amount to 267 M€, which represents an annual demand of 9,5 M€/year (assuming a construction and operation period of 3 and 25 years respectively). Such direct demand may be expressed as a function of the plant size. In such case it would result in 15,7 M€ for every MW installed. Employing the same methodology as before, it was possible to estimate the socio-economic indirect effects generated by the construction and operation phase of the plant (measured by the increase of the gross added value obtained from the sum of the indirect national and foreign demand). The total indirect effect generated during the construction and operation phase of the plant amounted 231M€. Within this amount, 150,8M€ would be national indirect demand and 80,2M€ would be indirect demands generated outside the Spanish borders. The multiplying effect is 1,87 which means that for every Euro invested during the construction and operation phase, a total of 1,87 euros of aggregate demand are generated within the economy. The national multiplier would be 1,65 while the exterior or foreign multiplier would be 3,4. Similarly, during both construction and operation phase, 3,018 new indirect employments of one year of duration would be created, implying that one new job is created for every 88 thousand euros invested. Total effects Table 6 summarizes the total economic effects derived from the construction and operation of the two plants considered in this study (a 50 MW parabolic through and 17 MW tower plant). The total effect on the national and foreign demand derived from the construction and operation of both plants would amount 1381,5 M€ which represents an average 20,6 M€ for

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every MW installed. When analysing the parabolic through plant, the total effect would amount to 884 M€, which represents 17,7 M€ for every MW installed.
CONCEPT Solar Through Power Plant (50 MW) Direct Demand (Inv.+Oper.) National Exterior Indirect Demand National Exterior TOTAL ..................................... Solar Tower (17 MW) Direct Demand (Inv.+Oper.) National Exterior Indirect Demand National Exterior TOTAL ..................................... AMOUNT UNIT EFFECT (M€)

8,2 1,5 5,2 2,7

M€/MW M€/MW M€/MW M€/MW

410,2 75,8 261,6 136,3 883,9

13,7 2,0 8,9 4,7

M€/MW M€/MW M€/MW M€/MW

232,8 33,8 150,8 80,2 497,6

Table 6. Total effect on the Gross Added Value. Table 7 shows the total effect in terms of employment generated. The direct employment generated would be 44 people while the indirectly employment generated would amount 8,313 equivalent jobs of one year of duration.
CONCEPT Solar Through Power Plant (50 MW) Direct Employment Indirect Employment * Solar Tower (17 MW) Direct Employment Indirect Employment ** *One employment by 92 KEuro of direct demand. ** One employment by 88 KEuro of direct demand. AMOUNT 0,4 92 1,3 88 UNIT Emp/MW Emp/k€ Emp/MW Emp/k€ EFFECT (M€) 22 5295 22 3018

Table 7: Total effect over the employment.

3.2. Compliance with the PER objectives Once the total effects derived from the construction and operation of the two solarthermal plants were studied, a further analysis was conducted. The goal was to explore the effects that would be derived from the construction of two plants that met the solarthermal objectives described in the Plan de Energías Renovables 2005-2010 (PER). In order to conduct such analysis, the following assumptions were considered: • The 2010 PER solarthermal installed capacity goal would be met with the installation of 400 MW of parabolic through plants (80% of the total power) while the rest (20%) would be met with the installation of 100 MW solar tower plants.

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It was assumed that during the period under consideration, operation and investment costs would decline by 20%. Consequently, the direct demand generated by every MW installed would be reduced by the same proportion. Besides this effect, there would be other implications for both the indirect demand as well as the indirect employment. • Also, it was assumed that there would be a decline in direct employment of 20%. Table 8 shows the results that would be obtained when taking into account all those assumptions. In particular, the results show the total effect that accomplishing the PER objectives would have on both the national and foreign gross added value and employment. The increase in both demands would amount 3710 M€, which is equivalent to an average 17,4 M€ for every MW installed. When considering only the parabolic through plants, the effect would amount 6300 M€, (15,8 M€ for every MW installed). On the other hand, when considering the solar tower plants, the increase would amount 2400 M€, (24,1 M€ for every MW installed).
CONCEPT Parabolic Through Power Plants Direct Demand (Inv.+Oper.) Indirect Demand National Exterior TOTAL ..................................... Tower Power Plants Direct Demand (Inv.+Oper.)) Indirect Demand National Exterior TOTAL ..................................... AMOUNT 7,8 8,0 5,2 2,7 UNIT M€/MW M€/MW M€/MW M€/MW EFFECT (M€) 3120 3183 2093 1090 6303 1154 1253 819 434 2407

•

12,5 13,6 8,9 4,7

M€/MW M€/MW M€/MW M€/MW

Table 8: Total effect on the Gross Added Value when meeting the PER objectives. Finally, Table 9 shows the effects on the employment that would be generated as a result of the accomplishment of the solarthermal power PER´s objectives. The direct employment generated would amount 220 people while the indirect employment would result in 47000 equivalent jobs of one year of duration.
CONCEPT Solar Through Power Plants Direct Employment Indirect Employment Direct Employment Indirect Employment
* ** *

AMOUNT

UNIT

EFFECT (M€) 120 33913 100 13110

0,3 92 1,0 88

Emp/MW Emp/k€ Emp/MW Emp/k€

Solar Tower Power Plants

Table 9. Total effect on employment (PER goal for termo-solar power generation).

One employment by 92 Keuro of direct demand. ** One employment by 88 Keuro of direct demand.

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4. Conclusions Solar energy is likely to play a key role in the future energy scene. Spain will probably become one of the leading countries in terms of implementation, experience acquisition and development of new technologies. The recently published Plan de Energías Renovables 20052010 states that solarthermal installed capacity by 2010 should reach 500 MW, starting from an almost null commercial stage. The portfolio of current projects under development as well as the solarthermal power plants under construction already exceeds the PER goal. In order to evaluate the socio-economic impacts that would be generated when accomplishing the solarthermal installed capacity PER objectives, the increase in the gross added value as well as the employment generated have been quantified. To accomplish such objective, it was necessary to first compute the economic impacts derived from the construction and operation of two different power plants: a 50 MW parabolic through plant and a 17 MW tower plant. Based on data and information provided by the firms that are currently promoting these types of power plants, it was possible to estimate the economic impact using the input-output methodology. Based on this methodology, the impact on both direct and indirect effects on the Gross Added Value (inside and outside the Spanish borders) as well as the employment were estimated. The firsts results obtained show that the total effect on both national and foreign demand for goods and services derived from the construction and operation of both plants would amount 1381,5 M€, which is equivalent to 20,6 M€ for every MW installed. With respect to the parabolic through power plant, its effect would reach 884 M€ (17,7 M€ for every MW installed). Similarly, the effects derived from the solar tower plant would result in 498 M€ (29,3 M€ for every MW installed).The multiplying effect associated to the parabolic through plant would be 1,83 (which means that for every dollar invested, the increase in the aggregate demand in the economy would reach 1,83). Its national multiplying effect would be 1,65 and the foreign associated multiplying effect would be 2,8. When considering the tower plant, its total multiplying effect would be 1,87 while the national multiplying effect would be 1,65 and the foreign multiplying effect would be 3,4. The direct employment generated by the two plants would amount 44 people while the indirect employment would reach 8.313 equivalent jobs of one year of duration. The second analysis consisted in studying the socio-economic impacts produced by the construction and operation of 500 MW solarthermal plants. This analysis was based on the previously obtained results at an individual scale. Moreover, it was assumed that solarthermal parabolic through would represent 80% of such installed capacity while the remaining 20% would be met with a tower plants. The total effect on the national and foreign demand of goods and services would amount 3710 M€ which is equivalent to an average 17,4 M€ for every MW installed. In terms of the parabolic through plants, the effect would come close to 6,300 M€ (15,8 M€ for every MW installed). When considering the tower plants individually, their effect would amount 2,400 M€ (24,1 M€ for every MW installed). The total direct employment generated would be 220 while the indirect employment generated would reach 47.000 equivalent jobs of one year of duration.

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In summary, it can be concluded that the socio-economic effect derived from the accomplishment of the PER´s solarthermal installed capacity goal would be remarkable (in terms of both increase in the gross added value and employment). Nevertheless, it would be necessary to compare it to other alternatives in order to put it in perspective. It must be highlighted that there exist other socio-economic impacts that have not been analysed due to either time or data constraints. Example of such spill-over effects include the creation and development of new technologies within the Spanish territory and abroad. Another example includes the induced effects over the economy.

5. References Bluhm, S., Ferber, R. and Mayo, L. (2004). Solar Thermal Power Plants in Small Utilities: an economic impact analysis. Proceedings of the Intersociety Energy Conversion Engineering Conference. 2004 Campisi, D. and Gastaldi, M. (1996). Decomposing growth in a multiregional I-O framework. The Annals of Regional Science, 30:409-425. Dewhurst, John H. Ll. Hewings, Geoffrey J.D. and Rodney C. Jensen. (Eds.). (1991). Regional input-output modelling / new developments and interpretation. Aldershot, England: Avebury. Drake, R. (1976). A short-cut to estimates of regional input-output multipliers: methodology and evaluation. International Regional Science Review, 1: 1-17. ECOSTAR (2004). European Concentrated Solar Thermal Road-Mapping. Ed. by R. PitzPaal, J. Dersch, B. Milow. DLR, Germany. Frey, D. E. (1989). A structural approach to the economic base multiplier. Land Economics, 65(4): 352-358. Goldman, G., Nakazawa, A. and David Taylor. (1997). Determining economic impacts for a community. Economic Development Review, 15(1): 48-51. Hewings, G. J. D. (1977). Evaluating the possibilities for exchanging regional input-output coefficients. Environment and Planning A, 9: 927-944. Hewings, Geoffrey. (1985). Regional input-output analysis, Beverly Hills: Sage Publications. Hinojosa, R. C. and Pigozzi, B. W. (1988). Economic base and input-output multipliers: An empirical linkage. Regional Science Perspectives, 18(2): 3-13. Holland, D. and Cooke, S. (1992). Sources of Structural Change in the Washington economy: an input-output perspective. Annals of Regional Science 26:155-70 Isard, W. (1975). Introduction to regional science. Englewood Cliffs, NJ. Prentice Hall. Leistritz, F. and Murdock, H. (1981). The socioeconomic impact of resource development: Methods for assessment. Boulder, CO: Westview Press. Leontief, Wassily. (1986). Input-output economics, 2nd edit. New York: Oxford University Press. Lucci, A., Lovegrove, K, Filippi, E., Fricker, H., Schmitz-Goeb, M., Chandapillai, Kaneff, S., (1998). Thechno-economic analysis of a 10 MW solar thermal power plant using ammonia-based thermochemical energy storage. Sol. Energy Vol 66, No.2, pp.91-101. McMenamin, D. and Haring, J. (1974). An appraisal of nonsurvey techniques for estimating regional input-output models. Journal of Regional Science, 14: 355-365. Miernyk, W.H. 1965. The elements of input-output analysis. New York: Random House. Miller, Ronald E. (1985). Input-output analysis: Foundations and extensions. Englewood Cliffs, NJ. Prentice Hall. Miller, Ronald E., Polenske, Karen R. and Adam Z. Rose.(1989). Frontiers of input-output analysis. New York : Oxford University Press.

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Olfert, M. and Stabler, J. (1994). Community level multipliers for rural development initiatives. Growth and Change, 25(Fall): 467-486. Peterson, William. (1991). Advances in input-output analysis : technology, planning, and development. New York : Oxford University Press. Pigozzi, B. W. & Hinojosa, R. C. (1985). Regional input-output inverse coefficients adjusted from national tables. Growth and Change, 16(1): 8-12. Pleeter, Saul (1980). Economic impact analysis: Methodology and applications. Boston: Maritinus Nijhoff Publishing. Pulido A., Fontenla E. (1993). Análisis input-output: Modelos, datos y aplicaciones. Ed. Pirámide. Richardson, H.W. (1972). Input-output and regional economics. New York: John Wiley. Round, J. I. (1983). Non survey techniques: A critical review of the theory and the evidence. International Regional Science Review, 8(3): 189-212. Sargent and Lundi (2003). Assessment of Parabolic Through and Power Tower Solar Technology Cost and Performance Forecasts. Subcontractor Report. National Renewable Energy Laboratory. NREL/S4-55-34440 Schwer R.K., Riddel M. (2004). The potential economic impact of constructing and operating solar power generation facilities in Nevada. Center for Business and Economic Research, Univ. of Nevada. NREL/SR-550-35037. Sterzinger, G., Svrcek, M., (2005). Solar PV Development: Location of Economic Activity. Technical Report. Renewable Energy Policy Project. Stevens, B., Treyz, G., Ehrlich, D. and Bower, J. (1983). A new technique for the construction of non-survey regional input-output models and comparison with two survey-based models. Internation Regional Science Review, 8(3): 271-286. Szyrmer, J. (1992). Input-output coefficients and multipliers from a total-flow perspective. Environment and Planning A, 24: 921-937

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