By Will Blyth, Oxford Energy Associates Presented at 'UK Energy System in Transition: Technology, Infrastructure and Investment'; an event organised by the UK Energy Research Centre, ClimateXChange and the Edinburgh Centre for Carbon Innovation, on Tuesday 1 April 2014, 14.00-17.00, in Edinburgh, United Kingdom.

1. Click to add title
1st April, 2014, UK Energy System in Transition: Technology, Infrastructure and Investment
Edinburgh Centre for Carbon Innovation
Green Finance and Green Jobs
Will Blyth
Oxford Energy Associates

2. Green Finance
What is the size of the ‘investment gap’?
Low-cost sources of finance, and prospects
for scaling these up
New sources of finance
Policy options
Based on:
“Financing the UK Power Sector: Is the Money Available?”
W. Blyth, R. McCarthy, R. Gross
Working Paper, UKERC Uncertainties Project.

3. £m
‘Investment Gap’ Annual Build Rate MW
Historical 2020 2025 2030
10000
8000
6000
4000
2000
0
2009-2012 Average:
4100 MW
3400 MW
4700 MW
5800 MW

4. £m
Annual UK CAPEX £m
Historical 2020 2025 2030
25000
20000
15000
10000
5000
0
2009-2012 Average:
£ 4600 m
£ 6100m £ 8000m
£ 12300m

5. Low-cost finance:
Two Major Investment Routes
Utilities:
85%85%85%85% of the 16.5 GW of new capacity 2006-2012 in UK,
has been built by the major utility companies (BNEF, 2012)
Financing of renewables:
Source: (UNEP, 2012) with data from BNEF
Project Finance
Balance Sheet (mostly utilities)
Bonds / other
Global renewable energy
investment $bn

6. UK Offshore Wind – Equity Ownership
Source: (PWC, 2012)

7. 0
2
4
6
8
10
12
14
2005 2007 2009 2011 2013 2015
CAPEX£billions
EDF
EON
RWE Group
Iberdrola
SSE
Centrica
RWE Innogy
(renewables)
Average
Average - excl EDF
‘Big 6’ CAPEX plans to 2015
Total for Europe

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274 345
450
540
691
812
1,111
3,984
1,899
1,155
€0
€500
€1,000
€1,500
€2,000
€2,500
€3,000
€3,500
€4,000
€4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Other
Renewable PE Fund
Hedge Fund
General PE Fund
General Infra Fund
Energy Infra Fund
Direct Long Term Investor
Dedicated Renewable
Infrastructure Fund
Direct Institutional Investment in low-carbon
infrastructure
Source: (Hg Capital)
Total for Europe €m

9. Green Finance Conclusions
History shows that finance can flow if investment
conditions are right – puts the emphasis back on policy
But large volumes of money (institutional investors) only
available for relatively low-risk investments
Current health of the utilities and business case for
investment is therefore a worry
Alternative routes for institutional finance to go directly
into projects are being developed
Back-of-the-envelope calculations suggest up to £1bn
for UK renewables via this route??

10. Potential Solutions
Overhaul the utility model
• Allow them to make a profit
• Dedicated wind utility
• Re-regulate generation sector
Ramp up project financing by accelerating the
re-refinancing of projects
Increased role of public finance institutions:
• Guarantees
• Public finance initiatives
• GIB / EIB co-investment
• Green bonds

11. Green Jobs
What are green jobs, and how can we
measure them?
Macroeconomic perspectives and
concepts
Comparative analysis of job estimates
from the literature
Conclusions
Based on systematic review of literature:
“Low carbon jobs: the evidence for net job creation from
policy support for energy efficiency and renewable energy”
Draft TPA report

12. What are green jobs?
Job types
• Direct, indirect, induced
• Short vs. long-term
• Manufacturing, construction &
installation, O&M
• Supply chain / wider economy
Net vs. gross jobs
(accounting boundary)
• Equipment manf inside boundary?
• Displaced jobs in product markets
• Impacts on labour market
• Impacts on household expenditure
£
MWh
Equipment
Labour
D
DI
DII

13. Calculating net jobs
Mostly Input-Output analysis, some direct job surveys, some CGE / other approaches

14. Macro-economic perspectives
Is the economy in equilibrium?
Is there an output (aggregate demand) gap?
Role of fiscal and monetary stimulus
Multipliers, interest rates and crowding out
Business cycles, long-term growth and
technology development

15. Evidence on Gross Jobs
Gross Jobs / annual GWh

16. Evidence on Net Jobs
Net Jobs / annual GWh

17. Short-Term Jobs (M,C&I)
Comparing Fossil vs. Renewables
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
75 79 F9 F9 75 79 19 42 53 65 75 79 79 79 47 79 19 79 79 19 79
Gas Lig Coal Wind Hyd Bio Geo CSP LFG CCS PV
job-yearsperMWinstalled
Range
Average

18. Green Jobs Conclusions
On a simple ‘per MWh’ or ‘per £invested’ basis, renewables
appear more labour intensive than fossil fuels. BUT:
• The energy sector is not a major direct employer, so the effects
we see are relatively small
• The ability to create jobs (in any sector) depends on having spare
capacity in the economy (i.e. recession). Timescales are
important in determining the effects of policy.
• Taking account of price effects will reduce employment benefits
if higher costs lead to reduced household spending. The source
of the money is important – is stimulus money really additional?
Do jobs lead or follow the economy?
• In the long-term (beyond the current business cycle), labour-
intensity may not in itself be a good thing. Dynamic efficiency
should drive decisions – i.e. will more RE/EE in the system make
the economy more efficient in the long-run?