TODAY’S STUDY: A SUPPRESSED STUDY OF OHIO NEW ENERGY JOBS

Ohio Alternative Energy Job Survey Analysis

February 2013 (Prepared for Development Services Agency Office of Energy; Prepared by ICF International)

[Editor’s note: This study, reportedly suppressed during the 2013 debate over freezing Ohio’s renewables mandate, found there were approximately 25% more renewables jobs in Ohio than proponents of the freeze claimed. They subsequently were successful, apparently seriously crippling renewables in the state.]

Introduction

In response to a request by the Ohio Development Services Agency (formerly known as the Ohio Department of Development), ICF International (ICF) and Wright State University (WSU) conducted a renewable energy (RE) and energy efficiency (EE) job survey across the state. The purpose of the survey was to provide the Ohio Development Services Agency with data about current (2012) and projected alternative energy (AE) employment and establishments in Ohio. To contextualize that data, the survey also aimed to provide a better understanding of the characteristics of the AE economy by sector or value-chain and technology as well as to identify factors that promote market growth or barriers that inhibit AE-related business in Ohio. This report presents the results of the 2012 survey of AE employers. The report is organized into three sections: approach, findings, and conclusions. The approach section describes the survey methodology, and outlines any data limitations and the measures taken to compensate for them. The findings section is organized into three subsections, as follows:

1. current AE employment, by sector and technology;

2. projected AE employment; and

3. market and policy findings.

The report concludes with a summary of key findings and a discussion of employers’ views regarding a range of alternative energy policy considerations…

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Conclusions

Current Alternative Energy Employment

In 2012, Ohio’s alternative energy (AE) economy accounted for more than 31,000 full-time and part-time jobs and 845 establishments. The businesses and employees in this economy supported a variety of sectors, technologies, industries, and functions throughout the value chain.

The majority of AE employment in Ohio is concentrated in the manufacturing and the construction, installation, and maintenance sectors. These key sectors – or value chain functions— represent nearly 75 percent of all AE employment in Ohio. Manufacturing accounts for more than 43 percent of overall AE employment, and a particularly high proportion of employment in the advanced energy (69 percent), solar (58 percent), bioenergy and alternative fuels (52 percent) and other renewables (47 percent) industries’ workforces. The second largest concentration is in the construction, installation, and maintenance sector, which accounted for roughly 30 percent of AE jobs in the state. The research, design, consulting, and marketing services sector generally employs a lower percentage of each technology’s value chain than the other two sectors.

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In terms of energy technologies, roughly half of all jobs in Ohio’s alternative energy economy were located in the energy efficiency industry, with employment in the solar industry a distant second. Nearly 12,200 people were employed in energy efficiency, and these jobs were evenly distributed across manufacturing (34 percent); installation, maintenance, and power generation operations (36 percent); and research, design, consulting, and marketing (30 percent). Approximately 7,100 workers, or 29 percent of those employed in the AE economy, were employed in renewable energies (including solar, wind, biomass, and other renewables). Of these renewable energy technologies, solar was by far the most significant, accounting for 79 percent of renewable energy jobs, and 23 percent of all jobs in the AE economy.

Regionally, Ohio’s alternative energy jobs are concentrated in the northern portion of the state, with the northwest and northeast regions together accounting for more than half of all jobs in alternative energy. This trend closely follows the population concentration of Ohio; the two northern regions have higher populations than other regions in the state and have more overall jobs. In terms of establishment size, more than 85 percent of establishments in the alternative energy economy were classified as small (5-49 employees). That said, only half of all AE employees worked at these small establishments, while a third worked at the 27 largest-size establishments in the state (classified as 250 or more employees).

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Projected Employment Growth

According to survey responses, employers in all AE sectors and technologies anticipate job growth in the first half of 2013, with the majority taking place in the construction, installation, and maintenance sector and the professional services sector. Construction, installation, and maintenance jobs are expected to experience significant growth in terms of both percentage (38 percent) and gross jobs (4,400) during the first half of 2013 to add to their already-strong workforce of 11,500. The professional services sector is expected to grow by 62 percent from roughly 6,400 people in 2012 to more than 10,000 people in the first half of 2013. The manufacturing sector and biosciences sector will both grow at much slower rates in 2013; manufacturing by 9 percent and biosciences by only 5 percent. As a result of these trends, by the end of 2013, total employment in the construction, installation, and maintenance sector should surpass the manufacturing sector as the largest employment sector in the state’s AE economy.

In terms of energy technologies, employment growth will be centered in the energy efficiency and solar industries, where employers appear to be extremely optimistic about anticipated employment needs within the upcoming 6 to 12 months. The vast majority of Ohio’s AE job growth is expected to occur in the energy efficiency industry, with employers anticipating adding 3,900 new employees to their workforce of 12,200; a projected employment growth of approximately 32 percent. The solar industry anticipates adding 540 employees to their workforce of 5,600 people, which amounts to a growth rate of just below 10 percent. The remaining industries are anticipated to grow at much lower rates with year-over-year employment growth in bioenergy and alternative fuels, wind, and biomass not expected to exceed one percent in 2013.

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Market and Policy Factors Affecting Business Growth

Survey respondents were asked to rate a wide range of market factors, policies, and programs as either supporting or inhibiting the growth of their businesses. The two factors that were most highly ranked as being supportive to business growth—federal incentives and current market demand for products—fall largely outside of the state’s control. Approximately 45 percent of respondents believed that federal incentives supported business growth, suggesting that uncertainty associated with any extension or expiration of federal credits or programs (e.g. the Production Tax Credit), could have wide-ranging impacts on businesses. Current market demand for products was rated the second most supportive factor, with 41 percent of respondents rating current demand as benefitting their business.

Three factors that are within the state’s influence were also widely cited as supportive of business growth. Thirty-six percent of respondents felt that the current availability of workers with the necessary skills/knowledge was supportive of business growth, 36 percent cited state financing options (including grant and loan programs) as supportive, and 33 percent cited state alternative energy tax incentives.

The factors cited most frequently as inhibiting business growth include federal regulations (44 percent), state permits and environmental regulations (37 percent), current availability of workers with the necessary skills and knowledge (32 percent), and local permits and zoning (28 percent). Given that the availability of skilled workers was cited frequently as both a supportive and inhibiting factor, further analysis of the respondents who cited this factor as either supporting or inhibiting business growth may allow for a better understanding of which industries would most benefit from investments in worker training programs.

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Existing Ohio Programs and Policies

When asked specifically about the State of Ohio’s policies and programs, respondents generally believed that state’s current policies supported their businesses more than they impeded them. Even the most highly cited inhibitive factor—Ohio’s building energy codes—was cited as inhibiting business growth by a mere 7 percent of survey respondents. Given this, Ohio’s programs and policies for AE appear to be on the right track.

Nearly a third of respondents, 29 percent for both factors, believed that Ohio’s building energy codes and energy standards for public buildings supported business growth. These two policies likely affect the energy efficiency industry exclusively, and therefore may be a significant driver for this significant industry which accounts for half of all jobs in the AE economy. The Ohio AEPS, ODSA Energy Loan Fund, and other ODSA programs were all cited by between 10-15 percent of respondents as supportive of business growth, whereas Ohio’s net metering regulations and renewable energy permitting standards were cited by only 9 percent of respondents. Respondents generally did not feel that Ohio’s policies inhibited their business growth. No particular policy was cited significantly more than others as being inhibitive of growth, and no option was selected by more than 7 percent of respondents.

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Potential Future Ohio Programs and Policies

When asked about their views regarding potential future policy changes or new policies and programs in the State of Ohio, roughly one-quarter of respondents felt that the following potential future programs and policies would support growth of their businesses:

 expansion of the Ohio AEPS (28 percent);

 assistance with project feasibility analysis (27 percent);

 assistance with market analysis (24 percent);

 and subprime financing for alternative fuel vehicles (23 percent).

At the same time, a large number of respondents felt that many of the potential future programs and policies would have “no presumed effect” on the growth of their business (note that this is different than inhibiting business growth). Approximately 44 percent of respondents believed that providing subprime financing for alternative fuel vehicles would not significantly affect their business, and 42 percent felt that establishing a low-carbon fuels standard would have no effect. This is likely because of the limited number of survey respondents in the alternative fuels/vehicles industry. The potential policy change least-cited by respondents as having no effect on business growth was an expansion of the state’s AEPS (23 percent), which is consistent with the fact that the AEPS was seen by many respondents as being highly supportive of alternative energy business growth.

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