BVG Associates (BVGA) and the Economic Intelligence Unit at the University of the Highlands and Islands (UHI) have developed a benchmark standard in measuring local and national value added from offshore wind developments.
Offshore wind is a maturing industry that is becoming truly global, BVGA said. For continued growth and to build local and government support, it needs a robust but easy way to demonstrate the economic benefits of projects. In particular, job creation can be a powerful way to gain support for projects.
Modelling of economic impacts usually relies on government statistics and standard industry classification (SIC) codes. BVGA argues that SIC level data is too general for a maturing sector such as offshore wind and does not reflect fully relevant industrial capacity and capability.
The new methodology builds on BVGA’s existing UK content methodology to derive measures for other economic indicators such as gross value added (GVA), full-time equivalent (FTE) jobs and earnings.
The method can be applied to any level of geography – global, continental, country or region, BVGA said. It can be used to model the impacts of a single product or service, a set of projects, or the industry as a whole over a given period. It can even be applied to different industries, provided sufficient knowledge is available.
By using a transparent set of assumptions that can be easily validated, the new methodology means governments, enablers, developers and suppliers can have confidence in the results.
“Many industrial sectors publish employment impact figures,” said Steve Westbrook, Director of Economic Intelligence Unit, UHI School of Management.
“Often these are unrealistically high, and the offshore wind sector needs to have a transparent methodology if it is to avoid cynicism.”
The great advantage of the approach is it takes the mystique out of economic analyses and creates a method that can be led by industry experts with input from economists, according to BVGA.
This economic impact methodology identifies visible, tangible jobs that can be associated with specific facilities, which is important in helping politicians understand the impacts of investments.
Overall, the result will be greater confidence in the data that is published and better evidence-based policy.
The method is summarised in a just-released white paper, available here.