The Economic Impact of Energy Transition in Wales

“The Swansea Bay City Region has a significant economic opportunity from renewable energy projects, but Wales must find mechanisms to enable such investment for these important purposes or risk only being able to capture a small portion of economic benefit as evident in previous ‘energy booms’.”

 

This is the central message from the IWA’s ‘Economic Impact of Energy Transition in Wales: A Renewable Energy System Vision for Swansea Bay City Region’ report that was launched today.

 

This paper is one of a series of reports being launched as part of the IWA’s ‘Re-energising Wales’ project, which in early 2019 will deliver a plan to enable Wales to meet its projected energy demands entirely from renewable sources by 2035.

 

The IWA commissioned economic expert Professor Calvin Jones at Cardiff Business School to conduct this research and work with us to prepare a compelling, evidence-based vision for energy in the Swansea Bay City Region and Wales.  We are proud to launch this report today – a constructive contribution to a crucial policy priority.

 

As part of the Re-energising project, earlier this year in April we launched our ‘Swansea Bay City Region: A Renewable Energy Future’ report which modelled and outlined a vision for how the Swansea Bay City Region has the potential to meet the equivalent of 100% of its electricity consumption from renewable energy sources by 2035. This provided a case study of the targets, challenges (e.g. commercial viability) and actions that would be needed to achieve a radical transformation of an energy system at a local level.

 

This new report launched today builds on the April report, and outlines the scale of the economic opportunity that renewable energy presents in the region.

 

In order to meet our renewable energy vision for the SBCR as set out in the April report, this new report highlights that £4.6bn of investment in renewable electricity generation, plus £1.2bn in domestic energy efficiency interventions would be needed.

 

This could support some 4,500 jobs across Wales during a 15-year investment period, with around £1.66bn in total Welsh GVA created in total. Around 60-70% of this Welsh economic potential could be captured within the Swansea Bay City Region, around 3,200 FTE jobs.

However, the report warns that unless Wales finds ways to make the investments we will miss out on the majority of economic benefits. In the past, Wales has only proved able to capture a small portion of total economic benefit from renewable energy booms, usually that related to local labour, some professional services and rental, sales or lease of landscape.

 

Some of this lack of past economic capture relates to a narrow economic base and lack of locally available skills and relevant companies.

 

Additionally, there is almost no Welsh capital ownership in the energy sector.

 

The report argues that in order to capture the significant opportunities in the region, the Welsh economic offer would have to change – and rapidly – to encompass investment capital, truly Welsh research and innovation, more high value services and perhaps even in some cases fabrication and manufacturing.

 

The message from this research is clear: Wales needs a truly transformative approach to energy generation and domestic refurbishment in order to capture the significant economic opportunity that exists.

 

If we can lever all our resources to build climate-friendly infrastructure in Wales there is real economic, as well as ecological, benefit to be created – and these benefits will arise within some of the communities that need the opportunities most.

The Swansea Bay City Region has already shown ambition and leadership on energy and the region is well-placed to act as a pathfinder for Wales to maximise its renewable energy potential.

However, without significant changes to the financial, as well as policy and regulatory contexts, the Swansea Bay City Region and Wales more generally are likely to miss out on the majority of economic (and social) benefits from the investment required to move the Swansea Bay City Region, and then Wales, to a renewable, sustainable footing.

 

Collectively, we need to shift the dial on our ambition and action if Swansea Bay City Region, and the rest of Wales, is to reach its renewable energy potential.