Ayman ShehataPwC CSR Strategy Manager

• www.pwc.com

Socioeconomic Impacts of Renewable Energy

EGX 2015

Introduction

• This presentation tries to bridge the gap between Renewable Energy as an environmental and economic tool and as a societal and community tool• Socio-economic impacts of Renewable Energy• How RE can be used as a tool for rural development • How RE can be used as a tool for rural development and community

empowerment• “how” the implementation process can lead to much wider societal

impact through Community-owned Renewable Energy projects

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Socioeconomic effects of renewable energy : Macroeconomic effects

• Value added• GDP• Employment• Welfare

Socioeconomic effects of renewable energy: The employment opportunities for value creation along the segments of RE value chain

• “From a sustainable development perspective, the term value creation goes beyond the traditional economic definition, to include a vast array of socio-economic benefits to society. These include job creation, improved health and education, reduced poverty and reduced negative environmental impacts (IRENA, 2045).”• Worldwide, there were about 6.5 million direct and indirect jobs in

the renewable energy sector in 2013, of which more than 3.1 million were related to solar PV, CSP and wind technologies

segments of RE value chain

• Socio-economic effects can be traced along the different segments of the value chain, including project planning; Manufacturing, grid connection, Operation and maintenance, Decommissioning.• Further opportunities for value creation exist in the supporting

processes such as policy- making, financial services, education, research and development and consulting in the fields related to Renewable Energy

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Policy Insights• Depending on the maturity of a country’s renewable energy sector,

more or less value may be created domestically.• Accordingly, a broad range of cross-cutting policy instruments may

influence value creation from the deployment of large-scale solar and wind energy. • These policies can stimulate deployment and aim at building a domestic

industry by encouraging investment and technology transfer, strengthening firm-level capabilities, promoting education and training, as well as research and innovation.

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Policy Insights• Maximizing value creation requires a long process of researching the

different tradeoffs between the different policies and their impacts along with their interrelated causality in order to reach the right policy mix, which is crosscutting and tailored to country-specific conditions

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Welfare

• The measure of GDP can be complemented with various welfare-related indicators developed to quantify economic performance. These indicators range from the concept of welfare in conventional economics to alternative measures of well-being, such as the Human Development Index • “In conventional economics, welfare is an indicator of material economic

well-being, measured as an aggregation of the utility that consumption or other activities/goods/services (for example, leisure) provide to a group of people• It is used in economic modelling and analysis to assess the changes in well-

being of a society, which are not necessarily reflected in other variables such as GDP

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Wellbeing• Renewable energy deployment can affect many such indicators of well-

being. Possibly the most important dimensions are environmental and health-related. • For example, power generation and road transport are two of the main

sources of air pollution.• Subjective wellbeing is influenced by the quality of the local

environment, which also affects environmental health.• Plenty of environmental policy instruments try to internalize a the

pollution harmful externalities on the welfare state through an estimate equivalent cost.

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Sustainability& the Poor• “In March 2014, the WHO reported that 7 million premature deaths annually are

linked to air pollution; by comparison, the AIDS pandemic killed 2.3 million people globally in 2005, its worst year”(WHO, 2014).• Research shows that is the poor who bear most of the ill-health and other costs of

environmental problems. • Their houses and neighborhoods are the worst served with water, sanitation,

garbage collection, paved roads and drains.• It is almost always the poorer groups who live in the places where the pollution

levels are worst• poorer groups often choose such places because these are the only locations

where they can find affordable land for their housing close to sources of employment

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Community Ownership and Community Power

• “Community ownership” covers RET projects that are completely in the hands of a community, and those that are only partially community owned (“co-ownership”).• Different legal and financial models of community ownership include

co-operatives, community charities, development trusts and shares owned by a local community organization

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“A project can be defined as Community Power if at least two of the following three criteria are fulfilled:

• 1. Local stakeholders own the majority or all of a project • 2. Voting control rests with the community-based organization • 3. The majority of social and economic benefits are distributed locally”.

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CRE projects as those which do the following:

• Decarbonize – Use renewable energy and other low carbon technologies (the environmental dimension);• Decentralize and localize energy supply (the technical dimension); and• Democratize energy governance through community ownership and/or

participation (the socio-political dimension)