Local Economic Effects of Solar Panels and Onshore Wind Turbines: Evidence from German counties

University essay from Handelshögskolan i Stockholm/Institutionen för nationalekonomi

Author: Victor Smid; [2019]

Keywords: Renewables; GDP; Employment; Local Effects;

Abstract: There is an abundance of literature on the economic effects of renewable energy stimulation at the national level, but the local effects of deployment have received relatively little academic attention. Against the backdrop of increases in local opposition against renewable energy plants, this thesis studies the local effects of solar and onshore wind energy capacity expansions in Germany. To this end, a panel regression was run using county level data over the period 2000-2016, correcting for county fixed effects, year fixed effects and county-specific trends, and controlling for capacity expansions of other renewables. I find effects of wind turbines on employment, but these are small and temporary (about 2.5 job-years per megawatt in the year preceding the start of energy production) and no effects on GDP. However, I find that wind capacity causes losses to the construction sector of about 0.41 jobs and 60,000 per megawatt. These seem to be the result mostly of temporary contractions in the years immediately following capacity expansions. The effects of solar capacity expansions are more difficult to establish. I find positive effects on GDP, jobs and the construction sector, but there is significant evidence that these arise due to reverse causality. As such, I find that instrumental variable models are preferred when measuring the effects of solar panel capacity.

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