In an April blog post, QUEST made the case for accelerating the transition to Smart Energy Communities as a response to the massive economic impact that has resulted from the COVID-19 pandemic. Community energy planning is a critical tool to enable Smart Energy Communities and now is more important than ever to understand its economic impact.
What is Community Energy Planning?
Community energy plans (CEPs) are a tool that helps define community priorities around energy with a view to improving efficiency, cutting emissions, and driving economic development. According to QUEST’s 2015 National Report on Community Energy Plan Implementation, positive economic development tops the list of the many environmental, economic, and social reasons why municipalities and their communities embark on the development and implementation of a CEP.
The 2016 QUEST Impact Report reported that 384 communities across Canada have completed, or are in the process of completing a CEP. This progress has continued and Canadian communities are driving change at the local level.
What are the Barriers to Understanding the Economic Potential?
Although there is a great deal of anecdotal information available as to the economic potential of implementing CEPs, there remains a significant challenge for municipalities and community stakeholders in actually measuring that potential. They require more information and support to understand and accurately estimate the economic potential, measured in job creation through CEP implementation.
CEPs, while often developed under the leadership of municipalities, establish community-wide goals that require significant commitment and buy-in from a wide range of stakeholders. Maintaining leadership and driving implementation is a challenge as they do not always have full information on:
- The changes in energy markets and technologies that bring local benefits
- How this fits with their traditional economic development role in attracting investment and job creation
The Transitioning Energy Economy
With this challenge in mind, a 2019 New Brunswick research project set out to examine the local economic benefits of implementing CEPs in New Brunswick.
This research started with the principle that any discussion on the economic job creation benefits of implementing CEPs needs to start at an understanding of how the energy economy is “transitioning.”
The Transitioning Energy Economy is largely defined as the change, over time, from centralized forms of generating and distributing energy in all its forms. This transition has three key attributes that link to a potentially positive impact on local and regional economies:
- The increase in readily available technologies and services that can serve the local goals of Community Energy Plans
- The vast majority of those technologies are located or implemented locally
- Community Energy Plans create channels to local markets for product and service providers that have a measurable positive economic impact by:
- Attracting local investment for local energy infrastructure
- Creating more energy-efficient economies
To understand how the energy economy is transitioning is to understand how any other sector of the economy transitions. We have seen this in communications – with the invention of the telephone, to the internet, to the smartphone. In transportation, we have witnessed the invention of the automobile, to the proliferation of air travel, to electric vehicles and public transportation. These examples demonstrate a radical change in technology matched by massive shifts in consumer and societal demands. It is no different for energy!
Our earliest settlers relied on local sources of energy to do their work. Horses provided agricultural and transportation energy. Wood was used to stay warm and cook food. As technologies advanced, energy systems began to centralize. Small regional electrical grids supplied were by water power and coal gas plants for industrial steam generation. This centralization scaled up at a very rapid rate at the turn of the last century and had a powerful effect on our local economies and culture.
The last half of the 21st century saw massive centralization of energy supply and distribution systems. All of which did a great job of supporting unprecedented growth in the world economy. However, the current economic reality of centralized energy systems has two distinct impacts on local economies:
- The inefficiencies of large scale centralized generation, from primary fuel inputs to long-distance transmission infrastructure, are substantial. The consumer pays for this through its regulated rates.
- The maintenance deficit on energy generation and distribution systems is growing further putting pressure on local ratepayers.
Communities of any size can spend up in the order of $50M a year per 10,000 citizens on transportation fuel, heating fuel, industrial energy and electricity to support their local economies. The vast majority of these dollars leave the community to support centralized, non-local energy generation, fuel supply and distribution.
Implementing community energy plans and transitioning to Smart Energy Communities provide an opportunity to keep these dollars local and to attract investment from the transitioning energy economy. This will have a significant positive impact on local economies through job creation.
Three Ways CEPs Create Jobs
Smart Energy Communities who implement their CEPs have the potential to create jobs in three ways:
1. Retaining Energy Dollars in the Community through Energy Efficiency
This category has the most direct, measurable, and easily communicated impact on local job generation as a result of implementing CEPs.
Municipalities and their communities are setting targets aiming to reduce energy use (and related costs) by up to 50%. Some communities are even more aggressive. This could mean as much as $25M per 100,000 citizens remaining in the community and stimulating direct, indirect and induced jobs. The Economic Impact of New Brunswick Community Energy Plans Project published a primer and workbook to help New Brunswick communities estimate the job impact potential of achieving the goals of their CEPs.
2. Attracting Investment in Local Energy Infrastructure
An increasing number of studies are finding that greater use of distributed energy systems provides economic benefits through job creation, while at the same time protecting the economy from risks associated with reliance on a traditional, centralized, energy systems.
CEPs typically call for the implementation of various technologies, and related design and engineering services, to achieve their energy and GHG emission reduction goals. This is often represented in the form of specific technologies such as solar photovoltaic, district energy, energy efficiency and energy conservation, and transportation infrastructure – all of which can have a significant impact on local design, engineering, construction and installation jobs.
3. Attracting Major Actors in the Transitioning Energy Economy
This is a unique category in that it does not have specific multipliers that are directly linked to the plan’s technical goals and targets.
Evidence of rapidly growing market activity for providers of products and services that support the implementation of CEPs. Companies and related organizations are looking to expand their current market activities or enter into new markets.
This is especially true of European companies that have matured under a transitioning energy economy and now looking to export their expertise, reflected in their products and services, to North America. CEPs provide these companies with a wider channel to their markets.
Market reports show providers of products and services that support Smart Energy Communities measure their existing and future markets in the tens and hundreds of billions of dollars. Communities, through their demonstrated commitment to CEP implementation, have the opportunity to attract the manufacturing and administration facilities for these companies as they grow with their markets.
How Can Municipalities Better Understand the Economic Potential?
Communities, and their municipal governments across Canada, will struggle to renew their post-pandemic economies in the years to come. Transitioning to Smart Energy Communities through the implementation of CEPs is a vital part of community recovery.
Communities that fail to accommodate the job creation and investment opportunities afforded through the implementation of CEPs may find themselves unable to compete in their efforts to maintain vibrant and resilient local economies.
How do I Learn More?
Learn more below about QUEST resources that have been designed to support municipalities and their communities on their Smart Energy Community journey.
Economic Impact of New Brunswick Community Energy Plans
This project examined the local economic benefits of implementing community energy plans in New Brunswick.
Why Smart Energy Communities are a Solution for Post-COVID-19 Canada
Smart Energy Communities offer a new set of tracks that can help us recover and meet our economic and environmental goals and we have written this blog to tell you how.
Smart Energy Communities Benchmark
The Benchmark measures where a community stands relative to Canadian best practices on ten indicators that, taken together, constitute the core characteristics of a Smart Energy Community.
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