The Federal Office for Building and Regional Planning

Publication Strategic Integration of Renewable Energies into Regional Energy Concepts - Regional Economic Effects

BMVBS-Online-Publikation 18/11, Ed.: BMVBS, September 2011

Series: BMVBS-Online-Publikationen Published: September 2011

University of Kassel, Institut für Volkswirtschaftslehre
Reinhold Kosfeld, Franziska Gückelhorn
MUT Energiesysteme
Armin Raatz, Matthias Wangelin, Nina Hemprich, Patrick Schwalm
Federal Ministry of Transport, Building and Urban Development, Berlin
Gina Siegel

Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), Bonn
Alexander Wacker


In recent years renewable energies received special attention, mainly because of growing climate change concerns, leading to increasing government incentives for investments in environmental friendly energy production like the Renewable Energy Law coming into force in 2000. In 2009 about 10.5% of German final energy consumption came from renewable energies and this is supposed to rise to 18% by 2020. Doubtlessly the ecological effects play an important role for the acceptance in the population, but local politicians need to introduce the economic benefits in the public debate as well. In particular a potential gain in regional value added through local production of renewable energy becomes the focus of attention for urban and rural communities.

This study aims at quantifying these economic effects arising from the energy production through wind, sun, water and biogas for four model regions: Trier, Hannover, Friesland and Nordschwarzwald. Especially the value added during the operating phase of a renewable energy production facility is of interest here while not taking into account the partly high initial investments.

A procedure was developed based on the definition of net value added used in the calculation of the distributive income flows of the national account systems, where it composes of the shares of each stakeholder (government, employees, creditor and investor). The calculations were carried out for the following as typical identified renewable energy systems:

  • photovoltaic (small (rooftop): 5 kWp, large (rooftop): 150 kWp, open space: 3,4 MWp)
  • wind power (small: 500 kW, large: 2 MW)
  • hydroelectric power (very small: 10 kW, small: 300 kW)
  • biogas (small: 150 kWel, large: 450 kWel).

The starting point of the procedure is a listing of the yearly incurred operating cost for those systems. These costs need to be first broken down in their income and their material components. Thereafter the part of the expenditures, which remain in the region, must be approximated. This listing determines already the share of the creditors (interest payments) and the share of the employees (labor costs). In the next step the earnings before tax can be calculated on the basis of the cost listing, the regional/system specific energy output of the plants and the corresponding reimbursement rate defined in the Renewable Energy Law. The tax paid on this amount consists mainly of the local business tax and the income tax, where 100% and 15%, respectively, remains in the region, which comprises the share of the government. Therefore the earnings after tax are the share of the investor. The sum of those amounts corresponds with the so-called direct net value added. But that is not all. The expenditures of the plant result also in an increasing production of the suppliers, which initiate further so called indirect value added. The calculation of these effects refers to the turnovers of the suppliers, which remain in the region. Here the income components will be interpreted directly as regional value added reduced by social security contribution and taxes approximated by the German reference value of 48%, because these drain out of the region. The material costs are interpreted as production value. Nationwide equates the net value added to about 42% of the production value. This percentage is here assumed as well. The last effects, which are considered in this study, are the so called induced effects. They are generated through the partly spending of the additional incomes (direct and indirect). Regional specific income multipliers are used for the determination of these effects in this report, which consider the different marginal propensities to import.

The main results of the calculation for the typical systems in the four model regions are displayed in table 1. Clearly the average net value added differs widely between the various kinds of energy sources ranging from 804 euro for the small biogas plant to 68 euro for the small wind power system, which reflect mainly the different operating costs leading to different reimbursement rates. But also within one energy source there are differences between the four model regions caused largely by differing yields and regional specific marginal propensities to import, where the latter depends on the size and the structure of the regional economy.

Table S-2-1: Net value added per kW installed capacity for typical regenerative energy plants (in Euro)
Biogas 150 kWBiogas 450 kWWater 10 kWWater 300 kWPV 5 kWPV 150 kWPV 3,4 MWWind
500 kW
2 MW
Arithmetic mean804403329358147150986885
Source: Own Calculations

Based on the results for the four regions there are two major implications for local politics. One of the substantial positions in the composition of the regional net value added is the share of the creditors. Therefore it is essential for a region that a lot of this interest payments stay through local initiatives within the considered community. The difference in net value added between the two extreme cases of 100% regional capital or 100% outside capital can be up to 50% (wind power). Influential on the net value added appears also the operating scheme and the place of effective management, because they affect the amount of tax paid to the local government. So it can be reasonable for local politicians to support and advice entrepreneurs.

Principally the developed procedure can be adapted to other regions as well by varying the parameters, which offers the regional planning authorities the chance to approximate beside the ecological effects the economic benefits of renewable energy production in their region.

The abstract is part of the German publication "Strategische Einbindung regenerativer Energien in regionale Energiekonzepte. Wertschöpfung auf regionaler Ebene" - BMVBS-Online-Publikation 18/11, Hrsg.: BMVBS, September 2011, Berlin
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