Macroeconomic and Fiscal Assessment of Utility-Scale Solar in Maryland
Washington, DC. November 16, 2020. At the request of a consortium of clean energy advocates, the Center for Climate Strategies (CCS) recently completed a macroeconomic and fiscal assessment of increased deployment of utility-scale solar projects in the State of Maryland. The study, entitled “Macroeconomic and Fiscal Impacts of Expanded Utility-Scale Solar Generation in Maryland,” examines proposed policy changes for the siting of new large solar projects in the state and analyzed the potential macroeconomic and fiscal benefits that are likely from accelerating deployment of these projects.
To conduct its analysis, CCS evaluated two deployment scenarios. First a “baseline” scenario was established, representing the total amount of new utility-scale solar expected to be constructed in Maryland by 2030 under existing policies. Second, a “Policy Scenario” was modeled in which utility-scale solar is deployed at an accelerated schedule as a result of new policies. CCS estimated the positive and negative financial flows (direct economic impacts) from these projects, including new project financing, workforce investment, impacts on local supply chains, imports/exports and tax revenues. Fiscal analysis found that policy-induced deployment of utility-scale solar will significantly increase new net sources of investment and associated tax revenue coming into the state and increase new net direct local investment in Maryland by as much as $441 million over the next ten years - with nearly $78 million in net additional tax revenue for state and local governments. In addition, it is expected that over $340 million will be invested in net new job creation over the next decade.
CCS integrated this fiscal analysis with its Macroeconomic Indicators Tool to help policymakers better understand the influence that the proposed policy and program designs and fiscal spending have on net macroeconomic conditions (GDP and jobs) and fiscal conditions (revenues and spending). The macroeconomic assessment is based on six key factors (indicators) that have a significant effect on estimated GDP growth and employment. Its output is a rating of each factors to illustrate the impact that the policy option could have on the economy of Maryland. CCS found that the policy scenario would have a strong positive influence on job creation, increased investment capital flowing into the state from external sources and increased local production of energy that would otherwise be imported. The option will also encourage significant investment in labor-intense activities, particularly construction, which is associated with economy-wide employment growth, while also reducing net imports of electricity and increasing adoption of advanced technologies, thus driving economic activity to key local sectors.
Overall, CCS concluded that increased deployment of utility-scale solar in the State of Maryland will have a significant expansionary impact on the Maryland economy. Accelerating deployment of utility-scale solar is a key driver to help Maryland meet its Renewable Portfolio Standard (RPS) and Greenhouse Gas (GHG) reduction targets as outlined in the 2018 Clean Energy Jobs Act and the Greenhouse Gas Reduction Act of 2009. Policies which encourage implementation of new solar projects in Maryland will also support economic recovery efforts in response to the Covid-19 pandemic. The review is based on generally accepted guidelines for policy and regulatory impact analysis, as well as CCS’s 16-year experience developing and analyzing clean energy, economic development, natural resource management, climate change, and sustainability strategies in over 20 nations and 40 subnational jurisdictions.
Read the full report here.
Since 2007, CCS has provided a variety of technical and facilitative support to the state of Maryland and its stakeholders for the development, analysis, and implementation of climate mitigation and adaptation action policy measures and plans.