How Much More Would You Spend on Electricity for Tens of Thousands of Jobs Lost? | Eastern North Carolina Now | The question isnít whether a massive buildout of offshore wind capacity off North Carolina beaches would lead to fewer jobs and less economic growth than otherwise, but how extensive the losses would be

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    Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Jon Sanders.

  • The question isn't whether a massive buildout of offshore wind capacity off North Carolina beaches would lead to fewer jobs and less economic growth than otherwise, but how extensive the losses would be
  • Households could pay $400-$500 a year more for the same amount of electricity they were already getting, and the increases in commercial and industrial bills would be much higher
  • A recent study estimated that, just based on electricity price hikes, North Carolina would lose 45,000-67,000 jobs, not counting job losses to affected coastal industries of fishing and tourism

    The previous research brief discussed the woeful shortcomings of Pres. Joe Biden and Gov. Roy Cooper's statements about how government forcing offshore wind energy development off the beaches of North Carolina would create jobs and grow the economy.

    Cooper went above and beyond the cause of political oversell on Aug. 4 when he told his "N.C. Taskforce for Offshore Wind Economic Resource Strategies" (a painfully named group to yield the acronym NC TOWERS) in Elizabeth City that investing in the offshore wind industry would even - I am not making this up -"put money in the pockets of North Carolina families."

    The previous brief pointed out how a decade of responsible policymakers choosing economic growth policies - cutting taxes, cutting regulations, spending responsibly, and saving wisely - helped gain North Carolina national recognition as a top state in business climate and economic outlook. It also pointed out how forcing expensive offshore wind production would lead to significant electricity rate hikes, which act like tax hikes and would lead to large net economic losses.

    How many jobs would offshore wind cost North Carolinians?

    Despite Biden and Cooper's political promises, the question isn't whether a massive buildout of offshore wind capacity off North Carolina beaches would lead to fewer jobs and less economic growth than otherwise. The question is how extensive the losses would be. After all, the 8 gigawatts (GW) of highly expensive, unreliable offshore wind energy production Cooper seeks by 2040 is equivalent to 23% of North Carolina's existing capacity.

    Getting to that realization requires thinking beyond the standard government/industry analysis that is focused solely on the facilities brought about by government actions and incentives as well as private investments. It requires consideration of the opportunity cost of the unseen alternate uses of those resources (productive resources, capital, and labor) as well as economic impacts from interconnecting 8 GW of intermittent offshore wind capacity to the grid for use by consumers who have no say over where their electricity derives from and how much their electricity costs. It also means considering the opportunity costs of the unseen alternate uses of household and business spending that would be used instead to pay the much higher electricity rates.

    As the "Big Blow" report by the Center for Food, Power, and Life (CFPL) showed, incorporating Cooper's massive influx of 8 GW of offshore wind would result in large electricity price increases for households.

    It's important first to realize that offshore wind is a much more expensive energy source than existing power plants already on the grid (see Figure 7 from the CFPL report below). It's not a one-for-one replacement to start with, and the cost disparity is greater to replace reliable, efficient power, especially nuclear, with an unreliable, intermittent source such as wind.


    The CFPL report estimated that by 2040, household bills would increase by $33-$43 per month over 2020 bills. In other words, North Carolina residential customers would pay around $400-$500 extra per year as a result of offshore wind additions. Having to pay a much higher amount of family income for the same amount of electricity means cutting family expenditures elsewhere: buying groceries, eating out, watching movies, going to family entertainment venues, attending concerts, etc. Here is what else it means: less expected revenues for all those businesses and more. For that reason some will fail and others will have to shrink their plans to expand, both leading to reductions in jobs.

    The CFPL report also estimated big electricity rate hikes on commercial and industrial consumers of electricity as a result of offshore wind additions. Commercial electric customers would have to pay an increase of $1,600-$2,000 extra per year, and industrial customers would face increases of $48,000-$60,000 per year.

    In other words, for all the state's employers, the cost of doing business (and the cost of a major input for industrial customers) will increase. Employers will get nothing new in return for these price spikes. They will consequently have less money available to pay workers, which means fewer jobs statewide than there otherwise would be.

    Estimated 45K-67K jobs lost without counting impacts to fishing and tourism

    For those reasons, a study presented to the North Carolina Energy Policy Council estimated that reaching Cooper's goals for offshore wind capacity would create big job losses, not gains. The analysis of Cooper's wind proposal by David T. Stevenson, director of the Caesar Rodney Institute's Center for Energy & Environment, estimated:

  • Cooper's intermediate goal of 2.8 GW by 2030 could "cost between 15,660 and 23,490 permanent jobs"
  • 8 GW of offshore wind capacity could "cost 45,000 to 67,000 jobs"

    As bad as they are, those figures are not comprehensive. They are based on estimating the economic impact of higher electricity prices, which act like tax increases or "any other policy that takes money out of people's pockets." (Stevenson could not have anticipated that Cooper would later gush that the offshore wind industry would actually "put money in people's pockets.")

    Nevertheless, Stevenson pointed out that the negative impact of offshore wind development on the state's jobs is likely higher than the numbers he gave since his estimates don't account for "negative impacts on tourism and commercial fishing."

    Potential impacts to fishing are discussed in a research brief titled "Offshore Wind Facilities Would Wreck N.C.'s Coastal Fishing Industry and Marine Ecosystems." One thing that comes out is that the Biden administration fully expects losses to commercial fishing - but they are undeterred. They've chosen to promote one industry (offshore wind) against the others. A future brief will examine the potential negative effects on the other major coastal industry, tourism.
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