Episode 30: Jilleah Welch of the Baker School of Public Policy and Public Affairs

Today’s episode is all about the 2024 Tennessee Advanced Energy Economic Impact Report. Every three years, TAEBC releases an Advanced Energy Economic Impact Report to provide context for public officials and private sector leaders to make lasting contributions to Tennessee’s economic base for the next decade and beyond. The report was produced by the Baker School of Public Policy and Public Affairs with support from the Tennessee Valley Authority and the University of Tennessee, Knoxville.

On the episode, host Cortney Piper and Jilleah Welch, senior research associate and lecturer at the Baker School of Public Policy and Public Affairs, discuss the report’s findings and potential impact, including the advanced energy industry’s $55.9 billion contribution to state GDP.

Learn more about TAEBC, the Baker School and download the 2024 Tennessee Advanced Energy Economic Impact Report!

Transcript

Cortney Piper: Welcome to Energizing Tennessee, powered by the Tennessee Advanced Energy Business Council. We're your number-one podcast for news about Tennessee's advanced energy sector. I'm your host, Cortney Piper.

Did you know? For over a decade, advanced energy in Tennessee has continued to grow faster than the state's overall economy, from former Governor and U.S. Senator Lamar Alexander's recruitment of automotive OEMs in the 1980s to Silicon Ranch becoming one of the largest Independent solar power producers in the world to our current dominance in electric vehicles, batteries, and advanced nuclear technology.

Tennessee's world class research institutions and manufacturers have positioned us to become the number one location in the world for energy innovation and high quality jobs. On today's episode, we'll discuss our fourth Tennessee advanced energy economic impact report with Jill Welch, an economist at the University of Tennessee, Knoxville's Baker School of Public Policy and Public Affairs.

Every three years, TAEBC releases an Advanced Energy Economic Impact Report to provide context for decisions by public officials and private sector leaders to make lasting contributions to Tennessee's economic base for the next decade and beyond. The report was produced with support from the Tennessee Valley Authority and the University of Tennessee, Knoxville.

Keep listening to hear how advanced energy contributes overwhelmingly to our state's economy and as always, if you enjoyed today's episode, please subscribe and leave a rating or review. It helps us spread the word and support the fantastic work in the advanced energy sector.

Today, I am thrilled to welcome Jill Welch. She is the Senior Research Associate and Lecturer at the Baker School of Public Policy and Public Affairs. We're diving into the 2024 Advanced Energy Economic Impact Report. Jill, welcome to the show. It's great to have you. 

Jill Welch: Thanks for having me, Cortney. 

Cortney Piper: All right, to kick things off, Jill, can you share a little bit more about your journey and what brought you to the Baker School?

Jill Welch: Sure. My background is in economics, I got my PhD in economics at UT actually, and I have been working at the now Baker School since 2015. It was the Baker Center when I started. I work on research projects that span a variety of topics such as environmental policy, economic development, and education, but a lot of my work is for the Center for Energy, Transportation, and Environmental Policy, which we call CTEP, and is a research center within the Baker School. CTEP brings together faculty from the Baker School and researchers from across UT's campus, as well as from industry, government and nonprofits, and researchers come from a wide variety of disciplines to conduct research on energy environment topics broadly.

CTEP helps researchers take their work further by helping them with policy engagement and incorporating their research into more informed public policy. In my graduate work, I was always drawn to applied work and public policy. So, I feel lucky to be at the Baker School. And it's exciting to not only be on the research side, but now that we are a school, we see enthusiastic students in our building, learning how to be public problem solvers. It's all energizing. 

Cortney Piper: No pun intended, right? Or maybe intended. 

Jill Welch: Intended. 

Cortney Piper: Jill, we have been partnering with the Baker School, when it was the Baker Center, since 2014 to publish these reports that take a look at Tennessee's advanced energy sector. And it has been a tremendous partnership for those reasons. What we try hard to do with this report is make it a little bit more applied and be able to share this data in a way where our policymakers and government officials, community leaders and business leaders can make decisions about how to use advanced energy to grow our economy and give more economic opportunities to Tennesseans in all 95 counties.

So, thank you so much for this partnership. Now, let's talk a little bit more about this report. So, our 2024 Advanced Energy Economic Impact Report. This is the fourth one. We try and do them every three years. It was produced by the Baker School of Public Policy and Public Affairs for the Tennessee Advanced Energy Business Council, funded by the University of Tennessee, Knoxville, and the Tennessee Valley Authority.

Again, we do these reports because when we started the Tennessee Advanced Energy Business Council, we thought it was very important to have a baseline, to have some quantitative data about what we are talking about when we say advanced energy, and being able to chart the growth and the trajectory of the advanced energy industry in the state.

Our thinking is you're not going to be able to create an economic development strategy around advanced energy unless you know what you're working with. These reports have helped our governors, state and federal elected officials, and community leaders do just that. So, for our listeners who might be new to advanced energy, when we talk about advanced energy, our basic narrative definition is anything that makes energy cleaner, safer, more secure, more efficient. It's in the tent, and it includes electricity and transportation. What we're talking about is a technology neutral approach. You make energy better and we use it as an economic development and job creation strategy. But in order to get this good, qualitative, quantitative data, we need to have a little bit more strict definition of advanced energy.

So Jill, talk to us about the definition that you all have used for us as economists when we are actually able to grab data on advanced energy. 

Jill Welch: Sure. As you mentioned, advanced energy it is technology neutral, and includes any technology that makes energy cleaner, safer, more secure, and more efficient.

Some examples would be electric and plug-in hybrid vehicles, bioenergy, lightweight composites and manufacturing, more efficient industrial processes, smart grids, wind, solar, and nuclear technologies. The advanced energy sector includes manufacturers and companies that use advanced energy technologies, in addition to researchers and entrepreneurs.

In Tennessee, there are many specific examples. A few examples would be the development of Blue Oval City electric truck and battery manufacturing facilities and battery cell manufacturing facilities in the state, which build upon the state's well established auto manufacturing sector. Another example would be Kairos Power, constructing one of the first advanced reactors in the U.S. in East Tennessee. Which also builds on a long history and presence of the nuclear industry in the state. There are also educational programs being developed to support workforce development in the advanced energy sector. I mean, again, there are many examples, but one going back to the auto manufacturing is Nissan, along with Tennessee's Colleges of Applied Technologies, TCATS, have announced the development of Centers of Excellence, which will provide training in advanced manufacturing and other growing technologies in the automotive industry. So those were just again, a few of many examples in Tennessee. But, the advanced energy sector is important nationally. I mean, it helps efforts to reduce energy use and create more energy efficient products and processes. It is market driven as well as policy driven consumers, workers, shareholders, business owners are all driving what is happening in the advanced energy sector. And it's good for the economy. The advanced energy sector creates and supports high quality jobs and significantly contributes to gross domestic product or GDP for the U.S. and for Tennessee.

Cortney Piper: All right now, according to our 2024 report, advanced energy outpaces the growth of the overall state economy and extends across all 95 counties. So Jill, walk us through some of the reports' top findings. 

Jill Welch: Yes. As you mentioned, this report is an update, the fourth in a series, and in this last report, we find that the advanced energy sector in Tennessee in 2022, that's what the most recent data was for 2022. And so the advanced energy sector in Tennessee in 2022 supported over 420,000 jobs for Tennesseans, which accounts for nearly 15% of all jobs in Tennessee. We also find that the average annual salary for an advanced energy worker is about $74,000, which is 31% higher than the state's average wage for all jobs, which is almost $57,000.

So, the advanced energy sector is supporting a lot of jobs for Tennesseans, and those jobs are high paying jobs. In terms of businesses, the advanced energy sector is spread across over 22,000 business establishments in Tennessee, which accounts for about 15% of all business establishments in the state, while advanced energy activity is concentrated around the state's metropolitan areas, we find that the advanced energy economy, as you mentioned, extends across all counties in the state. The advanced energy sector contributed $55.9 billion to the state's GDP in 2022, which represents about 12% of total GDP for the state.

And importantly, when we look back at not only the previous report but going back almost a decade to the first report, which was based on 2013 data, we find that the advanced energy sector is growing faster than the overall economy. For example, from 2013 to 2022, advanced energy employment increased by 30%. While total employment across all sectors in the state increased by about 19% over the same time period. 

Cortney Piper: That's huge. That is significant. That shows that advanced energy is providing opportunities to Tennesseans. It shows that we are contributing on a global and national stage in terms of energy innovation. And it shows that it's big business for the state of Tennessee. We have three very large research assets in Tennessee that are unique to any other state or region in this country. We have Oak Ridge National Lab, the University of Tennessee, and the Tennessee Valley Authority. So the nation's largest public power provider, the state's flagship land grant university, and the nation's largest science and energy national lab. All located within about 30 miles of one another, and that sort of innovative power is driving business growth and development across the state of Tennessee.

It shows that when policymakers and economic developers in Nashville make decisions about this sector of our economy, they're going to get a return on their investment, which is so important when we're talking about public dollars. And so when we see announcements come out from the governor's office, from the commissioner of economic and community development about really big economic development deals.

You know, Ford, Blue Oval City, we had Orano last year in East Tennessee. And, there was a governor's advisory council that was put together to talk about and specifically look at nuclear energy. When these things hit the paper, I'm aging myself there a little bit, but when you see these news items come out, As a member of the public, you can rest assured that there will be some return on investment on those things, which I think is really important for policymakers to consider.

And, it also opens up a lot of very exciting job opportunities for students right now that are in K-12 or might even be finishing out their post secondary education. I've been a champion of the advanced energy industry for a while. That's why we started the Advanced Energy Business Council. And it's so nice to have some really firm and clear data from economists that sort of backs up the narrative and those anecdotal stories that we hear across the state. So Jill, compared to our 2021 report, which was the last time that we do this, we tried to do them every three years. Did anything surprise you or strike you as particularly significant?

Jill Welch: So I just went over the high level highlights in the report. We go into more detail. For example, we look at the advanced energy sector by five sub industry groups. Since the 2021 report, we found that growth for the advanced energy sector was concentrated in two sub industries, advanced energy utilities and construction and advanced energy professional, scientific, and technical services.

It was a bit of a surprise. At first, at least, we didn't see the same growth in advanced energy manufacturing, but I think a few things are going on. One, we've had higher interest rates, which can, you know, especially be at play for capital intensive manufacturing facilities. Two, in Tennessee, we saw slow growth in manufacturing and employment more generally over the same time period. So, it's not just advanced energy manufacturing that is growing slower. And three, there might be some delayed effects. So, for example, the data is for 2022, and things like the Inflation Reduction Act, the CHIPS, and the Science Act hadn't completely hit yet. Also, there were some delays in manufacturing projects such as Blue Oval City.

 With all that said, though, slower growth for advanced energy manufacturing employment is a small setback because we're still overall continuing to see the advanced energy sector grow and grow faster than the overall economy. 

Cortney Piper: What are some of the main challenges facing the advanced energy sector in Tennessee, and how do you see policymakers and industry leaders stepping up to tackle those obstacles?

Jill Welch: I think that's a good question. I think there are likely more opportunities in Tennessee compared to other states rather than obstacles. I mean, this is why people and businesses are moving here. There's an abundant labor force, relatively low tax and regulatory burdens. It's a great location, a central location within the U.S. with strong logistics, infrastructure, and a good climate for workers and families. So, I think policymakers need to keep their eye on the ball kind of rather than spend time on issues that really don't meet the needs of the economy, businesses and workers. I think business voices need to continue to be strong through local chambers of commerce and statewide organizations like the Tennessee State Chamber of Commerce, the Tennessee Business Roundtable, and the Tennessee Advanced Energy Business Council. 

Cortney Piper: We are here to keep everybody focused, Jill. Okay, let's pull out the crystal ball for a moment.

What's your vision for advanced energy in Tennessee over the next 5 to 10 years, and any predictions or exciting trends that you think we need to watch for? 

Jill Welch: I think we're going to continue to see the advanced energy sector grow in Tennessee, and I think the advanced energy sector is probably going to continue to grow faster than the overall economy going forward, just as it has in the past, Tennessee has well established industries to build upon, such as the automotive industry and the nuclear energy, which I mentioned.

And as investments continue to be made in those sectors we will continue to see growth. There are a lot of advancements being made. I mean, TVA is a leader in advanced nuclear technologies. And as they upgrade and extend nuclear generation in addition to the continued development of the small modular reactors, as well as other nuclear investments being made in Oak Ridge, and East Tennessee.

And those investments extend to include supply chains in the production of SMRs for deployment in Tennessee and elsewhere. And as those industries grow, it will further attract companies to locate in Tennessee and provide jobs for Tennesseans. Tennessee, being a leader in electric vehicle manufacturing and battery manufacturing investments, is another example.

You know, we're in the midst of an energy transition. What is at the end of the transition? A new energy system. The advanced energy sector is expanding to support that transition and new system. And these new technologies are not only better for the environment by making energy cleaner, more efficient, but they're also good for the economy and create high quality jobs.

Cortney Piper: And Jill, I'm going to throw one in there, too, because I'm the host, and I can do that. TVA is working on its Integrated Resource Plan, and they'll have that out in the spring of 2025. The Tennessee Advanced Energy Business Council was honored to have a spot on that working group. And I can say from interacting with TVA in the years since we started the business council around 2013/2014, I have seen an intense focus and commitment from TVA to look at these emerging and innovative technologies and really put a renewed emphasis on their three pronged mission of power generation, economic development, and environmental stewardship. Really seizing the power and the opportunity coming from the other research assets and partnerships with industries and customers to either get new programs online where companies can procure or own carbon free generation that's more reliable and fits their needs.

Or if we're talking about looking at things like SMRs and carbon capture, and it is going to serve our economy extraordinarily well. If it's one thing that America is really great at its innovation, but we need folks on the ground to be able to harness those innovations and take them to market in order for us to really claim our place as an international leader in energy, innovation and delivery and deployment.

So I think TVA's IRP is going to be a real big game changer and lift for the advanced energy industry. That is my crystal ball prediction. I'm going to throw that in there. All right. Now, Jill, before we wrap up, let's make sure our listeners know where to go next. Where can they learn more about you, your work and the Baker School for Public Policy and Public Affairs?

Jill Welch: The Baker School website is probably the best place to start. There's a page for the Center for Energy Transportation Environmental Policy, CTEP, that I mentioned. From there you can see my info in addition to the contact information for our director. Charles Sims and all the CTEP faculty and experts.

There's also a section with CTEPS research where you can explore specific topics and look at reports and policy briefs. And to download the Advanced Energy Economic Impact Report, listeners should head over to the website for the Tennessee Advanced Energy Business Council at TNAdvancedEnergy.com. 

Cortney Piper: Thanks, Jill. Thanks for the plug. All right. Well, thank you very much for joining us today. Jill Welch, Senior Research Associate and lecturer at the Baker School of Public Policy and Public Affairs. 

Jill Welch: Thanks for having me, Cortney. This is fun.

Cortney Piper: And that's our show. Thanks for tuning into Energizing Tennessee, powered by the Tennessee Advanced Energy Business Council, your number-one podcast for news about Tennessee's advanced energy sector. Subscribe on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you like what you heard, please share it with others or leave a rating and review.

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