Transformation of electricity as an opportunity for rural areas?

Rural areas can benefit from this money in a certain way, as power generation will be more decentralized in the future than it is today, so a lot of money will have to be directed there through the EAG. Wind and solar energy in particular require favorable locations, which are more likely to be found in rural areas than cities.

For example, concepts already exist for integrating PV systems into agricultural production and thus twice the land use.[1]

Wind turbines can also be perfectly integrated into agriculture. Many measures are also taken in urban areas – the city of Vienna, for example, is planning an all-out PV attack[2] Rural areas can and should make a greater contribution in terms of quantity.

As the figure below shows, in 2020, the majority of electricity from renewables was produced in the federal states: Burgenland, Carinthia, Salzburg, Tyrol and Vorarlberg already had a share of renewables in electricity production of more than 90%, and in Lower Austria it was. by 86% and in Upper Austria and Styria about three quarters.

Hydroelectric power was dominant in most federal states, only in Burgenland most of the electric power produced came from wind turbines. Electricity is still generated from fossil sources mainly in Upper Austria, Lower Austria, Styria and Vienna. Burgenland, Carinthia, Salzburg, Tyrol, and Lower Austria were able to export electricity on a net basis, while Styria, Vorarlberg, Vienna and Upper Austria depended on imports.

Also surprising is the large difference in total final energy consumption per capita. The main reason for this is the demand for electricity in the manufacturing sector, which is relatively higher in Upper Austria and Styria and much lower in Vienna.

Electricity generation and electricity use by the federal state in TWh per 100,000 inhabitants, 2020

Source: Statistical Austria (2021): Energy balances of the federal states; own representation.
Note: Total final energy consumption includes electricity consumption by final consumers (private households, the manufacturing sector, public and private services, transportation, and agriculture) as well as grid losses and the energy sector’s own consumption.

Austrian Energy Agency[3] In a recent study, I compared the expansion goals set by the federal government according to the EAG with those of individual federal states and found significant discrepancies. If you add what the federal states have set themselves, then it will not be possible to achieve the federal goal by 2030. According to the current situation, many federal states will not even be able to achieve their own goals, which are already set at a very low level.

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Opportunities for expansion and potential

However, the IEA not only identifies the loopholes, but also interprets them as opportunities for expansion and demonstrates the potential of the respective federal states. For example, Burgenland, where only three percent of the population of Austria lives and more than three-quarters of the municipalities are considered rural areas,[4] Generate an additional 3.3 TWh of electricity from wind power by 2030, i.e. it should be responsible for a third of national expansion targets.

Nearly half of the necessary expansion of hydropower will occur in Tyrol, which is also predominantly rural and in which barely nine percent of the population lives. On the other hand, Vienna, where more than 20 percent of Austria’s population lives – despite its onslaught of photovoltaics – will not play a significant role in any of the technologies.

Much of the billion green electricity will be used in areas where fewer people live, but where there is a large area with good natural conditions for wind, solar and hydropower. However, money is spent on upfront services in the form of goods and services, which largely leads to value added outside of rural areas. How long do you actually stay in rural areas?

What can come from billion green electricity in rural areas

In a recent study by the Institute for Advanced Study (IHS), funded by the Federal Ministry of Climate Protection, Environment, Energy, Mobility, Innovation and Technology (BMK), the economic impacts of one billion green electricity were calculated.[5] The consideration has again been greatly expanded and the economic impacts of investment and operating impacts of 1 billion green electricity for individual power generation technologies from renewable energy sources have been identified.

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Accordingly, the local employment and value-added effects of investment spending vary greatly between individual technologies. For example, when investing in wind energy and PV systems during the construction phase, a lot of added value and therefore labor flows abroad, as the systems are mainly produced abroad and only assembled in Austria.

On the other hand, investments in hydropower are highly dependent on local value chains. Austria is a leader in the planning and construction of hydropower plants and the manufacture of station components for hydropower plants, which means that a lot of added value and labor can be kept locally when expanding hydropower. In addition, for all technologies, planning, construction and installation services in particular come from Austria and are often sourced from the region.

Operational effects show that operating all types of renewable electricity generation leads to significantly higher domestic value creation and employment impacts compared to fossil fuels, since no fuel imports from abroad are necessary for fossil fuels. Within renewable energy sources, energy generation from biomaterials (above all biomass and biogas) occupies a special place, because the operation of factories requires raw materials that come mainly from agriculture and forestry. Here, too, it can be assumed that some raw materials will be obtained from regional sources in the future. The results of this study indicate that from a purely economic point of view, individual rural areas will benefit differently from the expansion of renewable energy sources, depending on the technology developed.

Challenges for rural areas

However, the energy transition has not only potential for rural areas, but also challenges. For example, conflict of interest can arise in land use that needs to be mitigated. It is essential that citizens actively participate in the energy transition, which also includes access to information. Advisory services should also be established – eg for energy communities – in rural areas. For the success of renewables expansion, coordination between individual federal states is also essential.

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research needs

While there are already estimates of the economic effects of one billion green electricity on the entire Austrian economy, there is still a need for research regarding the potential of Austria’s rural areas.

Studies from Germany[6] It turns out that rural areas are particularly benefiting from the energy transition. However, due to the different structures of energy production, these results cannot be transferred one-to-one to Austria. For example, there is still a need to research whether the skilled workers needed to expand and operate renewable energy systems are available in rural areas and how individual goods and services for electricity generation are obtained from renewable energies at the regional level. Because only if companies from rural areas actively participate in the expansion and operation of renewable energy sources can they benefit in terms of value creation and employment.

[5] Labone et al. (expected to be released by May 2022): National Accounts for One Billion Green Electricity. Vienna: Institute for Advanced Study.

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