How growth in advanced energy industries led to more jobs and higher wages for Tennesseans
The advanced energy sector added jobs, paid higher wages and grew the state's economy from 2016 to 2019, according to the Tennessee Advanced Energy Business Council's (TAEBC) economic impact report released.
The sector contributed $45.8 billion to the state's economy, an increase of 8.2%, according to the report.
"Moreover, the rate of growth for employment, establishments, and inflation-adjusted payroll expenditures associated with (advanced energy) activities is higher than the growth rates for all industries within Tennessee," the study said.
Knox County maintained its spot as the county with the fourth highest rate of employment in the sector. It trailed Davidson, Shelby and Hamilton counties with more than 20,600 employees and annual payroll totaling more than $1.3 billion.
"The advanced energy sector is truly a job creation engine for Tennessee, and this industry is growing faster than the overall Tennessee economy," said Steve Seifried, account solutions executive for Ameresco and TAEBC board member. "And that's surprising because you don't think of Tennessee necessarily as a leader in the advanced energy space, but it's obvious when you start to scratch beneath the surface."
Tennessee's growth in advanced energy
The advanced energy sector includes any industry that makes energy cleaner, safer, more secure or more efficient, like wind, solar, new nuclear technologies, electric and plug-in hybrid vehicles, bioenergy, smart grids and many more.
The study was conducted using 2019 data from the U.S. Census Bureau by the Howard H. Baker Jr. Center for Public Policy at the University of Tennessee - Knoxville and funded by the University of Tennessee and the Tennessee Valley Authority.
It concluded the sector "has likely recovered" from the effects of the COVID-19 pandemic, but data was not yet available for 2020.
“From our dominance in the (electric vehicle) market to our world-class research institutions and manufacturing facilities, Tennessee continues to make gains that set us apart from other states and make us an attractive place to do business," Cortney Piper, executive director of TAEBC, said in a press release.
TAEBC is a statewide organization that touts advanced energy as an economic development and job creation tool. This is its third economic report since 2015.
There's plenty more opportunity in advanced energy, an estimated $1.4 trillion industry worldwide, according to insights from the Advanced Energy Economy market report.
"Given that several other states also have a strong foothold in the (advanced energy) market, including nearby Arkansas and North and South Carolina, it's important that we flex our strengths and progress to help attract more AE investments here at home," the study said.
Growth in this sector coincides with a paradigm shift in the energy industries, Seifried said, as companies move from a focus on just energy savings to also energy creation and storage.
"There's some really neat technology that allows cities, utilities and even college campuses (to) make sure that they're not only using as little energy as possible but they're either creating or saving or storing energy so that they're guaranteed the resilient energy," he said.
Key findings in employment, payroll
There are more employees working in advanced energy. The sector employed nearly 394,000 Tennesseans in 2019, a 10% increase from 2016. Jobs in the sector accounted for 14.5% of all jobs statewide, according to the report.
About 40% of advanced energy sector jobs were in manufacturing, the largest segment, and about 26.5% in utilities and construction.
Statewide, payroll increased almost 10% to $25 billion. Workers in the sector earned an average wage of just under $64,000.
Seifried said he anticipates the advanced energy sector will have an increasing need for a skilled workforce.
The University of Tennessee and Oak Ridge National Laboratories are focused on meeting that demand, said Stacey Patterson, vice president for research outreach and economic development at the University of Tennessee.
The UT-Oak Ridge Innovation Institute focuses on developing the next generation of talent in technology and emerging industries to fill the future workforce needs.
"Workforce development needs to be at the top of everyone's mind when we're thinking about economic development and opportunities for the future," Patterson said.
The number of companies and organizations pursuing energy solutions increased too. About 20,340 businesses and organizations worked in the sector, a 12% increase since 2016, according to the report.
The advanced energy sector generated $46 billion in 2019, or about 12.2% of the state's gross domestic product. The manufacturing industry is the largest contributor within advanced energy.
Tennessee is home to three major automotive manufacturing plants, General Motors, Volkswagen and Nissan, all three of which now produce electric vehicles.
More than 152,000 electric vehicles have been manufactured in Tennessee since 2013, according to the Tennessee Department of Economic & Community Development. Volkswagen is expanding its Chattanooga campus to include battery pack testing and assembly for electric vehicles.
The study compared each region's employment levels, payroll and number of businesses in the advanced energy sector in 2019 to 2016 figures.
Businesses in the Knoxville metro area, which includes nine counties, employed the third-most in the advanced energy sector, totaling about 50,500 jobs, a 3.8% decrease from 2016. The professional, scientific and technical services industries employed the most people, about 17,170 of those workers.
Knoxville metro area businesses paid about $3.62 billion in payroll, an increase of 10.3%.
The Nashville metro area was the largest contributor to the advanced energy sector, accounting for about 119,900 jobs, a 4.2% increase. Utilities and construction industries represented about 39,600 of those jobs.
The area doled out $8 billion in payroll, a 13.5% jump.
The Memphis metro area is the state's second largest region for advanced energy jobs with about 55,200 employees in the sector, a 1.1% decrease. Of those jobs, more than 19,700 came from utilities and construction.
The Memphis area paid about $3.37 billion in payroll in 2019, a 9.9% increase.
Source: Knoxville News Sentinel, by Brenna McDermott
The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org
Published August 6, 2021