Submarine Electricity Cables Cost Benefit Analysis Methodology Statement. Stakeholder Consultation December 2015

Transcription

1 Submarine Electricity Cables Cost Benefit Analysis Methodology Statement Stakeholder Consultation December 2015

2 Contents 02 Introduction 05 Methodology Overview: Stage 1: Identifying if impacts have any significant implications for any living organism, natural resource or habitat Stage 2: Quantifying the link between submarine electricity cable installations and the impact on any living organism, natural resource or habitat Stage 3: Assigning a monetary value to the impact that submarine electricity cable installations have on any living organism, natural resource or habitat Stage 4: Data used to quantify the impact that submarine electricity cable installations have on any living organism, natural resource or habitat 22 Next Steps 23 Additional information and references Appendix 1: Further literature review bibliography Consultation What Cost Benefit you need Analysis to know Methodology Statement

3 Page 01 What you need to know Fifty-nine Scottish islands are currently connected to the electricity network that serves mainland Great Britain by the Scottish Hydro Electric Power Distribution network. They are connected by submarine cables which supply electricity to homes and businesses on the islands. The cost of supplying electricity to the Scottish islands is supported by electricity consumers across the north of Scotland as part of their energy bills. Scotland s National Marine Plan, adopted in March 2015, requires us to consider how submarine electricity cables are laid and protected on the seabed. During September and October 2015, we asked stakeholders to help us shape the cost benefit analysis model. The model will be used to help us determine which method of submarine electricity cable installation delivers best value by satisfying all current legislation and providing a sustainable balance of economic, safety and wider social and economic impacts. Your responses to the first phase of our consultation have been valuable in helping inform: the submarine cable installation methods we consider in the cost benefit analysis; the benefits and drawbacks of protecting submarine electricity cables; the key impacts associated with installing submarine electricity cables; the methodology we will use to identify and evaluate potential impacts. We have summarised your responses and made them available on our website at This statement provides more detail about how our methodology has been informed by the consultation, how your input has informed, what the cost benefit analysis tool will look like, and how it will work. The next stage will be to illustrate a worked example of the cost benefit analysis tool in action at a series of three workshops. This will give you an opportunity to provide face-to-face feedback on our identified impacts and method(s) for quantifying them.

4 Page 02 Introduction The cost of maintaining the electricity distribution network involves investment by us. When customers in our network area receive an electricity bill from their supplier, our costs are included. Within our current business plan we propose spending 44 million over the next eight years to replace 112 kilometres of submarine electricity cables. This cost was based on our existing engineering practice of laying these cables on the seabed. The policies within Scotland s National Marine Plan may require us to change this practice. If we are required to protect the whole 112 kilometres, our initial high-level analysis suggests the cost of doing so could be in the region of 300 million. We want to find the best value method of cable installation which satisfies all current legislation and provides a sustainable balance of health and safety, socio-economic, environmental and wider engineering and economic impacts. To help us do this, we propose to use a cost benefit analysis model which will demonstrate (to ourselves, our customers, our regulators Ofgem and Marine Scotland and all users of the marine environment) that the method(s) we propose to deploy in the future for laying and protecting cables around the coast of Scotland justify the additional expenditure and provide best value. This paper sets out the methodology which we will use to develop this model.

5 Page 03 Timeline November 2014 Ofgem published its views on the allowances that Scottish Hydro Electric Power Distribution could spend on submarine electricity cables over the next eight years. Dec Jan Feb March 2015 Apr May Jun Scotland s National Marine Plan was adopted on 25 March 2015 and laid before Parliament on 27 March The plan includes policies on how submarine cables are laid and protected on the seabed to achieve seabed user co-existence. This means we may have to change our engineering practices. Jul Aug Sept 2015 to March 2016 We are undertaking a significant piece of work to fully understand the case for changing our engineering practices to meet the requirements of Scotland s National Marine Plan in terms of how submarine electricity cables are laid and protected on, or under, the seabed. Sep Oct Nov Dec Jan Feb March 2016 The output of the cost benefit analysis, which identifies benefits and drawbacks (to the cable, a wide range of stakeholders and electricity consumers) of each cable installation method, is presented to stakeholders. Should alternative installation methods be justified as best value, SHEPD will work with Ofgem to see if provisions can be made to recover additional costs associated with the changes in engineering practice.

6 Page 04 Installation Methods The cable installation methods that the cost benefit analysis will consider are: Surface laying: submarine cable is laid directly on the seabed with no additional protection. Ploughing: a narrow trench is cut in the seabed in which to lay the cable. Jetting: high pressure water jets fluidise the seabed allowing the cable to sink into the seabed. Mass flow excavation: a method of burial that clears sediment from underneath the cable. Mattressing: a concrete mattress, usually 3m x 6m, is used to protect the cable at key points. Rock dumping: covering the cable with rock. Horizontal directional drilling: land-based solution of drilling under short passages of water. We asked: Did we include all appropriate installation methods for submarine electricity cables? We heard: There are a number of ways in which submarine electricity cables can be installed. They are not mutually exclusive, but will depend on the specific submarine topography. Within the phase 1 consultation we asked for your views on whether all appropriate methods for installation had been considered for inclusion within the cost benefit analysis model. You highlighted three new methods: Horizontal directional drill: this is a land-based solution that enables a hole to be drilled into the ground for up to 3 kilometres without breaking the surface of the ground. Once a hole is drilled it is lined with conduit (plastic or steel) then a cable can be pulled through from one end to the other. Vibrating ploughs: a vibrating plough utilises similar engineering principles to a standard submarine cable plough but with the introduction of a gentle oscillatory vibration it can in certain conditions allow for a deeper cultivation (bury) with less power. This can result in shorter times for cable installation. Vertical injector: this system utilises high pressure water and a blade to cut into the seabed surface and is best suited to soft sediment and clays. It works in a similar way to jetting by fluidising the seabed and installing the cable within the made track, the injector is able to increase and decrease the depth of burial. This system is managed offshore by a vessel. You noted four alternative protection methods: Iron shells/split pipe: a series of interlocking half shell cast modules to form a vertebrae restrictor around the submarine electricity cable. High Density Polyethylene/Uraduct: a series of interlocking plastic modules which are attached around the submarine electricity cables to form a further protective coating. Our response: After further engineering review we decided to include horizontal directional drilling as an additional installation method, but not vibrating ploughs and vertical injectors because vibrating ploughs and vertical injectors would create broadly similar impacts to methods already included (ploughing and jetting) so it would be difficult to identify meaningful differences to quantify at this stage. In terms of alternative protection methods, these are typically used as protection aids for the shore end of electricity submarine cables on areas of rock. We have in the past installed them offshore, however, due to limitations of being manually applied they are limited to water depths of less than 20 metres and as such are not deemed to be a suitable operational solution for offshore installations greater than 100 metres. Therefore, we have not included any further protection methods.

7 Page 05 Methodology Overview The majority of respondents expressing an opinion on the proposed methodology, shown in Figure 1, agreed it enables adequate assessment of whether or not to include an impact within the cost benefit analysis model.

8 Page 06 Figure 1: Cost benefit analysis methodology overview 1 2 Does the identified impact have any significant implications for any living organism, natural resource or habitat? For example, is there a risk of: loss of human life or injury (safety impact) loss of earnings (social impact) financial impact on marine users (economic impact) habitat damage (environmental impact) Is there a quantifiable link between submarine cable installations and whatever they impact upon? For instance, x units of surface lay or protection will result in: y units of health and safety impact y units of socio-economic impact y units of environmental impact y of wider economic and engineering impact 3 4 Can this link be valued in a way that fits with the cost benefit analysis model? Is there pre-existing data to allow impacts to be quantified without significant primary data collection? We asked: Did you agree with our cost benefit analysis methodology overview? We heard: Eleven of the 31 respondents did not feel that they had sufficient information to decide if they agreed with our methodology of assessing if there is enough evidence to include an impact in our model. Concern was noted that some environmental impacts are hard to monetise and this may result in key impacts being excluded from the overall cost benefit analysis of protection methods. Our response: This method statement expands on our methodology and the second phase of workshops planned for December 2015 will allow stakeholders to highlight if further work is still required before the final report is published in March We believe that the cost benefit analysis methodology statement in Stage 3 addresses monetisation of impact areas.

9 Page 07 Stage 1 1 Identifying if impacts have any significant implications for any living organism, natural resource or habitat We carried out an initial literature review of impacts relevant to submarine electricity cable installation methods. This identified 34 impacts which we grouped into four broad impact categories. Respondents broadly agreed with these but requested further clarification of what we meant. Therefore we have redefined the broad impact categories as: Health and safety: refers to the health and safety of humans within the vicinity of our submarine electricity cables, during installation, operation, and removal. Socio-economic: describes how submarine electricity cables impacts on human activities, including fuel poverty, commercial fishing, and future renewable generation. Environmental: relates to the impact of our submarine electricity cables on the natural environment during their installation, operation and removal. Wider economic and engineering impacts: the cost impacts associated with installation, operation, and removal of submarine electricity cables, which may be directly or indirectly incurred by SHEPD s customers. We asked: Do you agree with the four broad categories (health and safety, socio-economic, environmental and wider economic and engineering)? We heard: There was a general feeling that the four broad categories are capable of capturing the impacts but stakeholders would like more detail about the impacts that will be measured. Respondents also commented that the cost benefit analysis must also be capable of capturing the consequential impacts that categories may have on one another. For example, an increased level of fuel poverty affects the health, safety and well-being of individuals, households and communities in the areas affected. Cultural heritage may also be impacted, in particular as a result of increased living costs, and young people with a Gaelic speaking background leaving the islands meaning that these traditions are lost. Other respondents also noted that the link between wider economic impacts and engineering impacts was not well enough defined and thus should be separated to ensure that all impacts were considered equally. Of the 37 responses received to this question, socio-economic impacts were highlighted as the impact with most importance (14 respondents); followed by health and safety (13 respondents); and environmental (seven respondents). Three respondents felt that all impacts were equally important. Our response: The second phase of workshops planned for December 2015 will allow stakeholders to highlight if further work is still required before the final report is published in March 2016.

10 Page 08 We asked stakeholders about the key impacts associated with submarine electricity cables installation methods and for evidence to support their view. We cross-referenced the evidence related to our existing list of impacts with the evidence provided for those suggested by stakeholders. Through this process we reduced the focus of the cost benefit analysis from 34 to 13 impact areas. These 13 impacts areas that will be included and quantified in the cost benefit analysis model are shown in Table 1 below. Table 1: Key impacts to be quantified in the cost benefit analysis. Category No Detail of impact Health and safety impacts 1 Risks to health and safety of those working in the fishing industry 2 Risks to health and safety of those working on submarine electricity cable laying vessels Socio-economic impacts 3 Damage to fishing equipment and vessels 4 Temporary impact on island community economies due to energy insecurity in the event of cable failure 5 Possible reduction in renewable generation on the islands 6 Fuel poverty impacts as a result of an increase in the distribution element of customers bills 7 Loss (temporary/permanent) of access to fishing grounds/impacts on benthic habitats and organisms due to seabed disturbance Environmental impacts 8 Possible increase in greenhouse gas emissions from a reduction in renewable generation 9 Greenhouse gas emissions from use of diesel generators during cable faults Wider economic and engineering 10 Increased installation costs (including specialist equipment, raw materials, and the use of extra vessels) 11 Impacts due to increased repair costs (should the cable fault) 12 Impacts on reduced fault rate and increased cable mean time between failure 13 Changes to operating, maintenance and decommissioning costs

11 Page 09 We asked: Have we captured the key health and safety impacts and have you any evidence to quantify them? We heard: The majority of respondents agreed that we had captured the key health and safety impacts. However some felt special consideration should be given to the health and safety impact of those pushed into fuel poverty (at a household/individual level) due to rising bills caused by changes to submarine electricity cable installation practices. Despite there being a large number of other marine vessels registered in UK waters, the number of reported incidents relating to submarine electricity cables is comparatively low. Therefore quantifiable data is limited and this has been excluded. Our response: We have reviewed the evidence and decided to include the health and safety impacts of fuel poverty under the socio-economic impact category because of the impact of low indoor temperatures on health, established by the World Health Organisation, which has a direct impact on society. As there was no strong evidence of the health and safety impacts of other marine vessels this will not be quantified in the cost benefit analysis. We asked: Have we captured the key socio-economic impacts and have you any evidence to quantify them? We heard: Over half of the respondents felt that quantification of the permanent disadvantage that socio-economic impacts have on people and business, when compared to the rest of the UK, had to be reflected. Some respondents believed that the list of socio-economic impacts had a very heavy fishing focus. Others suggested that some of the socialeconomic impacts currently listed were not material or could be mitigated in other ways and not included in the cost benefit analysis. Our response: The key impacts within this broad category have changed as follows: We have combined a number of the fishing impacts into Loss (temporary/permanent) of access to fishing grounds/impacts on benthic habitats and organisms due to seabed disturbance. In terms of restrictions to water sports, recreational, port and marine-based commercial activities, stakeholders did not express a view or provide evidence as to the impact that our submarine electricity cables have upon them. Also, due to the relatively short period required to install submarine electricity cables it is unlikely there will be prolonged restriction or displacement of these activities. Therefore, we have removed these from the model. Current requirements to survey the seabed prior to conducting installation activities means the likelihood of disturbing archaeological resources was considered low. When coupled with challenges with monetising disturbances to archaeological resources, we considered that this impact could not be robustly included within the analysis and have removed it from the model. We have expanded the impact of fuel poverty to include health-related and socio-economic implications of increasing levels of fuel poverty within the SHEPD network area in line with the Marmot Review.

12 Page 10 We asked: Have we captured the key environmental impacts and have you any evidence to quantify them? We heard: The majority of stakeholders agreed that we had captured the key environmental impacts. However, when we reviewed these against the evidence base, a number were removed as we could not establish a direct relationship between them and submarine electricity cable installation methods. This was true for electromagnetic fields, noise and vibration, thermal radiation, disturbance of containments in the seabed, temporary turbidity, the release of containments and creation of artificial substrate habitat. We did hear that these remain growing areas of scientific interest and that research is ongoing in these areas. We will therefore seek to work with stakeholders to include relevant information in future marine licensing applications. Our response: The likelihood of the following impacts: direct collision between marine mammals and cable laying vessels; and temporary emissions and wastes from vessels being realised is minimal due to regulation of activities which has resulted in mitigation measures being put in place. Therefore these have not been included in the cost benefit analysis. The impact on benthic habitat and organisms has now been included within the socio-economic category impact of restriction to the temporary/ permanent restriction of fishing grounds. Due to the relatively short period needed to lay electricity submarine cables the impact of our activities on seabirds and visual amenity is considered to be minimal and has therefore not been included in the cost benefit analysis. Respondents highlighted that environmental impacts are often cumulative and that the more invasive to the seabed the installation method is, the higher the environmental impact during the maintenance and decommissioning phases. However, we are currently unable to value and quantify this directly and will seek further guidance at the workshops on this process. We asked: Have we captured the key wider economic and engineering impacts and how do we quantify them? We heard: The majority of respondents agreed that we had captured the wider economic and engineering impacts. Some respondents highlighted that many impacts can be negated through early dialogue but historically this has not always been achieved. Our response: By being open and transparent through this cost benefit analysis we hope to build relationships and a better understanding of our impacts on others. A natural outcome of this will be early dialogue and consultation with stakeholders before future marine licensing applications avoiding potential conflicts.

13 Page 11 Stage 2 2 Quantifying the link between submarine electricity cable installations and the impact on any living organism, natural resource or habitat We have decided to use the following evidencebased selection criteria to identify those studies that best help to identify and evaluate potential impacts. The selection criteria we used in this process are: Date: given the large volume of available studies, the evidence will be limited to more recent studies from 2000 onwards. It is worth noting that with advances in non-market valuation techniques over the past decade, there is a greater likelihood of obtaining results which are more robust for the purposes of value transfer by focusing on more recent studies. Language: only evidence provided in English will be considered. Geography: the search will prioritise studies based in similar contexts to the Greater North Sea region, focusing on studies in the UK, and only including studies from other regions where there is a particularly clear case to do so. Technique: priority will be given to the results of peer-reviewed empirical studies rather than studies based on theoretical models, value transfer, or literature review. We asked: Do you agree our model will consider appropriate research literature? We heard: A majority of respondents were supportive of the evidence-based selection criteria. Our response: Stakeholders identified a further 20 sources of evidence (Appendix 1: Stakeholder recommended evidence) but offered no material arguments for amending the selection criteria we use to identify and evaluate impacts to be amended.

14 Page 12 Stage 3 3 Assigning a monetary value to the impact that submarine electricity cable installations have on any living organism, natural resource or habitat For each of the broad impact categories (health and safety; socio-economic; environmental; and wider economic and engineering) we have developed pathways to illustrate how we will quantify each impact. This will allow us to define the activity that gives rise to the impact on a receptor and what we believe will be the effect of that impact and the data we have used to produce the cost benefit analysis output. Figure 2: Impact pathway to output Health and Safety Activity: Installation of submarine electricity cable Input Variable: Method of cable installation a. The baseline length of cable installed using each technique (e.g. 15 km surface laid). b. The proposed length of cable installed using each technique (e.g. 10 km surface laid and 5 km ploughed). c. Whether the cable (or section of the cable) lies within an area used by fishing vessels (e.g. yes or no). Impact pathway Health and Safety Impact 1 Receptor Effect Risks to health and safety of those working in the fishing industry Impact 2 Risks to health and safety of those working on submarine electricity cable laying vessels Operators (fishing and installation crews) and their families Scottish Hydro Electric Power Distribution Business UK Government Wider economy Pain and suffering, medical costs, lost consumption Lower efficiency, administration costs NHS costs, administration costs, HSE investigations Loss of output, resources spent on insurance Total cost of health and safety risks over operational lifetime of electricity submarine cable Total cost of health and safety risks for each installation technique

15 Page 13 Figure 3: Impact pathway to output Socio-Economic Activity: Installation of submarine electricity cable Input Variable: Method of cable installation a. The baseline length of cable installed using each technique (e.g. 15 km surface laid). b. The proposed length of cable installed using each technique (e.g. 10 km surface laid and 5 km ploughed). c. Whether the cable (or section of the cable) lies within an area used by fishing vessels (e.g. yes or no). d. Possible failure rate and time taken to energise a replacement cable. Impact pathway Socio-Economic Impact 3 Damage to fishing equipment and vessels Impact 4 Temporary impact on island community economies due to energy insecurity in the event of cable failure Impact 5 Possible reduction in renewable generation on the islands Impact 6 Fuel poverty impacts as a result of an increase in the distribution element of customers bills Receptor Operators and their families SHEPD customers Island communities Scottish Hydro Electric Power Distribution Business Scottish renewables industry UK Government Wider economy Fish and other benthic species Effect Loss of catch in entangled nets Damage to machinery or vessels Down time during which fishing vessels cannot occur Inconvenience Damage to goods requiring refrigeration Reduced ability to provide electricitydependent services Loss of employment and income in the renewable industry Higher bills for customers leading to greater rates of fuel poverty Total cost of damage of snagging incidents over the operational lifetime of the submarine electricity cable Total cost to electricity users over operational life of the submarine electricity cable Total cost of changes in energy production over operational life of submarine electricity cable Total cost of changes in fuel poverty for each installation technique Impact 7 Loss of access to fishing grounds/impact on benthic habitats and organisms due to seabed disturbance Loss of habitat Loss of stationary species Reduced income for fishery operators Total cost due to fishery closure over installation of submarine electricity cable

16 Page 14 Figure 4: Impact pathway to output Environmental Activity: Installation of submarine electricity cable Input Variable: Method of cable installation a. The baseline length of cable installed using each technique (e.g. 15 km surface laid). b. The proposed length of cable installed using each technique (e.g. 10 km surface laid and 5 km ploughed). c. Possible failure rate and time taken to energise a replacement cable. Impact pathway Environmental Impact 8 Possible increase in greenhouse gas emissions from a reduction in renewable generation Receptor Global Climate System UK Government Local Climate System Effect Increase in greenhouse gas emissions Increase in air pollution and respiratory disease Total cost of greenhouse gas emissions from the reduction in renewables Impact 9 Greenhouse gas emissions from use of diesel generators during cable faults Total cost of greenhouse gas emissions over period of cable fault

17 Page 15 Figure 5: Impact pathway to output Wider Economic and Engineering Activity: Installation of submarine electricity cable Input Variable: Method of cable installation a. The baseline length of cable installed using each technique (e.g. 15 km surface laid). b. The proposed length of cable installed using each technique (e.g. 10 km surface laid and 5 km ploughed). c. Possible failure rate and time taken to energise a replacement cable. Impact pathway Wider Economic and Engineering Impact 10 Increase installation costs (including specialist equipment, raw materials, and use of extra vessels) Impact 11 Impacts due to increased repair costs (should the cable fault) Receptor Scottish Hydro Electric Power Distribution Business SHEPD customers Local economy Scottish economy Effect Permanent increase in costs Removal of protection before fault can be repaired Hire of specialist equipment and vessels Further vessels for restatement of protection Total engineering cost incurred during installation of submarine electricity cable Total engineering costs incurred during repair of submarine electricity cable Impact 12 Impacts on reduced fault rate and increased cable mean time between failure Impact 13 Change to operating, maintenance and decommissioning costs Reduced risk of third party faults Increased mean time between failures Increased maintenances and related survey costs Total cost in regard to the decreased need to repair electricity submarine cable faults Total engineering cost of changes in operation, maintenance and decommission of alternative submarine cable installation methods

18 Page 16 Stage 4 4 Data used to quantify the impact that submarine electricity cable installations have on any living organism, natural resource or habitat We have included tables for each of the broad categories to show how we will build the cost benefit analysis model. For each impact area we have defined the following: Inputs these are the submarine electricity cable factors which will vary the magnitude of the output depending on the specific type or types of installation methodology. Data these are the defined values based on evidence which will be used to quantify the impact. the positive or negative value of the quantified impact. We will use the total of all impact outputs to determine which installation method offers the best value. The December 2015 and January 2016 workshops will enable stakeholders to see how we build the cost benefit analysis model using the evidence base, and how we apply it to one of our submarine electricity cable routes. The purpose of these workshops is to gather stakeholder views and the evidence they have access to to inform the development of the cost benefit analysis tool which we will use to demonstrate to Ofgem, Marine Scotland, and users of the marine environment whether or not the additional cost of protecting or burying submarine electricity cables represents value to SHEPD customers and wider stakeholders.

19 Page 17 Table 2: Data used to support health and safety estimates Impact 1 2 Input Data Risks to health and safety of those working in the fishing industry a. The baseline length of cable installed using each technique (e.g. 15 km surface laid) b. The proposed length of cable installed using each technique (e.g. 10 km surface laid and 5 km ploughed) c. Whether the cable (or section of the cable) lies within an area used by fishing vessels (e.g. yes or no) Database in the model contains information on: 1. Statistical rate of accidental lives lost for cable snagging incidents for each cable type (e.g fatal accidents per km per year for unprotected cables) 2. Value of a statistical life (e.g million per life) 3. Statistical rate of reportable injuries from cable snagging incidents for each cable type (e.g reportable injuries per km per year for unprotected cables) 4. Cost of a reportable injury (e.g. 27,500 per injury) 5. The length of time for the assessment period (e.g. 45 years) 6. Health and safety discount rate (e.g. 1.5%) Total cost of health and safety risks over operational lifetime of electricity submarine cable Risks to health and safety of those working on submarine electricity cable laying vessels a. The proposed length of cable installed with each technique (e.g. 10 km surface laid) Database in the model contains information on: 1. Time taken for vessel operation for each cable installation technique (e.g. 10 days per km) 2. Statistical rate of accidental lives lost for vessel use (e.g accidents per day) 3. Value of a statistical life (e.g million per life) 4. Statistical rate of reportable injuries for vessel use (e.g accidents per day) 5. Cost of a reportable injury (e.g. 27,500 per injury) Total cost of health and safety risks for each installation technique

20 Page 18 Table 3: Data used to support socio-economic estimates Impact 3 4 Damage to fishing equipment and vessels Temporary impact on island community economies due to energy insecurity in the event of cable failure Input Data a. The baseline length of cable installed with each technique (e.g. 15 km surface laid) b. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) c. Whether the cable (or section of the cable) lies within an area used by fishing vessels (e.g. yes or no) 1. Frequency of damage to machinery (e.g incidents per km per year) 2. Cost of machinery damage (e.g. 7,500 per incident) 3. Frequency of damage to vessels (e.g incidents per km per year) 4. Cost of vessel damage (e.g. 1,500 per incident) 5. Frequency of incidents where fishing days are lost (e.g incidents per km per year) 6. Cost of lost time (e.g. 5,214 per incident) 7. Frequency of incidents where catch is lost (e.g per km per year) 8. Cost of lost catch (e.g. 1,750 per incident) 9. The length of time for the assessment period (e.g. 45 years) 10. Discount rate (e.g. 3.5% for years 0 30 and 3.0% for years 31 45) a. The baseline length of cable installed with each technique (e.g. 15 km surface laid) b. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) c. The island to which the cable connects (e.g. Shetland) 1. Fault rate for different cable installation techniques (e.g faults per km per year) 2. Average length of outage during faults (e.g. 0.5 MWh per fault) 3. Number of domestic, SME, and C&I users on each island (e.g. on Isle of Barra 845 domestic) 4. Value of Lost Load for domestic, SME, and C&I users (e.g. 9,888 per MW/h for domestic users) 5. The length of time for the assessment period (e.g. 45 years) 6. Discount rate (e.g. 3.5% for years 0 30 and 3.0% for years 31 45) Total cost of damage of snagging incidents over the operational lifetime of the submarine electricity cable Total cost to electricity users over the operational life of the submarine electricity cable

21 Page Possible reduction in renewable generation on the islands a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) Fuel poverty impacts as a result of an increase in the distribution element of customers bills a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) Loss (temporary/permanent) of access to fishing grounds/impacts on benthic habitats and organisms due to seabed disturbance The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) Economic value of fisheries crossing each section of the cable route (e.g. 150,000 per year) 1. Costs of cable protection type (e.g. 10 per km per year) 2. Proportion of costs passed on to renewable generators (e.g. 50%) 3. Existing renewable capacity connecting to SHEPD grid (e.g. 1,000 MW per year) 4. Existing grid connection costs (e.g. 100 per MW per year) 5. Impact of costs on generation capacity (e.g. 1% increase in costs leads to 0.5% decrease in generation) 6. GVA per unit of renewable energy generated (e.g. 200,000 per MW per year) 7. The length of time for the assessment period (e.g. 45 years) 8. Discount rate (e.g. 3.5% for years 0 30 and 3.0% for years 31 45) Total cost of changes in energy production over the operational life of submarine electricity cable 1. Costs to SHEPD of cable installation technique (e.g. per km) 2. Proportion of costs allocated to end users (e.g. 50%) 3. Existing average fuel bill (e.g. 500 per household per year) 4. Ratio of changes in fuel prices to changes in fuel poverty (e.g. 1:0.4) 5. Existing level of fuel poverty (e.g. 39.1%) 6. Number of SHEPD domestic customers (e.g. 683,831 households) 7. Investment required to remove a household from fuel poverty (e.g. 7,800 per household) Total cost of changes in fuel poverty for each submarine electricity cable installation technique Database in the model contains information on: a. Time taken for cable installation for each technique (e.g. 5 days per km) Total cost due to fishery closure over installation of submarine electricity cable

22 Page 20 Table 4: Data used to support environmental estimates Impact 8 9 Input Data Possible increase in greenhouse gas emissions from a reduction in renewable generation The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed) Database in the model contains information on: a. Costs of cable protection type (e.g. 10 per km per year) b. Proportion of costs passed on to renewable generators (e.g. 50%) c. Existing renewable capacity connecting to SHEPD grid (e.g. 1,000 MW per year) d. Existing grid connection costs (e.g. 100 per MW per year) e. Impact of costs on generation capacity (e.g. 1% increase in costs leads to 0.5% decrease in generation) f. Impact on GHG emissions from reduction in renewables (e.g. 1GWh:237tCO 2 e) g. DECC estimates of the cost of GHG emissions (e.g. 5 tco 2 e) h. The length of time for the assessment period (e.g. 45 years) i. Discount rate (e.g. 3.5% for years 0 30 and 3.0% for years 30 45) Total cost of greenhouse gas emissions from the reduction in renewables Greenhouse gas emissions from use of diesel generators during cable faults The possible failure rate and the time taken to energise a replacement cable. Database in the model contains information on: a. Failure rate of different cable types (e.g failures per km per year) b. Time taken to fix each type of cable (e.g. 24 days per failure) c. Rate of fuel use in backup generators and repair vessels (e.g. 1 tonne per day) d. Carbon intensity in generators (e.g. 0.5 tonnes CO 2 e per tonne of fuel) e. The length of time for the assessment period (e.g. 45 years) f. DECC carbon price (e.g. 50 per tonne of CO 2 ) g. Discount rate (e.g. 3.5% for years 0 30 and 3.0% for years 30 45) Total cost of greenhouse gas emissions over period of cable fault

23 Page 21 Table 5: Data used to support wider economic and engineering estimates Impact Increased installation costs (including specialist equipment, raw materials, and the use of extra vessels) Impacts due to increased repair costs (should the cable fault) Impacts on reduced fault rate and increased cable mean time between failure Changes to operating, maintenance and decommissioning costs Input a. The proposed length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed) a. The baseline length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed) b. The proposed length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed) a. The length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed) a. The proposed length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed) Data 1. Time taken for laying for each technique (e.g. 5 days per km) 2. Day rates for cable laying vessels (e.g. 1,000 per day) 3. Day rates for additional vessels for protection installation (e.g. 1,000 per day) 4. Price of cable (e.g. 1,000 per km) 1. Time taken for recovering the cable for each technique (e.g. 5 days per km) 2. Cost of recovering cable (e.g. 1,000 per km) 3. Time taken to relay cable including reinstallation of protection (e.g. 5 days per km) 4. Cost of relaying cable including protection (e.g. 1,000 per km) 1. Fault rate (e.g. faults per year per km) 1. Typical operation and maintenance costs (e.g. 1,000 per km per year) Total engineering cost incurred during installation of submarine electricity cable Total engineering costs incurred during repair of submarine electricity cable Total cost in regard to the decreased need to repair electricity submarine cable faults Total engineering cost of changes in operation, maintenance and decommission of alternative submarine cable installation methods

24 Page 22 Next Steps We are holding the following workshops which will provide participants with an opportunity to see how the methodology will be applied to a submarine electricity cable route and inform any changes to the approach. Date Time Location 16 December December :00 14:00 Station Hotel, 78 Guild St, Aberdeen, AB11 6GN 10:00 14:00 SSE Office, 1 Waterloo Street, Glasgow, G1 6AY 21 January :00 14:00 Shetland Museum & Archives, Hay s Dock, Lerwick, ZE1 0WP To register to attend one of our events, please [email protected]

25 Page 23 Appendix 1: Stakeholder Recommended Evidence The following pre-existing data has been added to the literature review to help quantify impacts. Ref Name Date Link N001 McCauley, D html Nature publication outlining the difficulty of linking the value of protecting nature and economic measures. N002 Comhairle Nan Eilean Siar B%20-%20Appendix%201%20Outer%20Hebrides%20Fuel%20 Poverty%20Survey.pdf Fuel poverty report to gain an up-to-date view on the level of fuel poverty currently in the islands and to raise awareness of fuel poverty. N003 Marine Scotland activity/pentlandorkney/consultation Consultation website for the Pilot Pentland Firth and Orkney Waters Marine Spatial Plan. Key documents include: Consultation Draft, Sustainability Appraisal and Socio-Economic Baseline Review Consultation Draft. N004 Friends of the Earth N005 ACE: Association for the Conservation of Energy Assesses the direct and indirect health impacts suffered by those living in fuel poverty and cold housing Research into the number of Excess Winter Deaths in the last five years in the UK. N006 Marine Scotland A model based tool which can be used to determine potential management requirements for Nature Conservation Marine Protected Areas. N007 Xero Energy A study for DECC by Xero Energy looking at the main grid access barriers connecting the Western Isles, Orkney and Shetland. N008 ISP Review Overview of the BT proposal to replace existing telecommunication infrastructure with fibre optic.

26 Page 24 Ref Name Date Link N009 NAFC Marine Centre Fourth edition of the Shetland Island Marine Spatial Plan (SIMSP). The policy and maps in the SIMPS will be material consideration in decision-making on individual marine planning and works licences. N010 Scottish Government N011 N012 N013 N014 Poseidon Aquatic Resource Management Fishing Liaison with Offshore Wind and Wet Renewables Group (FLOWW) Fishing Liaison with Offshore Wind and Wet Renewables Group (FLOWW) Fishing Liaison with Offshore Wind and Wet Renewables Group (FLOWW) Examines issues around the nature and measurement of fuel poverty in Scotland practice%20guidance.pdf Guidelines based on outputs from a technical workshop organised by the UK Fisheries Economic Network pdf Best practice guidance for Offshore Renewables Developments: Recommendations for Fisheries Disruption Settlements and Community Funds floww-best-practice-guidance-for-offshore-renewablesdevelopments-recommendations-for-fisheries-liaison.pdf Best practice guidance for Offshore Renewables Developments: Recommendations for Fisheries Liaison offshore-wind-energy/working-with-us/floww/ N015 Hutchison, Z 2015 Available in hard copy only N016 Highlands and Islands Enterprise Working group set up to establish good relationships between the fishing and offshore renewables energy sector and encourage co-existing of the industries. Behavioural and physiological responses of Modiolus modiolus and Mytilus edulis to sedimentation from marine renewable energy developments Research carried out into a minimum income standard for remote rural Scotland summary and key findings.

27 Page 25 Ref Name Date Link N017 Changeworks Fuel poverty maps produced to assist local authorities, neighbourhood partnerships and community groups to identify areas most in need of energy efficiency improvements. N018 Scottish Government N019 Kingfisher Information Service Offshore Renewable and Cable Awareness Project (KIS-ORCA) The Scottish Household Survey 2014 presents multiple indicators of deprivation and housing conditions for each local authority A project which provides free cable awareness charts, electronic cable positioning lists and digital information for chart plotters on fishing vessels. N020 Citizens Advice Bureau Shetland%20CAB%20Fuel%20Survey%20Report% pdf Research to raise awareness of fuel usage, fuel poverty and the large number of homes which are energy inefficient in the Shetland islands.

28 This document is the follow up to What you need to know our September consultation publication, which can be downloaded at For further information please contact: Submarine Cable Cost Benefit Analysis Project Team Scottish Hydro Electric Power Distribution Inveralmond House 200 Dunkeld Road Perth PH1 3AQ or by at