Submarine Electricity Cables Cost Benefit Analysis...

Stakeholder ConsultationNovember 2017

Submarine Electricity CablesCost Benefit AnalysisMethodology

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Contents

Introduction .................................................................................................... 03Why we developed a cost benefit methodology ............................. 04What’s different about this methodology? .......................................... 05How we developed the methodology ................................................. 06The methodology ........................................................................................ 07Stage 1 .............................................................................................................. 09Stage 2 .............................................................................................................. 11Stage 3 .............................................................................................................. 12Stage 4 .............................................................................................................. 17What’s changed?........................................... ................................................. 30

Submarine Electricity Cables Cost Benefit Analysis Methodology

Stakeholder Consultation November 2017

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We deliver electricity to some 760,000 customers in the north of Scotland which covers a quarter of the UK landmass. As well as the major towns and cities of Aberdeen, Dundee, Inverness and Perth, we connect to most Scottish islands with over 100 submarine electricity cable links, including the Inner and Outer Hebrides, Arran and the Orkney Islands. We also serve the Shetland Islands, which runs as a separate electrical system without a connection to the mainland.

As a natural monopoly, the amount of money we charge for this service is regulated by Ofgem andspread across all customers across the north of Scotland. We have an obligation to do the right thing and keep the electricity distribution element of billslow whilst providing value for money.

A number of our submarine electricity cable assets are nearing the end of their operational and economical life. This means that we are embarking on a significant programme of investment to ensure that we continue to provide a safe, reliable, secure supply of electricity to fifty-nine Scottish Islands who depend on them.

Scotland’s National Marine Plan, adopted in March 2015, requires us to consider how submarine electricity cables are installed, buried and protected within the marine environment.

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 installed, buried and protected within the marine environment.



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A number of our submarine electricity cable assets are nearing the end of their operational and economic life. A significant programme of investment ensures a safe, reliable, secure supply of electricity continues for the fifty-nine Scottish Islands that depend on it.

Why we developed a cost benefitanalysis methodology

The cost benefit analysis model demonstrates to ourselves, our customers, our regulators and all the users of the marine environment that the method(s) we propose for each cablewe install around the coast of Scotland provides best value.

We made a decision, in collaboration with our regulators, customers and stakeholders to make this replacement programme one which was sustainable and puts the communities we serve and work amongst at the centreof the decision making.

Three years ago the journey to be truly sustainable began. Partnership working has been ongoing ever since to understand the complexities and sophistication required to achieve this.

To help us account for the impacts that our operations have on society, the environment and the economy; we have developed this innovative cost benefit analysis methodology. This has moved from an engineering based decision making model to a holistic risk based approach.

By applying the methodology we are able to model scenarios which consider the full implications that our submarine electricity cable installation, protection and decommissioning proposals will have socially, environmentally and economically.

Communities have been consulted to determine if the resulting scenario is deliverable and fully considers local circumstances and represents best societal value.

As a responsible developer, we must ensure that ourdecisions continue to protect the well-being of currentand future generations.

Therefore, our methodology allows us to collectively make informed judgements about the submarine electricity cable replacement programme which is guided by a clear set of values - ensuring every decision is ethical, responsible and balanced.




Increased health costs associated with an increase in fuel poverty rates

Those who cannot afford the energy required to heat their home adequately may find themselves in cold, damp conditions that blight their health and wellbeing and significantly diminish their quality of life and life chances. The impact on health and wellbeing and health inequalities of wider determinants such as income, housing and employment are well established in research and policy.

The previous version of the cost benefit analysis methodology, published in July 2016, estimates the impact of change in fuel poverty levels which are directly related to increased costs arising from changes in our engineering practices due to policy changes implemented through Scotland’s National Marine Plan, (2015). This was captured through the impact “Increased cost of fuel poverty eradication programme due to higher fuel bills”.

A value was assigned to this impact based on the assumption that, for every additional household in which fuel poverty occurs, the Scottish Government will invest £8,273 to eradicate fuel poverty in that household, for example through energy efficiency measures. Stakeholders felt that this approach did not fully account for the health impacts caused by fuel poverty and suggested that we also valued and captured the wider health impacts of fuel poverty within the methodology.

In this consultation it is proposed that a well recognised academic study conducted in Northern Ireland be used to quantify this link with our submarine electricity cable engineering decisions. Your views on this approach are welcome.

Change in seabed natural capital value In simple terms, natural capital is the term we use to place a value on the renewable and non renewable environment which provides society with the resources we are dependent upon. In the case of submarine electricity cables, we impact on the natural capital of the seabed and its associated marine ecosystem and services. By including natural capital value in our methodology, the impact that our submarine electricity cable engineering decisions may have on seabed natural capital are considered. This consultation also asks whether we adequately capture the cumulative impact of installation, protection and decommissioning and the effect this has on ecosystem services.

The methodology uses measures and metrics, which place health and safety, environmental, socio-economic, wider engineering and economic risks and impacts alongside one another. Three years of extensive consultation have taken place on every impact, data point andassumption made within the methodology to increase reliability.

What’s different about this methodology?

Where there was room for improvement, advice was taken and literature was identified to help make improvements. Together, 18 impact areas have been collectively agreed for this methodology. Your views are sought on the two new impacts:

When fuel is too expensive, health sometimes suffers. The cost of laying these cables should not lead to adverse effects on local populations ability to keep warm and stay healthy. So our methodology must reflect this.

There is value in the seabed. It provides a home for species which feed us and supports a vast ecosystem which we depend on. We must factor this value into decision making so that the value of the seabed is protected and decisions are made with this in mind.

1. Fuel poverty and health 2. Seabed natural capital

Responses are accepted via:

Email: [email protected]

Uploaded via our website: news.ssen.co.uk/submarinecables/

Posted to: Submarine Electricity Cables Team, SSEN, Inveralmond House, 200 Dunkeld Road, Perth, PH1 3AQ

You can help by responding to the questions outlinedin this paper. The consultation will be open from the09 November 2017 to the 12 February 2018.


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Since 2015 we have been working with a diverse range of interested parties to understand:

• the benefits and drawbacks of different submarine electricity cable installation and protection methods from their perspective

• if there is a quantifiable link between the impact and our submarine electricity cable and if it can be assigned a monetary value

The cost benefit analysis methodology statement published in July 20161 drew all this information together. The resultant model has been used to support our marine licence applications. However, our stakeholders told us that they wanted us todevelop the methodology further to consider two new impacts:

• increased health costs associated with an increase in fuel poverty rates

• change in seabed natural capital value

This consultation seeks feedback on these two impacts whilst showing how they interface with the cost benefit analysis methodology.

1http://news.ssen.co.uk/media/147004/4731-ssepd-submarine-cables-doc-july-2016_06.pdf

How we developed the methodology

Our vision was to create a methodology which would help us balance the health and safety; socio-economic; environmental; and wider economic and engineering impacts associated with the way in which we install submarine electricity cables in the marine environment. This helps us to evidence that each cable we install represents the best value solution.



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The methodology

There are many ways to install submarine electricity cables. The cost benefit analysis methodology considers the following installation methods:

Jetting Mass flow excavation Ploughing

Mattressing Rock placement Horizontal directional drilling

Surface laying Rock filter bags

high pressure water jets ‘fluidise’ the seabed allowing the cable to ‘sink’ into the seabed.

a narrow trench is cut in the seabed in which to lay the cable.

a method of burial that clears sediment from underneath the cable.

a concrete ‘mattress’, typically 3m x 6m, is used to protect the cable atkey points.

covering the cable with rock of a suitable sizeand type.

land-based solution of drilling under short passages of water.

submarine electricity cable is laid directly onthe seabed with no additional protection.

2Rock filter bags were added as an additional solution for protecting the cable as it offers a more precise way of placing rocks to protect the cable from being moved by tidal flow.

A filter bag filled with rocks using typically 2m x 2m is used to protect and secure the cable at key points for stability2


NEW


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Taking each in turn, here is how this version of the methodology was arrived at.

1. 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 (socio-economic) • financial impact on marine users (economic impact) • habitat damage (environmental impact)

3. Can this link be valued in a way that fits with the cost benefit analysis model?

4. Is there pre-existing data to allow impacts to be quantified without significant primary data collection?

2. 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

Figure 1:Cost benefit analysis methodology overview shows the assessment stages we undertake to decide whether or not to include an impact.



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• Health and safety: refers to the health and safety of humans within the vicinity of our submarine electricity cables, during installation, operation, and removal.

• Impact 3 Increased health costs associated with an increase in fuel poverty rates. This impact recognises the additional health costs associated with fuel poverty which are borne by society.

• Impact 12 Change in seabed natural capital value. This impact values the loss of ecosystem services resulting from our submarine electricity cable installations within different benthic habitats.

An initial literature review of impacts relevant to submarine electricity cable installation methods identified 34 impacts which we then grouped into four impact categories. Respondents broadly agreed with these but requested further clarification of what we meant. Therefore we have redefined the impact categories as:

• Socio-economic: describes how submarine electricity cables impact 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 Scottish Hydro Electric Power Distribution plc customers.

This version of the methodology sees the addition of two new impacts:

Stage 1

Does the identified impact have any significant implications for any living organism, natural resource or habitats?


NEW

NEW


Table 1:Key impacts quantified in the submarine electricity cables cost benefit analysis methodology

Category No Type Name

Health and Safety impacts

1 Benefit Decreased health and safety risk to marine vessel operators from cable snagging

2 Net benefit /cost

Change in health and safety risk to cable laying vessel operators

Note, this is based on trade-off between: (i) lower fault rates leading to less time at sea; and (ii) longer installation, repair, and decommissioning time requiring longer time at sea

Socio-economic impacts

3 Cost Increased health costs associated with an increase in fuel poverty rates

4 Benefit Decreased damage costs to marine vessel operators from cable snagging

5 Benefit Decreased risk of energy outages for island communities due to lower fault rates

6 Cost Increased distribution costs leading to lower renewable generation on islands and lower Gross Value Added (GVA)

7 Cost Increased cost of fuel poverty eradication programme due to higher fuel bills

8 Cost Increased cost to fishing operators due to loss of access to fishing grounds during cable installation

9 Benefit Decreased risk of energy outages for renewable generators due to lower fault rates

Environmental impacts

10 Cost Increased distribution costs leading to lower renewable generation on islands and higher Greenhouse Gas (GHG) emissions

11 Net benefit /cost

Change in GHG emissions from use of backup diesel generators

Note, this is based on trade-off between: (i) lower fault rates resulting in a reduction in diesel usage; and (ii) longer repair time resulting in an increase in diesel usage


Change in seabed natural capital value

Note, this is based on trade-off between: (i) lower fault rates resulting in a reduction in the frequency of impacts on the seabed during repair events; and (ii) greater extent of impacts on the seabed due to wider footprint fromcable protection methods (aside from Horizontal Directional drilling)

Wider economic and engineering

13 Cost Increased installation costs associated with protection


Change in repair costs

Note this is based on trade-off between: (i) lower fault rates resulting in fewer repairs; and (ii) longer repair time because cables are protected

15 Cost Increased cost of decommissioning associated with protection

16 Benefit Decreased risk of outage charges due to lower fault rates

17 Cost Increased cost of maintenance surveys associated with protection


Change in use costs of using backup diesel generators

Note this is based on trade-off between: (i) lower fault rates resulting in a reduction in diesel usage; and (ii) longer repair time resulting in an increase in diesel usage

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NEW

NEW

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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

• 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.

Stage 2

• 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 evaluation 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.



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Can this link be valued in a way that fits with the cost benefit analysis model?

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 which gives rise to:

• the impact on a receptor• what we believe will be the effect of that impact• the data we have used to produce the cost benefit analysis output.

Stage 3



Figure 2:Impact pathway to output – Health and Safety

Activity: Installation of submarine electricity cableInput Variable: Method of cable installation

a. The baseline length of cable installed using each technique (e.g. 15km surface laid).b. The proposed length of cable installed using each technique (e.g. 10km surface laid and 5km 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 1Decreased health andsafety risk to marine vessel operators from cable snagging

DataValuation of Impact 1

Table 2

OutputTotal cost of healthand safety risks overoperational lifetimeof electricitysubmarine cable


Table 2

OutputTotal cost of healthand safety risks foreach installationtechnique


Table 2

OutputAdditional costs of health and wellbeing associated with fuel poverty

ReceptorMarine vesseloperators andtheir families

Scottish HydroElectric Power Distribution plcBusiness

Wider economy

Scottish HydroElectric Power Distribution plc Customers

EffectPain and suffering,medical costs, lostconsumption

Lower efficiency,administrationcosts

NHS costs,administrationcosts, HSEinvestigations

Loss of output,resources spenton insurance

Higher bills for customers leading to greater fuel poverty health and wellbeing impacts associated with fuel poverty.

Impact 2Change in health andsafety risk to cable laying vessel operators

Impact 3Increased health costs associated with an increase in fuel poverty rates

13Stakeholder Consultation November 2017


Figure 3:Impact pathway to output – Socio-Economic


a. The baseline length of cable installed using each technique (e.g. 15km surface laid).b. The proposed length of cable installed using each technique (e.g. 10km surface laid and 5km 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 4Decreased damagecosts to marine vessel operators from cable snagging

Impact 5Decreased risk of energy outages for island communities due to lower fault rates

Impact 6Increased distribution costs leading to lower renewable generation on islands and lower Growth Value Added (GVA)

Impact 7Increased cost of fuel poverty eradicationprogramme due tohigher fuel bills

Impact 8Increased cost to fishing operators due to loss of access to fishing grounds during cable installation

Impact 9Decreased risk of energy outages for renewable generators due to lower fault rates

DataValuationof Impact 4

Table 3


Table 3


Table 3


Table 3


Table 3


Table 3

OutputTotal cost of damage of snagging incidents over the operational lifetime of the submarine electricity cable

OutputTotal cost to electricity users over operational life of the submarine electricity cable

OutputTotal cost of changes in energy production over operational life of submarine electricity cable

OutputTotal cost of changes in fuel poverty for each installation technique

OutputTotal cost due to fishery closure over installation of submarine electricity cable

OutputTotal estimated cost of energy outages for renewable generators per cable failure event over operational life of the cable

ReceptorMarine vesseloperators andtheir families

Scottish Hydro Electric Power Distribution plccustomers

Scottish HydroElectric PowerDistribution plcBusiness

Scottishrenewablesindustry

Wider economy

Fish and otherbenthic species

EffectLoss of catch inentangled nets

Damageto machineryor vessels

Down time duringwhich fishingcannot occurinconvenience

Damage togoods requiringrefrigeration

Reduced ability to provide electricity-dependentservices

Loss of employmentand income in the renewable industry

Higher bills forcustomers leadingto greater rates offuel poverty

Loss of habitat

Loss of stationaryspecies

Reduced income for fishery operators

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Figure 4:Impact pathway to output – Environmental


a. The baseline length of cable installed using each technique (e.g. 15km surface laid).b. The proposed length of cable installed using each technique (e.g. 10km surface laid and 5km ploughed).c. Possible failure rate and time taken to energise a replacement cable.

Impact pathway – Environmental

Impact 10Increased distributioncosts leading to lowerrenewable generationon islands and highergreenhouse gasemissions

Impact 11Change in greenhousegas emissions fromuse of backup dieselgenerators

Impact 12Change in seabed natural capital value


Table 4


Table 4


Table 4

OutputTotal cost of greenhouse gas emissions fromthe reduction in renewables

OutputTotal cost ofgreenhouse gasemissions overperiod of cable fault

OutputCost of reduction in marine environment and ecosystem service provisions

ReceptorGlobal ClimateSystem

Local ClimateSystem

Marine environment

Marine users who rely on marine ecosystem functions

EffectIncrease ingreenhouse gasemissions

Increase in airpollution andrespiratory disease

Loss of marine ecosystem service provisions



Figure 5:Impact pathway to output – Wider Economic and Engineering


a. The baseline length of cable installed using each technique (e.g. 15km surface laid).b. The proposed length of cable installed using each technique (e.g. 10km surface laid and 5km ploughed).c. Possible failure rate and time taken to energise a replacement cable.

Impact pathway – Wider Economic and Engineering

Impact 13Increased installation costs associated with protection

Impact 14Change in repair costs

Impact 15Increased cost ofdecommissioningassociated withprotection

Impact 16Decreased risk of outage charges due to lower fault rates

Impact 17Increased cost of maintenance surveysassociated with protection

Impact 18Change in use costsof using backupdiesel generators


Table 5


Table 5


Table 5


Table 5


Table 5


Table 5

OutputTotal engineering cost incurred during the installation of a submarine electricity cable

OutputTotal engineering cost incurred during the repair of a submarineelectricity cable

OutputTotal engineering cost incurred during recovery of a decommissioned submarine electricity cable

OutputTotal economic cost of customer interruption and customer minutes lost during the repair of a submarine electricity cable

OutputTotal estimated engineering costs from operation and maintenance of submarineelectricity cables

OutputTotal estimated economic cost of diesel used during a fault of submarine electricity cables

ReceptorScottish HydroElectric PowerDistribution plcBusiness

Scottish Hydro Electric Power Distribution plc customers

Local economy

Scottish economy

EffectPermanentincrease in costs

Removal ofprotection before fault can be repaired

Hire of specialistequipment andvessels

Further vessels for restatementof protection

Reduced risk ofthird party faults

Increased meantime betweenfailures

Increasedmaintenances and relatedsurvey costs

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3DNV GL is a global quality assurance and risk management company. They provide classification, technical assurance, software and independent expert advisory services to the maritime, oil & gas, power and renewables industries. Combining technical, digital and operational expertise, risk methodology and in-depth industry knowledge, they empower decisions and actions with trust and confidence.

4CH2M are a global engineering consultancy firm which focus on turning challenges into opportunity. They specialise in complex infrastructure and natural resource challenges, across the water, transportation, energy, environment and industrial markets.

The data included within Tables 2 to 5 forms the baseline model which has been externally verified by two independent parties (DNV GL3 and CH2M4).

Additionally, the costs for inspecting, surveying, installing, protecting and decommissioning cables have been updated with global tendered rates.

Is there pre-existing data to allow impacts to be quantified without significant primarydata collection?

Stage 4

• Input: 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.

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:

• Data: these are the defined values based on evidence which will be used to quantify the impact.

• Output: 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.



Table 2: Data used to support health and safety estimates

Impact 1 2 Impact 3 4

Decreased health and safety risk to marinevessel operators from cable snagging



Decreased damage costs to marine vessel operators from cable snagging

Input For the proposed cable route the user chooses: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 any organisations use the area in which the cable lies for fishing (e.g. yes or no)

For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid)

Input For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. Proportion of costs passed on to domestic user distribution bills in Year 1 (e.g. 10.25%)c. Proportion of costs passed on to domestic user distribution bills in Years 2-4 (e.g. 4.46%)d. Proportion of costs passed on to domestic user distribution bills in Year 5-6 (e.g. 4.46%)

For the proposed cable route the user chooses: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 fishing is present in the area (e.g. yes or no)

Data Databases in the CBA model contain information on:A. Statistical rate of accidental lives lost for cable snagging incidents for each cable type (e.g. 0.000015 fatal accidents per km per year for unprotected cables)B. Value of a statistical life (e.g. £1.90 million per life)C. Statistical rate of reportable injuries from cable snagging incidents for each cable type (e.g. 0.0000086 reportable injuries per km per year for unprotected cables)D. Calculated costs of a reportable injury (e.g. £29,155 per injury)E. The length of time for the assessment period (e.g. 45 years)F. Health and safety discount rate (e.g. Ofgem guidance suggests using a discount rate for health and safety impacts of 1.5% )

Databases in the CBA model contain information on:A. Time taken for vessel operation for each cable installation technique (e.g. 1 days per km)B. Statistical rate of accidental lives lost for vessel use (e.g. 0.0001 accidents per day)C. Value of a statistical life (e.g. £1.90 million per life)D. Statistical rate of reportable injuries for vessel use (e.g. 0.0002 accidents per day)E. Cost of a reportable injury (e.g. £29,155 per injury)F. The length of time for the assessment period (e.g. 45 years)G. Health and safety discount rate (e.g. 1.5%5)

Data Databases in the CBA model contain information on:A. Total installation costs (e.g. £1 million per km)B. Number of domestic Scottish Hydro Electric Power Distribution plc customers (e.g. 683,831)C. Average existing electricity bill (e.g. £1,058.94)D. Ratio of change in fuel prices to fuel poverty (e.g. 1:0.4)E. Existing number of households in fuel poverty amongst Scottish Hydro Electric Power Distribution plc customers (e.g. 267,378)F. Health costs per household in fuel poverty (e.g. £791)G. First period in which costs are passed on to consumers (e.g. Year 1)H. Second period in which costs are passed on to consumers (e.g. Years 2-6)I. Third period in which costs are passed on to consumers (e.g. Years 2-6)J. The length of time for the assessment period (e.g. 45 years)K. Discount rate (e.g. 3.5% for Years 1-30 and 3.0% for Years 31-45)

Databases in the CBA model contain information on:A. Damage cost to fisheries if cable unprotected (e.g. £262.15 per km per year if fisheries present and £0 per km per year if no fishing present)B. The length of time for the assessment period (e.g. 45 years)C. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Calculation CBA model programmed to calculate:1. Baseline health and safety costs for each installation technique i.e. IF(c=“None”,0,P V(F,(a*A*B)+(a*C*D),E)) 2. Proposed health and safety costs for each installation technique (protected) i.e. IF(c=“None”,0,PV(F,(b*A*B)+(b*C*D) ,E)) 3. Proposed health and safety costs for each installation technique (unprotected) i.e. IF(c=“None”,0,PV(F,(b*A*B)+(b*C*D),E))4. Net health and safety costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline health and safety costs assumed to be zero as no installation required2. Proposed health and safety costs for each installation technique per vessel callout (protected) i.e. PV((G,((a*A*B*C)+(b*A*D*E)),F) 3. Proposed health and safety costs for each installation technique per vessel callout (unprotected) i.e. PV((G,((a*A*B*C)+(b*A*D*E)),F) 4. Net health and safety costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed costs (protected) i.e. PV(K((((a*A*b)/B)/ C)*D*E*F*G)+((((a*A*c)/B)/C)*D*E*F*H)+((((a*A*d) /B)/C)*D*E*F*I),J)3. Proposed costs (unprotected) i.e. PV(K((((a*A*b)/B)/ C)*D*E*F*G)+((((a*A*c)/B)/C)*D*E*F*H)+((((a*A*d)/ B)/C)*D*E*F*I),J)4. Net costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline damage costs i.e. PV(C,a*A(c),B)2. Proposed damage costs (protected) i.e. PV(C,b*A(c),B)3. Proposed damage costs (unprotected) i.e. PV(C,b*A(c),B)4. Net costs i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost of health and safety risks over operational lifetime of cables.

Output presented in terms of total estimated cost of health and safety risks for each installation technique per vessel callout over life of cables.

Output Output presented in terms of total cost of change in fuel poverty for each installation technique over a six year period.

Output presented in terms of total estimated damage cost of snagging incidents over operational lifetime of cables.

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5Ofgem (2014), Template CBA RIIO ED1 v4.xls




Decreased health and safety risk to marinevessel operators from cable snagging



Decreased damage costs to marine vessel operators from cable snagging

Input For the proposed cable route the user chooses: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 any organisations use the area in which the cable lies for fishing (e.g. yes or no)

For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid)


For the proposed cable route the user chooses: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 fishing is present in the area (e.g. yes or no)

Data Databases in the CBA model contain information on:A. Statistical rate of accidental lives lost for cable snagging incidents for each cable type (e.g. 0.000015 fatal accidents per km per year for unprotected cables)B. Value of a statistical life (e.g. £1.90 million per life)C. Statistical rate of reportable injuries from cable snagging incidents for each cable type (e.g. 0.0000086 reportable injuries per km per year for unprotected cables)D. Calculated costs of a reportable injury (e.g. £29,155 per injury)E. The length of time for the assessment period (e.g. 45 years)F. Health and safety discount rate (e.g. Ofgem guidance suggests using a discount rate for health and safety impacts of 1.5% )

Databases in the CBA model contain information on:A. Time taken for vessel operation for each cable installation technique (e.g. 1 days per km)B. Statistical rate of accidental lives lost for vessel use (e.g. 0.0001 accidents per day)C. Value of a statistical life (e.g. £1.90 million per life)D. Statistical rate of reportable injuries for vessel use (e.g. 0.0002 accidents per day)E. Cost of a reportable injury (e.g. £29,155 per injury)F. The length of time for the assessment period (e.g. 45 years)G. Health and safety discount rate (e.g. 1.5%5)

Data Databases in the CBA model contain information on:A. Total installation costs (e.g. £1 million per km)B. Number of domestic Scottish Hydro Electric Power Distribution plc customers (e.g. 683,831)C. Average existing electricity bill (e.g. £1,058.94)D. Ratio of change in fuel prices to fuel poverty (e.g. 1:0.4)E. Existing number of households in fuel poverty amongst Scottish Hydro Electric Power Distribution plc customers (e.g. 267,378)F. Health costs per household in fuel poverty (e.g. £791)G. First period in which costs are passed on to consumers (e.g. Year 1)H. Second period in which costs are passed on to consumers (e.g. Years 2-6)I. Third period in which costs are passed on to consumers (e.g. Years 2-6)J. The length of time for the assessment period (e.g. 45 years)K. Discount rate (e.g. 3.5% for Years 1-30 and 3.0% for Years 31-45)

Databases in the CBA model contain information on:A. Damage cost to fisheries if cable unprotected (e.g. £262.15 per km per year if fisheries present and £0 per km per year if no fishing present)B. The length of time for the assessment period (e.g. 45 years)C. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Calculation CBA model programmed to calculate:1. Baseline health and safety costs for each installation technique i.e. IF(c=“None”,0,P V(F,(a*A*B)+(a*C*D),E)) 2. Proposed health and safety costs for each installation technique (protected) i.e. IF(c=“None”,0,PV(F,(b*A*B)+(b*C*D) ,E)) 3. Proposed health and safety costs for each installation technique (unprotected) i.e. IF(c=“None”,0,PV(F,(b*A*B)+(b*C*D),E))4. Net health and safety costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline health and safety costs assumed to be zero as no installation required2. Proposed health and safety costs for each installation technique per vessel callout (protected) i.e. PV((G,((a*A*B*C)+(b*A*D*E)),F) 3. Proposed health and safety costs for each installation technique per vessel callout (unprotected) i.e. PV((G,((a*A*B*C)+(b*A*D*E)),F) 4. Net health and safety costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed costs (protected) i.e. PV(K((((a*A*b)/B)/ C)*D*E*F*G)+((((a*A*c)/B)/C)*D*E*F*H)+((((a*A*d) /B)/C)*D*E*F*I),J)3. Proposed costs (unprotected) i.e. PV(K((((a*A*b)/B)/ C)*D*E*F*G)+((((a*A*c)/B)/C)*D*E*F*H)+((((a*A*d)/ B)/C)*D*E*F*I),J)4. Net costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline damage costs i.e. PV(C,a*A(c),B)2. Proposed damage costs (protected) i.e. PV(C,b*A(c),B)3. Proposed damage costs (unprotected) i.e. PV(C,b*A(c),B)4. Net costs i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost of health and safety risks over operational lifetime of cables.

Output presented in terms of total estimated cost of health and safety risks for each installation technique per vessel callout over life of cables.

Output Output presented in terms of total cost of change in fuel poverty for each installation technique over a six year period.

Output presented in terms of total estimated damage cost of snagging incidents over operational lifetime of cables.


Table 3: Data used to support socio-economic estimates

NEW


Impact 5 6 Impact 7

Decreased risk of energy outages for island communities due to lower fault rates

Increased distribution costs leading to lower renewable generation on islands and lower Gross Value Added (GVA)

Increased cost of fuel poverty eradication programme due to higher fuel bills

Input For the proposed cable route the user chooses:a. The NRN number of the circuit (e.g. 0331021)b. Life expectancy of cable and expected number of years to fault (e.g. 25 years)

For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The NRN number of the circuit (e.g. 0331021) or, if a new circuit, the future projected amount of renewable energy to be connected (e.g. 50 MW)


Data Databases in the CBA model contain information on:A. Average length of outage during faults (e.g. 2 hours per fault)B. Number of domestic, SME, and C&I users on the circuit (e.g. 845 domestic, 10 SME, 5 C&I)C. Costs of outages to domestic, SME, and C&I users (e.g. £4.73 per hour for domestic users)D. The length of time for the assessment period (e.g. 45 years)E. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Projected demand for renewable generation distribution access on island (e.g. 100 MW)B. Percentage of applications likely to go ahead (e.g. 40%)C. Distribution costs passed on to renewable generators (e.g. £1 million)D. Existing renewable energy generation costs (e.g. £1.5 million per MW)E. Impact of costs on output (e.g. 1% increase in costs leads to 1% decrease in output)F. GVA reduction per unit of renewable energy generated due to reduced demand from construction costs (e.g. £212,000 per MW per year)G. GVA reduction per unit of renewable energy generated due to reduced demand from operation and maintenance costs (e.g. £212,000 per MW per year)H. Expected lifetime of wind farm following construction (e.g. 19 years)I. The length of time for the assessment period (e.g. 20 years)J. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Data Databases in the CBA model contain information on:A. Total installation costs (e.g. £1 million per km)B. Number of domestic Scottish Hydro Electric Power Distribution plc customers (e.g. 683,831)C. Average existing electricity bill (e.g. £1,058.94)D. Ratio of change in fuel prices to fuel poverty (e.g. 1:0.4)E. Existing number of households in fuel poverty amongst Scottish Hydro Electric Power Distribution plc customers (e.g. 267,378)F. Cost to eradicate fuel poverty per household (e.g. £8,273)G. First period in which costs are passed on to consumers (e.g. Year 1)H. Second period in which costs are passed on to consumers (e.g. Years 2-6)I. Third period in which costs are passed on to consumers (e.g. Years 2-6)J. The length of time for the assessment period (e.g. 45 years)K. Discount rate (e.g. 3.5% for Years 1-30 and 3.0% for Years 31-45)

Calculation CBA model programmed to calculate:1. Baseline costs per cable failure i.e. PV(E,A*B(a)*C*(1/b),D)2. Proposed costs per cable failure (protected) i.e. PV(E,A*B(a)*C*(1/b),D)3. Proposed costs per cable failure (unprotected) i.e. PV(E,A*B(a)*C*(1/b),D)4. Net costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed change in GVA (protected) i.e. PV(J,((A(b)*B)*((ΣC(a)/D)*E)*F)+((A(b)*B)*((ΣC(a)/ D)*E)*G)*H)),I)3. Proposed change in GVA (unprotected) i.e. PV(J,((A(b)*B)*((ΣC(a)/D)*E)*F)+((A(b)*B)*((ΣC(a)/ D)*E)*G)*H)),I)4. Net change in GVA from change in renewable energy production i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed costs (protected) i.e.PV(K(((((a*A*b)/B)/ C)*D*E*F*G)-(a*A*b))+(((((a*A*c)/B)/C)*D*E*F*H)- (a*A*c))+(((((a*A*d)/B)/C)*D*E*F*I)- (a*A*d)),J)3. Proposed costs (unprotected) i.e. PV(K(((((a*A*b)/B)/C)*D*E*F*G)-(a*A*b))+(((((a*A*c)/ B)/C)*D*E*F*H)-(a*A*c))+(((((a*A*d)/B)/ C)*D*E*F*I)-(a*A*d)),J)4. Net costs i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost to electricity users per cable failure event over operational life of the cables.

Output presented in terms of estimated total cost of changes in renewable energy production over twenty year period.

Output Output presented in terms of total cost of changes in fuel poverty for each installation technique over a six year period running from Year 16-21.


20



Impact 5 6 Impact 7

Decreased risk of energy outages for island communities due to lower fault rates

Increased distribution costs leading to lower renewable generation on islands and lower Gross Value Added (GVA)

Increased cost of fuel poverty eradication programme due to higher fuel bills

Input For the proposed cable route the user chooses:a. The NRN number of the circuit (e.g. 0331021)b. Life expectancy of cable and expected number of years to fault (e.g. 25 years)

For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The NRN number of the circuit (e.g. 0331021) or, if a new circuit, the future projected amount of renewable energy to be connected (e.g. 50 MW)


Data Databases in the CBA model contain information on:A. Average length of outage during faults (e.g. 2 hours per fault)B. Number of domestic, SME, and C&I users on the circuit (e.g. 845 domestic, 10 SME, 5 C&I)C. Costs of outages to domestic, SME, and C&I users (e.g. £4.73 per hour for domestic users)D. The length of time for the assessment period (e.g. 45 years)E. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Projected demand for renewable generation distribution access on island (e.g. 100 MW)B. Percentage of applications likely to go ahead (e.g. 40%)C. Distribution costs passed on to renewable generators (e.g. £1 million)D. Existing renewable energy generation costs (e.g. £1.5 million per MW)E. Impact of costs on output (e.g. 1% increase in costs leads to 1% decrease in output)F. GVA reduction per unit of renewable energy generated due to reduced demand from construction costs (e.g. £212,000 per MW per year)G. GVA reduction per unit of renewable energy generated due to reduced demand from operation and maintenance costs (e.g. £212,000 per MW per year)H. Expected lifetime of wind farm following construction (e.g. 19 years)I. The length of time for the assessment period (e.g. 20 years)J. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Data Databases in the CBA model contain information on:A. Total installation costs (e.g. £1 million per km)B. Number of domestic Scottish Hydro Electric Power Distribution plc customers (e.g. 683,831)C. Average existing electricity bill (e.g. £1,058.94)D. Ratio of change in fuel prices to fuel poverty (e.g. 1:0.4)E. Existing number of households in fuel poverty amongst Scottish Hydro Electric Power Distribution plc customers (e.g. 267,378)F. Cost to eradicate fuel poverty per household (e.g. £8,273)G. First period in which costs are passed on to consumers (e.g. Year 1)H. Second period in which costs are passed on to consumers (e.g. Years 2-6)I. Third period in which costs are passed on to consumers (e.g. Years 2-6)J. The length of time for the assessment period (e.g. 45 years)K. Discount rate (e.g. 3.5% for Years 1-30 and 3.0% for Years 31-45)

Calculation CBA model programmed to calculate:1. Baseline costs per cable failure i.e. PV(E,A*B(a)*C*(1/b),D)2. Proposed costs per cable failure (protected) i.e. PV(E,A*B(a)*C*(1/b),D)3. Proposed costs per cable failure (unprotected) i.e. PV(E,A*B(a)*C*(1/b),D)4. Net costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed change in GVA (protected) i.e. PV(J,((A(b)*B)*((ΣC(a)/D)*E)*F)+((A(b)*B)*((ΣC(a)/ D)*E)*G)*H)),I)3. Proposed change in GVA (unprotected) i.e. PV(J,((A(b)*B)*((ΣC(a)/D)*E)*F)+((A(b)*B)*((ΣC(a)/ D)*E)*G)*H)),I)4. Net change in GVA from change in renewable energy production i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed costs (protected) i.e.PV(K(((((a*A*b)/B)/ C)*D*E*F*G)-(a*A*b))+(((((a*A*c)/B)/C)*D*E*F*H)- (a*A*c))+(((((a*A*d)/B)/C)*D*E*F*I)- (a*A*d)),J)3. Proposed costs (unprotected) i.e. PV(K(((((a*A*b)/B)/C)*D*E*F*G)-(a*A*b))+(((((a*A*c)/ B)/C)*D*E*F*H)-(a*A*c))+(((((a*A*d)/B)/ C)*D*E*F*I)-(a*A*d)),J)4. Net costs i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost to electricity users per cable failure event over operational life of the cables.

Output presented in terms of estimated total cost of changes in renewable energy production over twenty year period.

Output Output presented in terms of total cost of changes in fuel poverty for each installation technique over a six year period running from Year 16-21.



Impact 8 9

Increased cost to fishing operators due to loss of access to fishing grounds during cable installation

Decreased risk of energy outages for renewable generators due to lower fault rates

Input For the proposed cable route the user chooses: a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. Economic value of fisheries crossing each section of the cable route (e.g. £150,000 per year)

For the proposed cable route the user chooses:a. The NRN number of the circuit (e.g. 0331021)b. Life expectancy of cable and expected number of years to fault (e.g. 25 years)

Data Databases in the CBA model contain information on:A. Time taken for cable installation for each technique (e.g. 5 days per km)B. Time taken for cable location to be added to admiralty charts (e.g. 30 days)C. The length of time for the assessment period (e.g. 45 years)D. Discount rate (e.g. 3.5% for Years 1-30 and 3.0% for Years 31-45)

Databases in the CBA model contain information on:A. Current and projected demand for distribution access on island (e.g. 100 MW)B. Percentage of applications likely to go ahead (e.g. 40%)C. Average onshore wind capacity factor (e.g. 30%)D. Average length of outage during faults (e.g. 2 hours per fault)E. Cost of distribution losses during outage (e.g. £100.76/MWh)F. The length of time for the assessment period (e.g. 45 years)G. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Calculation CBA model programmed to calculate:1. Baseline fishery costs assumed to be zero as no additional disturbance 2. Proposed fishery costs for each installation technique (protected) i.e. PV(D,((a*A)+B)*(b/365)),C)3. Proposed fishery costs for each installation technique (unprotected) i.e. PV(D,((a*A)+B)*(b/365)),C)4. Net fishery costs i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline costs per cable failure i.e. PV(G,A(a)*B*C*D*E*(1/b),F)2. Proposed costs per cable failure (protected) i.e. PV(G,A(a)*B*C*D*E*(1/b),F)3. Proposed costs per cable failure (unprotected) i.e. PV(G,A(a)*B*C*D*E*(1/b),F)4. Net costs i.e. 2-1 and 2-3 Note; while the formulae for calculating the impacts are the same, the results will differ depending on the fault rate of the cable.

Output Output presented in terms of total estimated cost due to fishery closure due to installation of cables.

Output presented in terms of total estimated cost of energy outages for renewable generators per cable failure event over operational life of the cable.


22



Impact 10 11 Impact 12

Increased distribution costs leading to lower renewable generation on islands and increased GHG emissions



Input For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The NRN number of the circuit (e.g. 0331021)

For the proposed cable route the user chooses: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. Life expectancy of cable and expected number of years to fault (e.g. 25 years)

Input For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The cable type to be installed (e.g. 33 kV 95 XLPE SWA)c. The seabed type on which the cable is to be installed (e.g. aphotic reef)

Data Databases in the CBA model contain information on:A. Projected energy distribution demand on island from future renewable supply (e.g. 100 MW)B. Percentage of renewable generation applications likely to go ahead (e.g. 40%)C. Distribution costs passed on to renewable generators (e.g. £1 million)D. Existing renewable energy generation costs (e.g. £1.5 million per MW)E. Impact of distribution costs on renewable output (e.g. 1% increase in costs leads to 1% decrease in output)F. Wind energy capacity factor (e.g. 30%)G. GHG emissions factor for reduction in renewable generation (e.g. 0.237 tCO2e per MWh)H. Abatement cost of CO2 emissions (e.g. £5.14)I. Expected life of wind farm development (e.g. 20 years)J. The length of time for the assessment period (e.g. 20 years)K. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Repair time for each cable type per year (e.g. 24 days)B. Rate of fuel use in backup generators and repair vessels (e.g. 4,800 litres per day)C. Carbon intensity of generators (e.g. 0.0028 tonnes CO2e per litre of fuel) D. DECC carbon price (e.g. £50 per tonne of CO2)E. The length of time for the assessment period (e.g. 45 years)F. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 30-45)

Data Databases in the CBA model contain information on:A. Width of cable type (e.g. 0.000095 km for 33 kV 300 XLPE SWA)B. Width of impact on seabed beyond the cable width (e.g. 0.003 km for concrete mattressing) C. Value of ecosystem services provided by habitat (e.g. £29,998 per km2 per year for shallow sedimentary habitats)D. Recovery period for habitat type (e.g. 5 years for shallow mud and sand)E. The length of time for the assessment period (e.g. 45 years)F. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 30-45)

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed change in GVA (protected) i.e. PV(K,(((A(b)*B)*(ΣC(a)/D))*E)*F*G*H*I),J)3. Proposed change in GVA (unprotected) i.e. PV(K,(((A(b)*B)*(ΣC(a)/D))*E)*F*G*H*I),J)4. Net change in GVA from change in energy production i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline emission costs for each installation technique per fault i.e. PV(F,a*A*B*C*D*(1/c),E) 2. Proposed emission costs for each installation technique per fault (protected) i.e. PV(F,b*A*B*C*D*(1/c),E) 3. Proposed emission costs for each installation technique per fault (unprotected) i.e. PV(F,b*A*B*C*D*(1/c),E) 4. Net emission costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs for each installation technique i.e. \PV(F,a*b(A+B)*c(C)*D,E)) 2. Proposed costs for each installation technique (protected) i.e. PV(F,a*b(A+B)*c(C)*D,E))3. Proposed costs for each installation technique (unprotected) i.e PV(F,a*b(A+B)*c(C)*D,E))4. Net changes in marine habitat value i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost of changes in GHG emissions over a twenty year period.

Output presented in terms of total estimated cost of emissions per fault over 45 years.

Output Output presented in terms of cost incurred each year following installation, repair, or cable decommissioning for the length of the recovery period.

24



Table 4: Data used to support environmental estimates

Impact 10 11 Impact 12

Increased distribution costs leading to lower renewable generation on islands and increased GHG emissions



Input For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The NRN number of the circuit (e.g. 0331021)


Input For the proposed cable route the user chooses:a. The proposed length of cable installed with each technique (e.g. 10 km surface laid and 5 km ploughed)b. The cable type to be installed (e.g. 33 kV 95 XLPE SWA)c. The seabed type on which the cable is to be installed (e.g. aphotic reef)

Data Databases in the CBA model contain information on:A. Projected energy distribution demand on island from future renewable supply (e.g. 100 MW)B. Percentage of renewable generation applications likely to go ahead (e.g. 40%)C. Distribution costs passed on to renewable generators (e.g. £1 million)D. Existing renewable energy generation costs (e.g. £1.5 million per MW)E. Impact of distribution costs on renewable output (e.g. 1% increase in costs leads to 1% decrease in output)F. Wind energy capacity factor (e.g. 30%)G. GHG emissions factor for reduction in renewable generation (e.g. 0.237 tCO2e per MWh)H. Abatement cost of CO2 emissions (e.g. £5.14)I. Expected life of wind farm development (e.g. 20 years)J. The length of time for the assessment period (e.g. 20 years)K. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Repair time for each cable type per year (e.g. 24 days)B. Rate of fuel use in backup generators and repair vessels (e.g. 4,800 litres per day)C. Carbon intensity of generators (e.g. 0.0028 tonnes CO2e per litre of fuel) D. DECC carbon price (e.g. £50 per tonne of CO2)E. The length of time for the assessment period (e.g. 45 years)F. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 30-45)

Data Databases in the CBA model contain information on:A. Width of cable type (e.g. 0.000095 km for 33 kV 300 XLPE SWA)B. Width of impact on seabed beyond the cable width (e.g. 0.003 km for concrete mattressing) C. Value of ecosystem services provided by habitat (e.g. £29,998 per km2 per year for shallow sedimentary habitats)D. Recovery period for habitat type (e.g. 5 years for shallow mud and sand)E. The length of time for the assessment period (e.g. 45 years)F. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 30-45)

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed change in GVA (protected) i.e. PV(K,(((A(b)*B)*(ΣC(a)/D))*E)*F*G*H*I),J)3. Proposed change in GVA (unprotected) i.e. PV(K,(((A(b)*B)*(ΣC(a)/D))*E)*F*G*H*I),J)4. Net change in GVA from change in energy production i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline emission costs for each installation technique per fault i.e. PV(F,a*A*B*C*D*(1/c),E) 2. Proposed emission costs for each installation technique per fault (protected) i.e. PV(F,b*A*B*C*D*(1/c),E) 3. Proposed emission costs for each installation technique per fault (unprotected) i.e. PV(F,b*A*B*C*D*(1/c),E) 4. Net emission costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline costs for each installation technique i.e. \PV(F,a*b(A+B)*c(C)*D,E)) 2. Proposed costs for each installation technique (protected) i.e. PV(F,a*b(A+B)*c(C)*D,E))3. Proposed costs for each installation technique (unprotected) i.e PV(F,a*b(A+B)*c(C)*D,E))4. Net changes in marine habitat value i.e. 2-1 and 2-3

Output Output presented in terms of total estimated cost of changes in GHG emissions over a twenty year period.

Output presented in terms of total estimated cost of emissions per fault over 45 years.

Output Output presented in terms of cost incurred each year following installation, repair, or cable decommissioning for the length of the recovery period.


NEW



Increased installation costs associated with protection

Impacts due to the change in repair costs Increased cost of decommissioning associated with protection

Decreased risk of outage charges due to lower fault rates

Input For the proposed cable route the user chooses:a. The proposed length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed)

For the proposed cable route the user chooses: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)

Input For the proposed cable route the user chooses: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)

For the proposed cable route the user chooses:a. NRN Number

Data Databases in the CBA model contain information on:A. Cost of decommissioning the existing cable, if applicableB. Cable laying rates for each technique (e.g. 5 km per hour)C. Day rates for cable laying vessels (e.g. £1,000 per day, assuming a 12/6 hr working day)D. Day rates for additional vessels for protection installation (e.g. £1,000 per day)E. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)F. Cost of different cable types (e.g. £1,000 per km of 33 kV)G. The length of time for the assessment period (e.g. 45 years)H. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Cable recovering rates for each technique (e.g. 5 km per hour)B. Day rates for recovering the cable (e.g. £1,000 per day)C. Cable laying rates including reinstallation of any protection (e.g. 5 km per hour)D. Dates rates for relaying cable including any protection (e.g. £1,000 per day)E. Cost of different cable types (e.g. £1,000 per km of 33 kV)F. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)G. Assessment period (e.g. 45 years)H. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Data Databases in the CBA model contain information on:A. Cable recovery rates for each technique (e.g. 5 km per day)B. Day rates for vessels recovering the cable (e.g. £1,000 per day)C. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)D. Assessment period (e.g. 45 years)E. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Number of customers (e.g. 1000)B. Time to reconnect customers after a fault (e.g. 2 hours)C. Cost per CI (e.g. £16.38)D. Cost per CML (e.g. £0.40)E. Assessment period e.g.45 yearsF. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed installation costs for cable (protected) i.e. PV(H,(A+(a*C/B)+(a*D/B)+E+(a*F),G) 3. Proposed installation costs for cable (unprotected) i.e. PV(H,(A+(a*C/B)+E+(a*F),G)4. Net costs of installation i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline cost of recovering and replacing the cable per repair, i.e. PV(H,(a*B/A)+(a*D/ C)+(a*E)+F,G) 2. Proposed cost of recovering and replacing the cable per repair (protected), i.e. PV(H,(b*B/A)+(b*D/C)+(b*E)+F,G) 3. Proposed cost of recovering and replacing the cable per repair (unprotected), i.e. PV(H,(b*B/A)+(b*C/D)+(b*E)+F,G) 4. Net change in repair costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline cost of recovering the cable, i.e. PV(E,(a*B/A)+C,D) 2. Proposed cost of recovering the cable (protected), i.e. PV(E,(b*B/A)+C,D)3. Proposed cost of recovering the cable (unprotected), i.e. PV(E,(b*B/A)+C,D) 4. Net costs of decommissioning i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline costs of CI and CML per fault i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)2. Proposed costs of CI and CML per fault (unprotected) i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)3. Proposed costs of CI and CML per fault (protected) i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)4. Net costs of CI and CML i.e. 2-1 and 2-3

Output Output presented in terms of total estimated engineering cost incurred during cable installation over 45 year assessment period.

Output presented in terms of total estimated engineering cost incurred to repair cables over the 45 year assessment period.

Output Output presented in terms of total estimated engineering cost incurred during recovery of the cables over the assessment period.

Output presented in terms of total estimated engineering costs from CI and CML charges over the 45 year assessment period.

Table 5: Data used to support wider economic and engineering estimates

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Increased installation costs associated with protection

Impacts due to the change in repair costs Increased cost of decommissioning associated with protection

Decreased risk of outage charges due to lower fault rates

Input For the proposed cable route the user chooses:a. The proposed length of cable laid with each technique (e.g. 10 km surface laid and 5 km ploughed)

For the proposed cable route the user chooses: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)


For the proposed cable route the user chooses:a. NRN Number

Data Databases in the CBA model contain information on:A. Cost of decommissioning the existing cable, if applicableB. Cable laying rates for each technique (e.g. 5 km per hour)C. Day rates for cable laying vessels (e.g. £1,000 per day, assuming a 12/6 hr working day)D. Day rates for additional vessels for protection installation (e.g. £1,000 per day)E. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)F. Cost of different cable types (e.g. £1,000 per km of 33 kV)G. The length of time for the assessment period (e.g. 45 years)H. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Cable recovering rates for each technique (e.g. 5 km per hour)B. Day rates for recovering the cable (e.g. £1,000 per day)C. Cable laying rates including reinstallation of any protection (e.g. 5 km per hour)D. Dates rates for relaying cable including any protection (e.g. £1,000 per day)E. Cost of different cable types (e.g. £1,000 per km of 33 kV)F. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)G. Assessment period (e.g. 45 years)H. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Data Databases in the CBA model contain information on:A. Cable recovery rates for each technique (e.g. 5 km per day)B. Day rates for vessels recovering the cable (e.g. £1,000 per day)C. Mobilisation, demobilisation and travel costs for vessel operators (e.g. £390,000 per job)D. Assessment period (e.g. 45 years)E. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Number of customers (e.g. 1000)B. Time to reconnect customers after a fault (e.g. 2 hours)C. Cost per CI (e.g. £16.38)D. Cost per CML (e.g. £0.40)E. Assessment period e.g.45 yearsF. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Calculation CBA model programmed to calculate:1. Baseline costs assumed to be zero as no installation required2. Proposed installation costs for cable (protected) i.e. PV(H,(A+(a*C/B)+(a*D/B)+E+(a*F),G) 3. Proposed installation costs for cable (unprotected) i.e. PV(H,(A+(a*C/B)+E+(a*F),G)4. Net costs of installation i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline cost of recovering and replacing the cable per repair, i.e. PV(H,(a*B/A)+(a*D/ C)+(a*E)+F,G) 2. Proposed cost of recovering and replacing the cable per repair (protected), i.e. PV(H,(b*B/A)+(b*D/C)+(b*E)+F,G) 3. Proposed cost of recovering and replacing the cable per repair (unprotected), i.e. PV(H,(b*B/A)+(b*C/D)+(b*E)+F,G) 4. Net change in repair costs i.e. 2-1 and 2-3

Calculation CBA model programmed to calculate:1. Baseline cost of recovering the cable, i.e. PV(E,(a*B/A)+C,D) 2. Proposed cost of recovering the cable (protected), i.e. PV(E,(b*B/A)+C,D)3. Proposed cost of recovering the cable (unprotected), i.e. PV(E,(b*B/A)+C,D) 4. Net costs of decommissioning i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline costs of CI and CML per fault i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)2. Proposed costs of CI and CML per fault (unprotected) i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)3. Proposed costs of CI and CML per fault (protected) i.e. PV(F,(A(a)*C)+(A(a)*B*D),E)4. Net costs of CI and CML i.e. 2-1 and 2-3

Output Output presented in terms of total estimated engineering cost incurred during cable installation over 45 year assessment period.

Output presented in terms of total estimated engineering cost incurred to repair cables over the 45 year assessment period.

Output Output presented in terms of total estimated engineering cost incurred during recovery of the cables over the assessment period.

Output presented in terms of total estimated engineering costs from CI and CML charges over the 45 year assessment period.



Impact 17 18

Increased cost of maintenance surveys associated with protection

Change in use costs of using backup diesel generators



Data Databases in the CBA model contain information on:A. Survey costs (e.g. £1,000 per day)B. Survey productivity (e.g. 5 km per day)C. Survey setup costs (e.g. £30,000 per survey)D. Current survey procedure (e.g. every 5 years)E. Future survey procedure (e.g. every 3 years)F. Assessment period e.g. 45 yearsG. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 31-45)

Databases in the CBA model contain information on:A. Repair time for each cable type per year (e.g. 24 days per km per year)B. Rate of fuel use in backup generators and repair vessels (e.g. 1 tonne per day)C. Cost of diesel (e.g. £/ML)D. The length of time for the assessment period (e.g. 45 years)E. Discount rate (e.g. 3.5% for years 0-30 and 3.0% for years 30-45)

Calculation CBA model programmed to calculate:1. Baseline operation and maintenance costs per survey, i.e. PV(G,D((a*A/B)+C)),F)2. Proposed operation and maintenance costs per survey (protected), i.e. PV(G,E((b*A/ B)+C)),F)3. Proposed operation and maintenance costs per survey (unprotected), i.e. PV(G,E((b*A/B)+C)),F)4. Net costs of surveys, i.e. 2-1 and 2-3

CBA model programmed to calculate:1. Baseline diesel costs for each installation technique per fault i.e. PV(E,A(a)*B*C*(1/c),D) 2. Proposed diesel costs for each installation technique per fault (protected) i.e. PV(E,A(b)*B*C*(1/c),D) 3. Proposed diesel costs for each installation technique per fault (unprotected) i.e. PV(E,A(b)*B*C*(1/c),D) 4. Net diesel costs i.e. 2-1 and 2-3

Output Output presented in terms of total estimated engineering costs for operation and maintenance of the cables over the 45 year assessment period.

Output presented in terms of total estimated cost of diesel used per fault over 45 years.

Table 5: Data used to support wider economic and engineering estimates

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In March 2015 Scotland’s National Marine Plan came into force and required Scottish Hydro Electric Power Distribution plc to consider protecting our submarine electricity cables end to end, rather than defaulting to our traditional practice of surface lay.

This would increase the cost of submarine cable installation, a cost on which would be passed onto customers. We wanted the true impact of this change in cost to be included in every engineering decision and so our installation methodology had to respond.

Working with stakeholders and our regulators, we quantified the impact that changes to our engineering practices would have on those who enter into fuel poverty or extreme fuel poverty as a result of increases to the distribution element of electricity bills; and wider society as public services respond.

The previous version of the cost benefit analysis methodology estimates the impact of a change in fuel poverty resulting from increased costs relating to changes in our engineering practices due to policy changes implemented through Scotland’s National Marine Plan 2015. This was captured through the impact “Increased cost of fuel poverty eradication programme due to higher fuel bills”.

A value was assigned to this impact based on the assumption that, for every additional household in which fuel poverty occurs, the Scottish Government will invest £8,273 to eradicate fuel poverty in that household, for example through energy efficiency measures.

Stakeholders felt that this approach did not fully account for the health impacts caused by fuel poverty and suggested that we also valued and captured the wider health impacts of fuel poverty within the methodology. Once this impact was identified, we began assessing the impact against the criterion set out in stage 2 of the cost benefit analysis methodology.

What’s changed?

How customerspay for distribution network charges

The cost of maintaining the electricity distribution network is shared equally among all customers in a distributionnetwork area.

The cost is included in the electricity bill you receive form your chosen supply company.

To provide you with an opportunity to review the new impact changes which have been implemented in the updated methodology, here is an overview of why they were made and how we have evaluated them. You can help by responding to the questions outlined in this paper before the consultation closes on the 12 February 2018.

Impact 3Increased health costs due to increase in fuel poverty rates.

The following literature was reviewed:

• Working with the health sector to tackle fuel poverty: healthy homes project final report (Shelter Scotland, 2016).

• Fuel poverty: how to improve health and wellbeing through action on affordable warmth (UK Health Forum, 2014).

• Fuel poverty evidence review: defining, measuring and analysing fuel poverty in Scotland (The Scottish Government, 2012).

• The health impacts of cold homes and fuel poverty (Friends of the Earth, 2011).

• Estimating the health impacts of Northern Ireland’s Warm Homes Scheme 2000-2008 (Liddell, 2008).

• The impact of fuel poverty on children (Save the Children, 2008).

• Excess winter mortality in Europe: a cross country analysis identifying key risk factors (Healy, J. D., 2002

• Fuel Poverty: Overview. Scottish Public Health Network (Arnot, J. 2016)

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6We include burial as a method of protection.



Responses are accepted via:


Uploaded via our website:http://news.ssen.co.uk/submarinecables/

Posted to:Submarine Electricity Cables Team,Scottish Hydro Electric Power Distribution plc,Inveralmond House,200 Dunkeld Road,Perth, PH1 3AQ

Queries can be raised at any time via these channels.

Stakeholders highlighted that the existing version of the cost benefit analysis methodology does not adequately capture the cumulative impact of installation, protection6 and decommissioning and the effect this has on ecosystem services.

There is little pre-existing literature which values the natural capital of the seabed the most relevant study to date is The Marine Bill – Marine Nature Conservation Proposals – Valuing the Benefits Final Report, DEFRA 2008. We have taken the habitat values assigned within this study to assign a natural capital habitat value to the seabed in which our submarine electricity cables are placed.

The same study also provides estimates of the length of impact within each benthic habitat and we have included these within Figure 4 and Table 4.

To quantify this impact, the following equation is used:Impact 12 (£) = Natural Capital Habitat value (£/km2) * Area impacted (km2) * Length of impact (days)

Impact 12Change in seabed natural capital value

Tell us what you thinkWe would like to receive your feedback on this consultation report. The consultation will remain open until 12 February 2018.

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Can you tell us of any other studies which place a monetary value on the health impacts of fuel poverty?

It is proposed that the Quality Adjusted Life Years -based estimate could be incorporated into the model using the approach set out in Figure 6 and Table 7.

Is there any other pre-existing data which you would like us to consider in relation to the natural capital habitat value?

Q1.

Q2.

Q3.

• reducing fuel poverty in 60,233 households

• generating health benefits of around £35.6 million or £591 per household (measured in terms of Quality Adjusted Life Years

• or, using more conservative assumptions, created direct savings to the NHS of £1.3 million or £22 per household (assumed to be in 2008 prices) per year over a period of 15 years

Are there any other reports which identify a link between fuel poverty and health impacts which should be considered?

To help us assign a monetary value to the impact on health (stage 3), the report “Estimating the health impacts of Northern Ireland’s Warm Homes Scheme 2000-2008” (Liddell, 2008) quantified the impact without requiring us to undertake significant primary data collection. Northern Ireland’s Warm home scheme was credited with:



Scottish and Southern Electricity Networks is a trading name of: Scottish and Southern Energy Power Distribution Limited Registered in Scotland No. SC213459; Scottish Hydro Electric Transmission plc Registered in Scotland No. SC213461; Scottish Hydro Electric Power Distribution plc Registered in Scotland No. SC213460; (all having their Registered Offices at Inveralmond House 200 Dunkeld Road Perth PH1 3AQ); and Southern Electric Power Distribution plc Registered in England & Wales No. 04094290 having its Registered Office at Number One Forbury Place, 43 Forbury Road, Reading, Berkshire, RG1 3JH which are members of the SSE Group.

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Submarine Electricity Cables Team,Scottish Hydro Electric Power Distribution plc,Inveralmond House,200 Dunkeld Road,Perth, PH1 3AQ


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