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Triton Knoll Offshore Wind Farm Limited

TRITON KNOLL ELECTRICAL SYSTEM

Regeneris Socioeconomics Impact Study

April 2015

Document Reference 6.2.5.3.3

Pursuant to: APFP Reg. 5(2)(a)

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Triton Knoll Electrical System Triton Knoll Offshore Wind Farm Limited Copyright © 2015 RWE Innogy UK Ltd Environmental Statement All pre-existing rights reserved.

Application Document 6.2.5.3.3 Liability Regeneris Socioeconomics Impact Study In preparation of this document Triton Knoll April 2015 Offshore Wind Farm Limited (TKOWFL), a joint venture between RWE Innogy UK (RWE) and Statkraft UK, subconsultants working on behalf of TKOWFL, have made reasonable efforts to ensure Drafted By: Regeneris that the content is accurate, up to date and Approved By: Kim Gauld-Clark complete for the purpose for which it was prepared. Date of April 2015 Neither TKOWFL nor their subcontractors make any Approval warranty as to the accuracy or completeness of Revision A material supplied. Other than any liability on TKOWFL or their subcontractors detailed in the Triton Knoll Offshore Wind Farm Ltd contracts between the parties for this work neither Auckland House TKOWFL or their subcontractors shall have any Great Western Way liability for any loss, damage, injury, claim, expense, Swindon cost or other consequence arising as a result of use Wiltshire, SN5 8ZT or reliance upon any information contained in or omitted from this document. T +44 (0)845 720 090 Any persons intending to use this document should F +44 (0)845 720 050 satisfy themselves as to its applicability for their I www.rweinnogy.com intended purpose. Where appropriate, the user of this document has the obligation to employ safe www.rweinnogy.com/tritonknoll working practices for any activities referred to and tritonknoll@rwe.com to adopt specific practices appropriate to local conditions.

Triton Knoll Offshore Wind Farm Limited have been awarded EU TEN-E funding to support the development of the Triton Knoll Offshore Wind Farm Electrical System located in both UK Territorial waters and the UK’s Exclusive Economic Zone. The funding which is to be matched will support a number of surveys, engineering reports, and environmental impact assessment studies for the Triton Knoll Electrical System. The studies will form part of the formal documentation that will accompany the Development Consent Order which will be submitted to the Planning Inspectorate. The sum of €1,159,559 has been granted and the process to reclaim this funding is ongoing. Triton Knoll Offshore Wind Farm - Impacts Study

A Final Report by Regeneris Consulting RWE npower renewables

Triton Knoll Offshore Wind Farm - Impacts Study

11 September 2014

Regeneris Consulting Ltd www.regeneris.co.uk Triton Knoll Offshore Wind Farm - Impacts Study

Contents Page

1. Introduction 1

2. Electrical System Components - Impacts Analysis 2

3. Revised Overall Scheme Impacts 6

4. Summary of UK Level Impacts 8 Triton Knoll Offshore Wind Farm - Impacts Study

1. Introduction

1.1 Regeneris Consulting was appointed to undertake a short study to set out economic and employment impact figures relating to the proposed Triton Knoll Offshore Wind Farm, to be located off the coast of Lincolnshire. The aims of this study were to deliver two outputs:  Firstly, a detailed analysis of the economic impacts relating to the electrical system elements of the proposed Triton Knoll Offshore Wind Farm, which has been identified by the client as a key part of the overall capital investment where there are expected to be substantial local economic impacts.  Secondly a high-level refresh of the overall employment impacts of the overall scheme, updating earlier analysis and taking account of the reduced scale and capacity of the scheme. 1.2 The analysis work has drawn on:  The existing socio-economic chapter drafted for the Triton Knoll Offshore Wind Farm EIA  Information provided separately by RWE, including costs and timescales for investments in electrical system components  Experience from supply chain analysis undertaken for Gwynt Y Mor to help in making assessments regarding the degree of local sourcing of goods and labour for construction phase works  National sector benchmarks, using data from the Office for National Statistics, to help in making assumptions about the number of employees supported by the scale of investment being made  Regeneris’ bespoke regional and national input-output models, to help in assessing the supply chain and induced multiplier effects from investments made in local electrical system components  Other wider sector benchmark information as required (eg published reports by DECC, Crown Estates and RenewableUK). 1.3 This report is broken down as follows:  Section 2 sets out the economic and employment impacts relating to the electrical system components  Section 3 sets out a revised overall assessment of the employment impacts of the scheme, taking account of the reduction in planned generating capacity from 1,200MW to 900MW, and intelligence from the supply chain impacts analysis of Gwynt Y Mor Offshore Wind Farm.

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2. Electrical System Components - Impacts Analysis

2.1 This assessment covers the economic and employment impacts relating to planned investment in electrical system components as part of the Triton Knoll Offshore Wind Farm.

Types of Impact

2.2 This section focuses on two types of impact: employment (focusing on full time equivalent or FTE employment) and gross value added (GVA) – a measure of economic benefit in an area. 2.3 In both cases the impacts are split by:  Direct impacts – the employment and GVA impacts from direct spend on electrical system components  Indirect impacts – the employment and GVA impacts relating to the lower supply chain investments made by firms benefitting from the direct impacts  Induced impacts – the employment and GVA impacts relating to the additional local spend in all sectors of the employees supported by direct and indirect impacts.

Impact Areas

2.4 Three main impact areas have been identified for assessing the economic and employment impacts of the electrical system components. These are:  Lincolnshire – where the key electrical system components would be installed (including cable landfall, onshore substation, onshore intermediate electrical compound and cable routes)  The East Midlands region  The UK as a whole.

Method of Assessment

2.5 Employment and GVA impacts have been assessed using information provided by RWE regarding estimated costs and geographical sourcing patterns for each element of the electrical system for the proposed offshore wind farm. 2.6 As total costings are not fully known and procurement has yet to take place for most elements, this information is based on estimates, drawing on benchmarks from previous schemes (including Regeneris’ analysis of the actual construction impacts of Gwynt Y Mor Offshore Wind Farm, June 2013) and the knowledge and experience of RWE. The impact figures presented should therefore be considered as indicative only. Acknowledging this degree of uncertainty, the employment and GVA figures presented are in most cases rounded (to the nearest 5 FTE jobs and the nearest £0.1m). 2.7 The impacts are estimated by breaking down projected costs by key components, including:  Onshore Cables  Onshore Intermediate Electrical Compound

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 Onshore Substation  Offshore Cables  Landfall HDD  400 kV cables onshore Substation to NGET Substation 2.8 The proportion of each input sourced from the three impact areas: Lincolnshire, the East Midlands region, and the UK as a whole, has then been estimated. 2.9 The estimated geographic sourcing patterns are summarised in the table below:

Table 2.1 Assumed Geographic Sourcing of Electrical System Components % of Value Spent Within each Area Lincolnshire Elsewhere in Elsewhere in Rest of the the East the UK World Midlands Onshore Cables 10% 25% 0% 65% Onshore Intermediate Electrical 5% 10% 25% 60% Compound Onshore Substation 5% 10% 25% 60% Offshore Cables 0% 0% 0% 100% Landfall HDD 0% 0% 100% 0% 400 kV cables onshore 5% 15% 0% 80% Substation to NGET Substation 2.10 To calculate direct employment impacts in each impact area, the relevant sector for each component is identified, using standard industrial classifications, and a benchmark ‘turnover-per- FTE’ figure is used for each relevant sector to calculate direct employment from a given investment value:  This ‘turnover-per-FTE’ figure is derived from national data relating to total turnover (from the Annual Business Survey) and total full time equivalent employees (from the Business Register and Employment Survey) for each sector.  The ‘turnover-per-FTE’ figure is calculated for each sector at a 2-digit SIC (standard industrial classification) level. For most of the components covered in this analysis, the ‘civil engineering’ code (SIC 42) has been used.  For each impact area, the total spend in that area for each component is calculated (using the total cost and the geographical sourcing figures in Table 2.1), and the relevant ‘turnover-per-FTE is applied to this total spend to assess the number of direct FTE employees supported. 2.11 Indirect and induced employment is derived using mutlipliers from Regeneris’ own national and regional Input-Output models:  Regeneris’ input-output models were specially commissioned tools to allow more detailed regional impact analysis. They can be used to identify the proportion of total spend in a particular sector that is subsequently invested in lower supply chain tiers, and the proportion of employee income that will be reinvested into the area.  This tool is used to provide multipliers which can be applied to the direct employment creation in order to estimate indirect and induced employment creation at national and regional levels. The local level multipliers are based on estimates, drawing on knowledge

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of the regional level multipliers (from the Input-Output model) and Regeneris’ experience of typical multiplier values for the size of the geographic area. 2.12 To calculate GVA, a benchmark 'GVA-per-FTE' figure is used for each sector to assess direct, indirect and induced GVA creation:  This ‘GVA-per-FTE’ figure is derived from national data relating to total GVA (from the Annual Business Survey) and total full time equivalent employees (from the Business Register and Employment Survey) for each sector nationally.  The ‘GVA-per-FTE’ figure is calculated for each sector at a 2-digit SIC (standard industrial classification) level. For most of the components covered in the direct analysis, the ‘civil engineering’ code (SIC 42) has been used; for indirect and induced impacts, an average ‘GVA-per-FTE’ for across the whole economy has been used.  For each impact area, the relevant ‘GVA-per-FTE is applied to the total employment to assess the total GVA generated by the employment supported.

Construction Impacts

2.13 The total construction cost for the full offshore wind farm construction is estimated to be around £3.9 billion, and the value of the electrical system components is anticipated to be in the region of 15-20% of this overall project cost. 2.14 Table 2.2 below sets out the findings from analysis of likely economic impacts generated in the three impact areas during the electrical system construction phase. The majority of construction phase impacts are anticipated to take place over a five year period; the estimated employment impacts are therefore presented as the full time equivalent jobs supported per year during that construction period.

Table 2.2 Economic and Employment Impacts of Electrical System Construction Phase Lincolnshire East Midlands UK

Annual FTE Total Annual FTE Total Annual FTE Total Employment GVA Employment GVA Employment GVA (£m) (£m) (£m)

Direct 25 7.9 80 26.4 135 43.7 Indirect 15 3.5 135 32.1 175 42.5 Induced 10 2.3 95 23.0 185 44.4 TOTAL 50 13.8 310 81.5 495 130.6 Note: Figures may not sum exactly to the totals, due to rounding.

2.15 Overall, it is estimated that the construction phase for the electrical system of the proposed Triton Knoll Offshore Wind Farm would support an average of over 300 full time equivalent jobs per year in the East Midlands over the five-year construction phase. 2.16 This figure includes over 200 full time equivalent jobs supported in the region by the direct spending of the wind farm on goods and services, and the lower supply chain spending benefits captured in the region. Almost 100 further full time equivalent jobs would be supported in the East Midlands by the induced spend, arising from additional spend of direct and indirect employees in the region.

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Triton Knoll Offshore Wind Farm - Impacts Study

2.17 Of these regional impacts, it is anticipated that around 50 full time equivalent jobs per year will be supported in Lincolnshire over the five-year construction phase. This includes around 40 full time equivalent jobs generated from the direct spending of the wind farm on goods and services, and the lower supply chain spending benefits captured locally, and around 10 full time equivalent jobs supported by the induced spend, arising from additional spend of direct and indirect employees in the local area 2.18 Nationally, it is estimated that the electrical system works will support around 500 full time equivalent jobs per year in total over the five year construction period. This includes over 300 full time equivalent posts per year through the direct spending of the wind farm on goods and services, and the lower supply chain spending that is captured across the UK, and more than 180 full time equivalent jobs per year by the induced spend, arising from additional spend of direct and indirect employees across the UK.

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Triton Knoll Offshore Wind Farm - Impacts Study

3. Revised Overall Scheme Impacts

3.1 A detailed socio-economics chapter was produced as part of the Environmental Impact Assessment for the Triton Knoll Offshore Wind Farm in January 2012. At the time it was estimated that the installed generating capacity of the proposed wind farm would be up to 1,200 MW. 3.2 Following a project review and offshore site investigations, it was announced in early 2014 that the capacity of the proposed wind farm would be reduced, with a new assumption of installed generating capacity of up to 900MW. 3.3 Since the EIA assessment, RWE has also commissioned a study to undertake detailed analysis of the economic and employment impacts relating to the construction of its Gwynt Y Mor Offshore Wind Farm (currently under construction), providing more detailed figures from which benchmarks can be drawn. 3.4 This section therefore sets out revised national and regional employment impacts that would be generated on the basis of:  the reduced wind farm size  the benchmarks provided by the Gwynt Y Mor study. 3.5 It should be noted that this study has not involved a detailed economic impacts analysis, but has drawn on high-level benchmarks from the analysis of actual economic and employment impacts in the UK from the Gwynt Y Mor Offshore Wind Farm analysis, undertaken in August 2014.

Gwynt Y Mor Construction Phase Impacts

3.6 The economic impact analysis for the Gwynt Y Mor construction phase highlighted that:  Approximately 34% of the value from the £2.0bn construction cost was secured by contractors and employees in the UK. This is equal to approximately £690m.  This supported 4,900 supply chain person years of employment across the UK (or 2,450 jobs over a two year construction period).  This equates to approximately £141,000 UK investment for every person year of employment supported  Approximately two thirds of the UK value went to businesses based in the regions surrounding the development: the North West and Wales.

Triton Knoll Construction Phase – Estimated Supply Chain Impacts

3.7 Applying these benchmark figures from Gwynt Y Mor, it can be estimated that based on the current market conditions:  Approximately 34% of the £3.9bn construction cost anticipated for the proposed 900MW Triton Knoll Offshore Wind Farm might be secured by contractors and employees in the UK. This is equal to approximately £1.33bn.  Based on the average £141,000 investment for every person year of employment, this would be expected to support over 9,400 person years of employment across the UK in the wind farm supply chain.

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Triton Knoll Offshore Wind Farm - Impacts Study

 Given the industry strengths and developing offshore wind supply chain in the regions surrounding the proposed Triton Knoll site, it would be anticipated that the majority of this value would be secured by businesses based in the East Midlands, Yorkshire & Humber and East of England regions.

High Impact Scenario

3.8 As highlighted in the 2012 EIA chapter, there is significant offshore wind sector supply chain development activity across the UK, and particularly in regions close to the Triton Knoll area, notably the development of Siemens’ wind turbine factory in Hull. 3.9 In 2012 the Government and Industry set out a vision for 50% of the offshore wind supply chain to be sourced from the UK. On the basis of the analysis undertaken for Gwynt Y Mor, the wind turbines contract accounted for a substantial portion of the overall costs, and so in the scenario that these were sourced from the UK, it is possible that this 50% UK sourcing target could be reached. 3.10 The analysis in this study has not sought to fully quantify the economic and employment impacts of this high impact scenario, which would depend on more detailed assumptions about sourcing patterns for individual components. However, based on an uplift from 34% of wind farm content being sourced from the UK (assumed in the impacts above), to a high impact scenario of 50% of goods and services sourced from the UK, it could be assumed that under a high impact scenario, the employment impacts would be of the order of around 1.5 times the baseline impacts set out above. 3.11 It is therefore estimated that the high impact scenario could be assumed to support around 14,000 person years of employment in the UK wind farm supply chain. Again, the majority of this value would be expected to be secured by businesses in the regions surrounding the site, including the East Midlands, Yorkshire and the Humber and the East of England.

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4. Summary of UK Level Impacts

Baseline Scenario

Overall Project Impacts

4.1 Based on an installed capacity of 900MW and total construction costs of £3.9bn, it is estimated that, on the basis of the current UK market, the Triton Knoll Offshore Wind Farm would support over 9,400 person years of employment in the offshore wind supply chain across the UK. That might for example be 1,900 full time jobs supported over a five year construction period. 4.2 It is anticipated that more than half of these UK impacts would benefit the regions surrounding the wind farm: the East Midlands, Yorkshire and the Humber, and the East of England.

Electrical System Impacts

4.3 The electrical system components form a sub-set of these overall project impacts. Based on a cost of around 15-20% of the total wind farm construction cost, it is estimated that the investment in the UK from sourcing goods and services for the electrical system would support over 1,500 person years of employment in the offshore wind supply chain across the UK. That might be for example around 300 full time jobs supported over a five year construction period. 4.4 In addition to the supply chain jobs created, the induced impacts generated by the additional spending from the employment created in the supply chain, would support over 900 person years of employment. That might for example be around 180 full time jobs supported over a five year construction period. 4.5 The supply chain jobs and the induced employment combined would therefore generate over 2,400 person years of employment, which might for example be around 500 full time jobs supported over a five year construction period across the UK.

High Impact Scenario

4.6 Based on the potential for substantial offshore wind sector growth in the UK in the coming years, the high impact scenario assumes up to 50% of goods and services for the construction supply chain could be sourced from the UK. 4.7 On that basis it is estimated that the scheme could support in the region of 14,000 person years of employment in the UK. That might for example be 2,800 full time jobs over a five year construction period. 4.8 As above, it is anticipated that more than half of these UK impacts would benefit the regions surrounding the wind farm: the East Midlands, Yorkshire and the Humber, and the East of England.

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