Draft Sectoral Marine Plans for Offshore Renewable Energy in Scottish Waters: Socio - Economic Assesment

11. Discussion and Conclusions

11.1 Potential Cost Impacts

The socio-economic assessment provides a broad overview of indicative cost impacts to other activities associated with potential offshore wind, wave and tidal development within the Draft Plan Option areas. The Present Value (discounted over the assessment period at 2012 prices) of the quantified costs ranged from £5.4m (Low Scenario: 3 GW offshore wind; 0.5 GW wave; 0.5 GW tidal) to £154m (High Scenario: 15 GW offshore wind; 2.5 GW wave; 2.5 GW tidal).

The quantified potential cost impacts to commercial shipping accounted for around 70-90% of total quantified costs, depending on scenario. Most of the quantified potential cost impacts relate to either reductions in revenues (for example, reduced tourism or recreational angling expenditure) or increased fuel costs (shipping and recreational boating). Some potential one-off costs have been identified for the CCS sector associated with the need to construct additional cable crossings where a possible future pipeline crossed future offshore wind farm export cables in the North East SORER. The commercial fisheries costs relate to estimated impacts to GVA as a result of potential reductions in fish landings.

The relatively higher potential costs to the shipping sector under the Central and High Scenarios reflects the increasing level of constraint on commercial shipping associated with more intense development within offshore wind Draft Plan Option areas, thus reducing the flexibility to locate arrays within portions of the Draft Plan Option areas that have low shipping densities. Thus under Central and High Scenarios, increasing numbers of vessels will be required to deviate from current routes, resulting in significant additional fuel costs. The main impacts relate to OWNE1 ( PV cost of £71m), OWNE2 ( PV cost of £17m), OWN2 ( PV cost of £9m), OWW1 ( PV cost of £6m) and OWN1 ( PV cost of £5m).

Such route deviations will also potentially give rise to additional cost impacts associated with time delays to passing vessels, but it has not been possible to quantify these impacts. Offshore wind Draft Plan Option area OWNE2 intersects with ferry routes from Peterhead to Shetland and to Orkney, and OWN2 intersects with the ferry route from Lerwick to Hanstholm (in Denmark). The time delays associated with deviating around possible offshore wind development in this Draft Plan Option area could have a particularly detrimental impact on the Shetland services should these routes not be taken into account in the siting of arrays within the Draft Plan Option area.

While potential wave and tidal arrays also have some potential to disrupt existing vessel routes, the much smaller spatial scale of development and the much greater flexibility in locating such development within the Draft Plan Option areas potentially mean that spatial planning can be used to minimise impacts to the shipping sector from such developments. On this basis, the combined impacts of offshore wind, wave and tidal development on shipping within each SORER are broadly similar to the impact of offshore wind Draft Plan Option areas alone.

For the commercial fisheries sector, the estimated impact for all technologies at national level ranges from PV £1.4m GVA (Low Scenario) to PV £7.0m GVA (High Scenario). Under the High Scenario, the impact represents less than 1% of total annual GVA for the commercial fisheries sector in Scotland. Furthermore, this is considered to be a very conservative estimate, as it assumes that all fishing effort and associated landings within the footprint of offshore wind, wave and tidal arrays is lost, rather than simply displaced. In reality, it is likely that some commercial fishing activity will continue, particularly within offshore wind arrays (which account for around 90% of total impact in this assessment). This level of impact is not considered to have significant implications for the fish processing sector. It has not been possible within this study to quantify the potential impacts of offshore renewables on other aspects of commercial fishing, but there may be impacts from additional steaming distances to fishing grounds, gear development and adaptation costs and quota costs involved in moving to alternative fishing grounds, and cost impacts associated with gear damage associated with interactions with intra-array or export cables.

The combined impacts of offshore wind, wave and tidal development on commercial fishing are considered to be very similar to the impacts of offshore wind on its own, as wave and tidal are estimated to contribute only around 5% each to total commercial fishing impacts.

The quantified recreational boating impacts have been assessed as being relatively minor ranging from £0 p.a. (Low Scenario) up to £0.87m p.a. (High Scenario in 2035) with the PV cost impacts ((discounted over the assessment period at 2012 prices) ranging from £0m (Low Scenario) to £5.8m (High Scenario). The cost estimates relate purely to the potential additional fuel costs associated with diverting around wind or tidal arrays. The cost estimates in relation to offshore wind arrays are considered to be conservative, as it is possible for recreational vessels to transit through offshore wind farms in fair weather conditions. The main factor affecting the range of estimated cost impact is the assumption about the scope for spatial planning of Draft Plan Option areas to minimise disruption to sailing routes. In particular, given that on average wave arrays under the High Scenario will only need to be deployed across less than 1% of the Draft Plan Option area and that such environments only experience light use by recreational sailors, it has been assumed that spatial planning will be able to avoid any impacts associated with the deployment of wave devices. It has not been possible to quantify the impact of development within the Draft Plan Option areas on wider aspects of recreational boating. In particular, there is uncertainty surrounding the effect of multiple offshore energy developments on the attractiveness of sailing around the Scottish coast. In particular, the area off the Mull of Galloway and the Mull of Kintyre are already challenging routes and there is some concern that offshore renewables development in these areas may deter sailors from using this route up the West coast of Scotland. This could lead to a reduction in expenditure in local supply chains. Similarly, multiple offshore wind developments along the East coast may deter recreational sailors travelling along the east coast, although their location relatively far offshore will provide a safe inshore route and thus is likely to limit the combined impact. On this basis, the combined impacts of offshore wind, wave and tidal development on recreational boating may be greater than the sum of the individual impacts, although it is not possible to quantify this potential impact.

Some potential costs may be incurred by the CCS sector in the future, should possible new CCS pipelines be constructed running from the Firth of Forth up to St Fergus. However, these costs are particularly uncertain as they are based on a speculative development path for CCS.

Quantified cost impact estimates for recreational angling and tourism are low, reflecting assumptions about the limited interaction between offshore renewables and these sectors. While there are ongoing concerns about the impact of offshore wind farms on tourism, there is currently no evidence of any offshore wind farm having a significant impact on tourism. Given that the current Draft Plan Option areas for offshore wind are generally all a minimum of 10km offshore, the scope for significant impacts on tourism is considered to be very limited. It has not been possible to quantify potential cost impacts to the tourism sector associated with onshore development ( O&M facilities and substations). While such developments have the potential to affect the character and setting of areas of importance to tourism, it is noted that adverse impacts will be controlled through the planning system.

For the majority of activities, no significant cost impacts were identified under any of the scenarios including aquaculture, energy generation, oil and gas, ports and harbours, power interconnectors, telecom cables, waste disposal and the majority of water sports. However, for some sectors, some uncertainty remained concerning potential impacts. For example for oil & gas, power interconnectors and telecom cables, where export cables require to cross existing cables or pipelines, it was assumed that the main costs of constructing the crossings would fall on the offshore renewables developers. While the existing asset owners would seek to protect their interests through cable crossing agreements, it remains uncertain the extent to which all future liabilities might be covered by such agreements. For example should an existing asset owner need to replace their infrastructure, they might need to place this on top of an offshore renewables cable and thus inherit additional liabilities at that point. For energy generation, some uncertainty remains concerning the potential impact of competition for grid connection and cable landfalls between rival developers.

It has not been possible to develop quantified cost estimates for aviation or military interests. There is some potential for impact to helicopter services to offshore oil and gas fields where offshore wind developments may preclude low level flying during adverse weather. This would require helicopters to deviate around arrays, resulting in extended flight distances. While service providers were approached, they were not able to provide any information within the time scales of this study. In the absence of quantified information, the cost impact is considered to be relatively minor as route deviations will only be required in adverse weather conditions. It may be possible to minimise such impacts through careful location of the arrays at project level. Offshore wind development within many of the Draft Plan Option areas will affect radar services around the coast and mitigation measures are likely to be required at project level. It has not been possible to quantify these costs in this study but the costs will be borne by the offshore wind developers and therefore would not fall on the aviation sector.

The MOD has identified that offshore renewables development within the Draft Plan Option areas may have the potential to affect military training exercises and activities but that it is not possible to quantify impacts at this stage. Such potential impacts will therefore need to be addressed at project level.

No significant benefits to activities could be quantified in this study, although it is noted that a number of activities such as ports & harbours, shipping and tourism would benefit from the development of the supply chain, but this was outwith the scope of the study.

Most of the social impacts are limited to localised effects and even these are generally expected to be small. There may be some impacts on recreational boaters, sea kayakers and sea anglers that could require them to change the location of their activities. This could affect marinas, boat charters, boat maintenance businesses, etc. with knock-on employment effects. However, the impacts on one marina are likely to be compensated by benefits for others. As a result, the overall impacts should balance out. The social issue then depends on whether the benefits move from areas that are more (or less) deprived such that they could have a distributional effect or whether sailors in smaller, more traditional boats with fewer navigational aids are affected in terms of access and opportunities for continued activity. The magnitude of the impacts is unlikely to be significant enough to result in closure of a marina (or associated businesses) such that the distributional effects should be limited. If sailors of more traditional craft feel that the additional navigational risks are too great, they could reduce their activity with impacts for their well-being.

Impacts on commercial fisheries may be more significant and could affect groups such as crofters using fishing as a means of supplementing their income. It is difficult to determine which fishermen would be affected, although the greater impacts are predicted in crofting areas, such as Caithness and the Northern Isles (North region) and the Western Isles (West region). The magnitude of impacts may be more significant on vessels greater than 15m in length, but the relative impact may be greater on the under 10 and under 15m sectors particularly in West and North regions while impacts on different gear types vary between regions. As a result, there is no one group that is consistently affected to a greater extent overall.

Knock-on effects on GVA and employment are generally insignificant, with few of the costs exceeding the 5% of turnover threshold used as the minimum value for estimating these impacts ^[17] . The only sector that exceeds the 5% threshold is commercial fishing and then only in North and West regions (low and central scenarios), and North, North East, West and North West regions (high scenario). In all cases, this is associated with offshore wind. The main estimated impacts on GVA and employment are as follows:

• Type I (direct and indirect) to Type II (direct, indirect and induced) effect on GVA (high scenario):
  • North: £5.4 to £5.9 million;
  • North East: £0.76 to £0.83 million ( PV);
  • West: £1.9 o £2.1 million ( PV); and
  • North West: £0.75 to £0.82 million ( PV).
• Type I (direct and indirect) to Type II (direct, indirect and induced) effect on employment (high scenario):
  • North: 9.2 to 10.2 jobs;
  • North East: 1.4 to 1.5 jobs;
  • West: 1.5 to 1.7 jobs; and
  • North West: 1.3 to 1.5 jobs.

This shows that the most significant effects are likely to be in North region, but these are still relatively minor. There might be localised effects that are greater in impact than the numbers suggest, for example, if crofters in North region are affected more significantly than full-time fishermen or if most of the impacts fall onto fishermen from the same harbours, or where impacts fall on areas that are heavily dependent on fisheries.

11.2 Study Limitations

There is currently a high level of uncertainty surrounding the location and intensity of possible future offshore renewables development within the Draft Plan Option areas. The study has sought to use assumptions about the density and location of development within the Draft Plan Option areas to inform the scenarios to address this, for example, it is assumed that the notional installed capacities for offshore wind, wave and tidal development identified in the scenarios are apportioned pro rata across the Draft Plan Option areas in proportion to the size of each Draft Plan Option area. In reality it is likely that development will be more intensive in some Draft Plan Option areas than in others leading to variable levels of socio-economic impact within each Draft Plan Option area.

The timing of any development within the Draft Plan Option areas is also uncertain. In this study we have made a simplistic assumption that all development starts in 2023 and is completed by 2025. However, should development proceed within the Draft Plan Option areas this is likely to be staggered in the period 2018 to 2030. While the study assumption is likely to give PV estimates that reflect a national average of development spread over the period 2018 to 2030, it is possible that cost impacts could vary at regional level should development proceed earlier or later than assumed in this assessment. A sensitivity analysis undertaken on the timing of development indicated that if all developments became operational five years earlier ( i.e. by 2020) this would increase cost/ GVA impacts by around 19% (based on an assessment period ending ten years after full operation ( i.e. 2030). Conversely, a delay of five years would reduce cost/ GVA impacts by around 16% (based on an assessment period ending ten years after full operation ( i.e. 2040).

The nature and scale of socio-economic impacts is particularly dependent on the precise locations in which offshore renewables development may occur within individual Draft Plan Option areas. This study has assumed that spatial planning within Draft Plan Option areas can be used effectively to minimise socio-economic impacts, particularly where the density of development occupies less than 5% of an Draft Plan Option area. However, within individual Draft Plan Option areas it is possible that other constraints may limit flexibility in choice of the location for offshore renewables development, resulting in higher levels of socio-economic assessment.

Uncertainties in the location and nature of future activity in the marine environment also contribute to uncertainty in the estimation of costs and benefits. For example, potential CCS impacts are based on assumptions about a possible future requirement for a new CCS pipeline sometime in the 2020's. Similar uncertainties relate to future trends in ongoing activities such as commercial fishing (assumed landings values remain constant over the assessment period) and tourism (revenues assumed to be constant in real terms). Such assessments are therefore based on a significant degree of speculation about future levels of activity and are thus inherently uncertain.

There is also some uncertainty concerning the nature and scale of socio-economic impacts associated with offshore renewables development. This reflects uncertainty surrounding the details of the technologies to be deployed, the lack of scientific understanding relating to the impacts of novel technologies, and the lack of scientific understanding of some specific environmental pressures and impact pathways ( e.g. the scale of collision mortality and the effects of electromagnetic fields). The study has sought to accommodate these uncertainties in the assessment where possible, for example in relation to the differential impacts of tidal turbine foundation design on navigation interests. However, some uncertainty remains concerning some aspects of the impacts of offshore renewables and it is important that such issues are managed through the process of plan implementation by ensuring that newly acquired evidence on impacts is used to refine the plans.

Most of the social impacts are likely to be felt at a very local level. The scale of this assessment is generally focused on a regional level such that small scale issues can appear to be insignificant. The study addresses this by considering impacts on specific social groups, including looking for local hotspots (such as marinas) where the impacts may be disproportionate. However, the real significance of the local impacts could only be fully explored through a specific, local assessment, which is beyond the scope of this study. For example, it has not been possible to explore whether a local area might become increasingly deprived if there were impacts on jobs partly because the impacts are generally small but also because the specific locations of the impacts cannot be clearly identified. In addition, the 5% threshold for assessing quantitative impacts may under-estimate effects on certain businesses that may be disproportionately affected as impacts are unlikely to be evenly distributed across a sector.

It has not been possible to quantify social impacts, other than access to employment where multipliers have been used. Other impacts have been assessed qualitatively, which can result in homogenisation of impacts although it does mean that all impacts are considered throughout the assessment. The social impacts are generally assessed as knock-on impacts from the direct effects on activities. This means that areas such as employment, environment and health have been included to a greater extent than the much more indirect effects on crime or education. Again, these indirect effects may become more evident in a specific, local assessment.

The combined assessment poses particular challenges owing to the complexity of such assessments and the limited scientific understanding of impacts. Within this study, combined effects (the combined impact of potential offshore wind, wave and tidal development within the Draft Plan Option areas) have generally been assessed as the sum of the individual impacts of offshore wind, wave and tidal development. This has been based on the generally minor contribution to overall assessed impacts arising from wave and tidal development and the modest overall scale of impacts.

As identified in section 11.1 above, it has not been possible to provide quantified cost estimates for a number of activities owing to a lack of data or because of a lack of time for the relevant sector to respond. However, based on the information available to the study team, the cost impacts to the affected sectors are not considered to be particularly large.

For oil and gas, power interconnectors and telecom cables, other uncertainties about potential cost impacts arise relating to assumptions about potential future liabilities at crossing points. There is currently limited experience of developing and implementing such agreements and thus the extent to which all future liabilities might be taken into account.

The main uncertainty with the GVA and employment effects is associated with the use of multipliers. The multipliers used typically relate to much wider sectors than just the industries that could be affected by the Draft Plan Option areas, so they may under- or over-estimate the impacts. The fisheries multiplier has also been questioned, although a review of other multipliers was inconclusive over if (and how) the multipliers used should be adjusted. The use of a 5% threshold for identifying potentially significant impacts could mean that some locally significant effects are not highlighted. This is because regional data have been used as the basis for assessing whether the impacts exceeded the threshold.