Wind farm costs

Summary

The request sought Treasury papers and minutes regarding the Earystane wind farm proposal, resulting in the disclosure of a Treasury Paper seeking funding for a Phase 2 socio-economic impact assessment, though the response was partially exempt.

Key Facts

• The Isle of Man Government committed to delivering a 20MW onshore wind project by 2026 as part of the Island Plan.
• Public ownership was recommended by procurement consultant Bird & Bird as the strategy to provide the best value to consumers.
• The Treasury Paper seeks funding from the Project Development Fund to undertake a detailed socio-economic impact assessment for the preferred site.
• Three sites were initially identified for environmental and technical surveys, with the chosen site expected to have limited impact on local businesses due to its remote location.
• The proposed 20MW wind farm has the potential to generate 60 GWh of electricity per year.

Data Disclosed

• 20MW
• 2026
• 15%
• 60 GWh
• 32 locations
• 12 July 2023
• 1st June 2023
• £500,000
• 2024-09-03
• 2024-10-07
• 27 pages
• 3 documents

Original Request

Please forward copies of the Treasury Papers and minutes relating to the Windfarm proposal at Earystane since request FOI ref 3263901

Data Tables (6)

Full Response Text

Treasury Paper No. 23/543 Treasury Paper Department/Treasury Board/Office Manx Utilities Chief Officer Phil King Responsible Officer Simon Clague Cut ups to be sent to Phil King, Simon Clague, Adrian Dobbins Date of Treasury Meeting 12 July 2023 Title Project Development Fund Application – Renewable Electricity Generation – Onshore Wind Has appropriate internal and/or public consultation taken place? Stakeholder Are there any resource/personnel implications? Yes Do you have the statutory vires? (If yes, provide confirmation of the source within ‘Background’) Yes Are there any inter-Departmental implications? Yes If yes, which other Departments are involved? DoI, DEFA Major Policy Proposal/Primary Legislation? Yes Have you completed an impact assessment? If yes, please append a copy to this paper Yes If Primary Legislation, has Council Legislation Subcommittee approved the inclusion of the proposed Bill on the legislative programme Not Applicable Decision date of the Council Legislation Subcommittee Does the recommendation have Political approval within the Department/Treasury Board/Office? Yes Date approval granted 1st June 2023 Are there any Financial Implications? Yes GDPR Implications No Data Protection Impact Assessment undertaken? Not Applicable Detailed evaluation undertaken? Not Applicable Are there any Equality Act Implications? Append a copy of the impact assessment No Fund Claim Application? Note that any claims in excess of £500,000 must be accompanied by a Comin paper and that Treasury will submit the Comin paper on behalf of the relevant body. Approval will not be confirmed until after CoMin’s decision. No Purpose of this Paper: This paper seeks funding of £ M from the Project Development Fund to allow the Phase 2 detailed socio-economic impact assessment of a preferred site to be undertaken. Page 2 of 21 1. Background Delivering at least 20MW of electricity from renewable sources is part of the ‘Island Plan’. In February 2023 the Isle of Man Government committed to the delivery of a 20MW onshore wind project. The Council of Ministers approved Manx Utilities’ recommendations to carry out the initial environmental and technical surveys at three sites, and supported the recommendation to adopt the ownership route which seeks to provide the best value to the consumer. Manx Utilities’ professional procurement consultant, Bird & Bird, recommended that public ownership represented the most appropriate strategy to deliver this project successfully within the timescales avail The Business Case has the following objective to deliver a 20MW onshore wind farm by 2026 to meet the target committed to in the Island Plan.
Optimised outcomes of this project should also deliver: • Confidence to stakeholders that the optimum site(s) for onshore wind on the Island has been selected and all environmental risks are appropriately mitigated. • The lowest possible cost for consumers via the ownership model which provides the best value to consumers. • A reduction in carbon emissions in electricity supply by up to 15% through the provision of renewable capacity. The wider strategic context is provided in the Business Case, Appendix 1. 2. Options Considered The following options were considered for the delivery of the project. These are expanded upon in Appendix 1. (1) Recommended Option: Public Ownership route with funding approved; (2) Do nothing; (3) Private ownership. 3. Impact Assessment 3.1 Business The direct impact on local businesses at the chosen site will be considered under Phase 2 of work under a detailed socio-economic impact assessment. This forms a key portion of the Environmental Impact Assessment. Wardell-Armstrong are working with the Department for Enterprise to better understand how any impact can be mitigated. However, based on the three sites under review at this stage, the impact on local business is expected to be limited as the sites are remote. Works will be programmed, and traffic managed, to minimise disruption to local residents and businesses.
The majority of the site preparation works in the construction phase is expected to be undertaken by on-island civil contractors with major items (concrete, aggregates etc.) provided by local suppliers. The 20MW onshore windfarm has the potential to generate 60 GWh electricity per year which is more than sufficient to meet the Environmental, Social, Governance (ESG) requirements of Isle of Man businesses at present. Manx Utilities approach will ensure security of supply is maintained while renewables are introduced to the power system avoiding any disruption to the wider Isle of Man economy.

Page 3 of 21 3.2 Government Under The Electricity Act, 19961, Manx Utilities has responsibility for the provision of secure and reliable electricity from the most economic route. The Climate Change Act, 20212 has also modified the Electricity Act, 1996, to include a commitment to consider the environmental impact of this supply, which Manx Utilities understands to also mean a commitment to deliver on climate targets set by Isle of Man Government.

In April 2022, an onshore renewable consultant, Bureau Veritas, carried out an appraisal on the suitability (both technical and environmental suitability) of all sites across the public estate for the generation of renewable electricity. In total 32 locations were identified as suitable for solar, with three key sites identified for onshore wind – these sites are under the ownership of Manx Utilities and the Department of Environment, Food and Agriculture. The initial sites have since been widened to incorporate any adjacent land owned by the public estate to enable additional generating capacity.

In October 2022, Tynwald approved the Climate Plan 2022-20273. This included an action to deliver at least 20MW of onshore renewables by 2026. This action is also included in the Island Plan, 2023.4

Following the approval of the Climate Plan 2022-2027, Manx Utilities appointed a procurement specialist, Bird & Bird, to identify both the optimum mix of renewables to meet the Government’s 2026 target and to identify the ownership route which provides the best value for customers.

Based on this report, Manx Utilities recommended a mix of 20MW onshore wind and 10MW solar split across rooftops and car parks on the public estate to Council in January 2023 and this recommendation was accepted. This split is largely based on the difference between electricity demand across winter and summer on the Isle of Man relative to the production of power from these different technologies. The procurement specialist also identified that the route which provided best value to consumers on the Isle of Man was that of public ownership. In addition, given the short timescales between delivery and environmental surveys, it would also be necessary to take forward the three sites already identified in the Bureau Veritas study.

In January 2023, recommendations were approved by Council of Ministers.

Aside from the 2026 onshore renewable target, the Climate Plan 2022-2027 also sets a formal policy commitment for Manx Utilities to deliver 100% decarbonised electricity supply by 2030, which is the current proposal to deliver the Isle of Man Government’s 35% 2030 Interim Target. For this reason, Manx Utilities has developed a strategy to meet this overarching target, which is shown in the Roadmap in Appendix 2. This roadmap includes the delivery of 20MW onshore wind by 2026 and the delivery of 10MW solar. The roadmap was presented to Tynwald, as part of Manx Utilities Annual Plan, and approved in April 2023.

3.3 Social The initial work by Bureau Veritas examined the impact to residents including factors such as visual impact, noise and access restrictions to identify an optimum set of three sites from over 500 sites across the public estate. Of these issues visual impact and landscape change is deemed to be the most significant high level social impact, and the three sites under consideration are situated in areas which are largely obscured from view, while still accessing the dominant wind direction on the Island.

Wardell-Armstrong are conducting socio-economic impact assessments as part of their Phase 1 work which will review impact on local communities and businesses in each of the chosen areas.
The Department for Enterprise are assisting with this phase of work.

1 Electricity Act, 1996 2 Climate Change Act, 2021 3 Climate Change Plan, 2022 – 2027
4 Our Island Plan, 2023

Page 4 of 21 A local liaison committee will also be established as the project progresses into Phase 2, which will provide reassurance to local residents at the chosen site to make sure the impact to them is minimal. An additional programme of stakeholder engagement will also be conducted by Wardell- Armstrong to re-assure local land-owners and the project working group includes expertise from both central planning and the DEFA planning teams to ensure planning application has the best chance of success.

It is anticipated that the transportation of wind turbines from landing point to the construction site will require road disruption. Wardell-Armstrong are working with members from the Department of Infrastructure (Highways and Harbours division), Isle of Man Airport, as well as Isle of Man Constabulary to ensure the impact is minimised. Manx Utilities and Wardell-Armstrong have significant experience of projects where disruption to residents and business from construction works has been minimised by local liaison. In particular Wardell-Armstrong has recent experience in stakeholder management from the HS2 project in the UK.

3.4 Environmental The Isle of Man Strategic Plan, 20165 requires any onshore wind site to have a comprehensive Environmental Impact Assessment (EIA), which must follow the Town and Country Planning Act (Environmental Impact Assessment) England and Wales, 2017. Such surveys must take a minimum of 18-24 months, to include two seasons of migratory birds and bats, which ensures that the optimum site is identified. These surveys must also be carried out in tandem with the design of the onshore windfarm, so that any adverse environmental impacts are mitigated and the mitigation is incorporated into the design.

Wardell-Armstrong have extensive experience carrying out onshore wind farm surveys and planning applications. Comprehensive EIAs will be produced in Phase 2 of the programme which will identify how any risk can be appropriately mitigated. An exemption will be required for this piece of work as having completed Phase 1, Wardell-Armstrong will need to follow through this initial piece of work into Phase 2 if the project is to be delivered to meet the 2026 target.

Three sites are being taken to Phase 1 completion which includes environmental and technical appraisals. This work is already underway and enables the optimum site to be identified and progressed to Phase 2. However, all suitable sites will remain an option even after an optimum site has been identified and progressed to Phase 2 in case of emergent issues.

Manx Utilities has set up a cross-governmental working group to assist from Phase 1 through to Planning. Drawing expertise from the working group will enable differing viewpoints to be factored in to provide the best possible solutions to mitigate any risks.

3.5 GDPR There are not considered to be any GDPR impacts.

3.6 Equality
The public ownership of the Isle of Man electrical system enables the system costs to be socialised across the full electricity customer base, as opposed to groups of customers being able to minimise their costs through private arrangements at the expense of other customer groups. The adoption of the public ownership will reduce the cost to consumers. Contractors delivering the scheme will need to demonstrate compliance with the Equality Act 2017.

5 Isle of Man Strategic Plan, 2016

Page 5 of 21 4. Financial Implications

4.1 Overall Funding Requirement Work is ongoing to identify funding routes. Manx Utilities will continue to work with Treasury to determine which route is the most appropriate. This will also assist with undertaking accurate cost to consumers calculations based on hurdle rates and metrics advised by Treasury.

The phased spending for the project is as follows (including 5% contingency funding):

Project Tranche One off Cost (2023) Year 1 Bid (2024) Year 2 Bid (2025) Year 3 Bid (2026) Phase 1 Environmental and technical surveys* £ M

Phase 2 Front-End Engineering Design (exemption required for Wardell-Armstrong to follow on this piece of work)

£ M

Phase 2 EIAs and Design Package including appointment of Owner’s Engineer

£ M £ M

Phase 3 Final Design (5%)

£ M

Phase 3 Manufacturing capacity booking (15% of estimated manufacturing cost) £ M

Phase 4 Site Preparation, manufacturing, construction and commissioning**

£ M

not included in this sanction request *Using indicative network connection costs from Long O’Donnell based on UK network connections may not fully align with the true connection costs for the Isle of Man power system.

Based on the work by WSP and Bird & Bird, the cost of electricity from public owned onshore wind is indicated to be lower than private ownership. It should be noted that the scheme will be delivered by the private sector (contractors, manufacturers, suppliers, consultants (including designers)); the primary differences between a private and public ownership model is the owner of the constructed assets and how the cost may have been funded.

On a purely indicative basis, the costs to consumers from public ownership could be up to 9p/kWh lower at the point of generation compared to private ownership.

The total power generated from an onshore wind farm without any curtailment (which would potentially be required to optimise electricity supply and demand) would be 59.6 GWh per year, for a typical UK onshore capacity factor of 34%. This would represent an annual cost saving of up to £ M for consumers.

4.2 Short-Term Funding Requirement In the short term, funding for Phase 2 design and securing of manufacturing capacity for 2025, still enables the ownership model to be changed further down the line. This option therefore represents the least regret option and increases the likelihood of the Government’s target being delivered on time.

The cost of the Phase 2 design work, including detailed socio-economic impact assessment of a preferred site, is estimated to be £ M. It is proposed that this funding is allocated from th

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