Harryburn Wind Farm Socio-economic Statement - for Innogy Renewables UK Ltd by MKA Economics

 
Harryburn Wind Farm Socio-economic Statement - for Innogy Renewables UK Ltd by MKA Economics
Harryburn Wind Farm
     Socio-economic
           Statement
                           for
      Innogy Renewables UK Ltd
                            by
               MKA Economics

                       May 2017
Harryburn Wind Farm Socio-economic Statement - for Innogy Renewables UK Ltd by MKA Economics
Harryburn Wind Farm: Socio-economic Statement

                                                 TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................................ I

1      INTRODUCTION ................................................................................................................ 1

    BACKGROUND TO THIS REPORT ................................................................................................. 1
    ASSESSMENT METHODOLOGY ................................................................................................... 1

2      DIRECT SOCIO-ECONOMIC AND COMMUNITY BENEFITS ......................................... 2

    INTRODUCTION ......................................................................................................................... 2
    SOCIO-ECONOMIC BENEFITS ..................................................................................................... 2
    SOCIO-ECONOMIC BASELINE POSITION ...................................................................................... 3
    SOCIO-ECONOMIC POLICY POSITION ......................................................................................... 3

3      SOCIO-ECONOMIC BENEFITS ........................................................................................ 4

    INTRODUCTION ......................................................................................................................... 4
    ECONOMIC BENEFIT ................................................................................................................. 4
    COMMUNITY INVESTMENT ......................................................................................................... 9

4      COMMUNITY BENEFITS ................................................................................................ 12

    INTRODUCTION ....................................................................................................................... 12
    COMMUNITY BENEFIT ............................................................................................................. 12
    SUMMARY .............................................................................................................................. 14

5      SOCIO-ECONOMIC BASELINE POSITION ................................................................... 16

    INTRODUCTION ....................................................................................................................... 16
    POPULATION .......................................................................................................................... 16
    EMPLOYMENT......................................................................................................................... 16
    UNEMPLOYMENT .................................................................................................................... 17
    EDUCATION ............................................................................................................................ 17
    LOCAL BUSINESS BASE .......................................................................................................... 18
    SUMMARY .............................................................................................................................. 18

6      SOCIO-ECONOMIC POLICY POSITION ........................................................................ 20

    INTRODUCTION ....................................................................................................................... 20
    NATIONAL ECONOMIC POLICY ................................................................................................. 20
    REGIONAL ECONOMIC POLICY ................................................................................................. 21
    TOURISM ATTITUDES TO WIND FARMS ..................................................................................... 24
    SUMMARY .............................................................................................................................. 24

APPENDIX A: SOCIO-ECONOMIC BASELINE TABLES ....................................................... A
Harryburn Wind Farm: Socio-economic Statement

Executive Summary

MKA Economics was appointed by Innogy Renewables UK Limited to undertake an
independent socio-economic assessment of the proposed Harryburn Wind Farm, which is an
onshore wind farm in the Lowther Hills in South Lanarkshire. The scheme is expected to
have an output ranging between 54.4MW and 69.7MW and as such will be the subject of an
application to the Scottish Government’s Local Energy Consents Unit.

The key facts drawn from this assessment include:

   •   Utilising available industry assumptions, Innogy will invest between £68 million and
       £86 million in the project.

   •   The total value of contracts that could be secured in South Lanarkshire has been
       estimated to be between £4.35 and £5.57 million and in Scotland businesses could
       secure contracts between £19.47 million and £24.95 million.

   •   The development could support between 131 and 168 jobs in Scotland including
       between 29 and 38 jobs in South Lanarkshire during the construction phase. In
       Gross Value Added (GVA) terms construction phase has the potential to inject
       between £1.70 million and £2.18 million into the South Lanarkshire economy and
       between £7.61 million and £9.75 million to the Scottish economy.

   •   The operations and maintenance of Harryburn Wind Farm could support between 9
       and 12 jobs in Scotland, of which between 4 and 5 could be in South Lanarkshire. In
       GVA terms the operational phase has the potential to inject between £419k and
       £537k per annum into the South Lanarkshire economy and between £946k and £1.21
       million to the Scottish economy.

   •   Local businesses will have the opportunity to benefit from the contracts to be
       awarded by Innogy and their main contractor. These range from civil engineering and
       ground work contractors, haulage businesses through to suppliers of water, as well as
       local service based companies including hotels, bars, restaurants and local shops.

   •   A community benefit fund (CB) of between £272k and £349k per year based on
       £5K per MW installed, will be made available to communities that neighbour the site.
       The actual amount will be subject to the final installed capacity of the site. This long
       term flexible funding could be used by communities to support projects that address
       key issues such as: improving digital connectivity; retaining rural services; increasing
       tourism opportunities; helping local people access training; creating and sustaining
       local jobs; tackling rural isolation and supporting community facilities.

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Harryburn Wind Farm: Socio-economic Statement

•   There is a proposal to develop a Community Shared Ownership (CSO) Scheme to
    allow the community to benefit further through the ability to invest in the development
    and receive an additional annual return to reinvest into community projects.

•   Once completed Harryburn Wind Farm will produce electricity equivalent to the
    domestic power consumed by between 23% and 30% of households in South
    Lanarkshire. Harryburn Wind Farm will save between 60,000 tonnes and 77,000
    tonnes of carbon emissions each year if it is constructed

•   The proposal has a strong policy fit; it will support regional and national economic
    strategies which have a focus on creating the right conditions to enable sustainable
    economic growth. The economic impact of the proposal has been measured in line
    with industry best practice including the Scottish Government’s Draft Advice Note on
    Economic Benefit and Planning.

•   The local area (which for the purposes of this report is defined as comprising
    Abington, Crawford and Leadhills and the rural hinterland) has the economic
    characteristics of a remote rural area, with a low population base, ageing population,
    a low employment rate and a reliance on a narrow business base. South Lanarkshire
    continues to face economic challenges, where unemployment is higher than the
    Scottish average, notably amongst young people.

•   Access to, and isolation from, lifeline services and technologies, notably poor
    broadband coverage are major issues affecting local people, these are also holding
    back local economic development opportunities.

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Harryburn Wind Farm: Socio-economic Statement

1          Introduction

Background to this report

1.1        This is an assessment of the potential effects of Harryburn Wind Farm on the
economy, both locally and regionally and in both quantitative and qualitative terms. It
considers the effects of Harryburn Wind Farm on employment, the economy and the
community.

1.2        The assessment describes the methods used to identify the economic impacts, the
socio-economic baseline conditions in policy and statistical terms, and the potential effects of
Harryburn Wind Farm during the construction and operational phases. The impact of the
anticipated community benefit fund and possible shared ownership scheme for Harryburn
Wind Farm is also assessed.

Assessment Methodology

1.3        There are no published standards or technical guidelines that set out a preferred
methodology for assessing the likely socio-economic effects of an onshore wind farm
proposal.      However, there is a series of commonly used methodologies and recognised
approaches to quantifying economic effects both during the construction of a development
and      following   its   completion,    notably    economic     impact    assumptions   drawn   from
RenewablesUK and Department of Energy and Climate Control (DECC) commissioned
research 1.

1.4        The economic assessment will be based on the RenewableUK / DECC research
which has shown through investigation of numerous case studies how expenditure from the
different phases of a renewable development (e.g. construction, operation and maintenance)
is passed to the local, regional and national economy. As such, this provides a model which
can be utilised to illustrate the potential range of economic impacts that the Harryburn Wind
Farm can have in South Lanarkshire, Scotland and the UK.

1.5        This ex-ante economic assessment estimates both construction and operational
employment associated with Harryburn Wind Farm, and the economic effect this would have
on the economy. It also considers the potential impact of a Community Benefit Fund and (if
adopted) the Community Shared Ownership Fund, associated with the Harryburn Wind Farm.

1.6. For the purposes of this report the Local Area is defined as comprising Abington,
Crawford and Leadhills and the rural hinterland. The region is defined as the local authority
area of South Lanarkshire.

1
    RenewableUK / DECC, Onshore Wind: Direct and Wider Economic Benefits, 2012

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Harryburn Wind Farm: Socio-economic Statement

2           Direct Socio-economic and Community Benefits

Introduction

2.1        This section summarises the key positive economic and social impacts from the
research. The assessment uses Renewables UK / DECCS research 2.

Socio-economic Benefits

2.2         Utilising Renewables UK / DECC assumptions, it is estimated that Innogy could
potentially invest between £68 million and £86 million in the project. The total value of
contracts that could be secured in South Lanarkshire has been estimated to be between
£4.35 million and £5.57 million and in Scotland businesses could secure contracts worth
between £19.47 million and £24.95 million.

2.3         The development could potentially support between 131 and 168 jobs in Scotland
including between 29 and 38 jobs in South Lanarkshire during the construction phase. In
GVA terms the construction phase has the potential to inject between £1.70 million and £2.18
million into the South Lanarkshire economy and between £7.61 million and £9.75 million to
the Scottish economy.

2.4         The operations and maintenance of Harryburn Wind Farm could potentially support
between 9 and 12 jobs in Scotland, of which between 4 and 5 could be in South Lanarkshire.
                    3
In gross value added (GVA) terms the operational phase has the potential to inject between
£419k and £537k per annum into the South Lanarkshire economy and between £946k and
£1.21 million to the Scottish economy.

2.5         There are considerable financial community benefits associated with the project; the
community benefit fund is estimated to be in the region of £272k - £349k per annum. In
addition, Innogy has presented the local community with the opportunity to invest in the
project through a Shared Ownership Scheme.

2.6         There will be a range of contract opportunities for businesses. Innogy will host a Meet
the Buyer event to ensure local, regional and national businesses are aware of the contracts
to be let and the procurement process being adopted.

2
    RenewableUK / DECC (2012), Onshore Wind: Direct and Wider Economic Benefits
3
    Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector
of an economy

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Harryburn Wind Farm: Socio-economic Statement

Socio-economic Baseline Position

2.7      A review of the local, regional and national economy has been completed (see
Section 5). The local area is remote, rural, sparsely populated, and has a population of less
than 600 residents, many of whom are aged over 50 years (48.0%, compared to 39.6% at the
South Lanarkshire level and 38.1% nationally). The local area has a lower proportion of
residents who are economically active, compared to the regional and national average. There
are around 40 children in primary education and 30 in secondary education at the local level.

2.8      At the regional level South Lanarkshire has a larger proportion of manufacturing
employment (8.9%) compared to the national level (7.7%). This indicates that the region is
well positioned to benefit from the development of renewable energy projects, both in terms of
construction and maintenance.

2.9       The local area has a small business base, with only 12 business premises with a
rateable value above £50,000, and where 70% of business premises are receiving some form
of rate relief.

2.10     The local area is a remote rural economy which relies on both primary and secondary
sector employment, but also benefits from its links to the M74 and proximity to major
conurbation, which assists local people find work across a wider range of economic sectors.
This is evidenced in the Baseline Section which highlights that a comparatively high
percentage of people in the local area commute out of the area for work.

2.11     South Lanarkshire which is located in Visitscotland’s ‘Clyde Valley’ is not a major
tourism destination in terms of domestic and overseas visitors, particularly when compared to
‘Glasgow’, ‘Argyll and Bute’ and the ‘Trossachs’. Also, the visitors who do visit the ‘Clyde
Valley’ tend to visit attractions nearer to Glasgow, including New Lanark (330,000 visitors)
and Chatelherault Country Park (700,000 visitors). The tourism sector is not a significant
contributor to the local economy.

Socio-economic Policy Position

2.12     If consented, Harryburn Wind Farm has the potential to directly support national and
local economic strategies, where both the Scottish Government and South Lanarkshire are
committed to supporting the renewable energy sector economy and the national renewable
energy targets.

2.13     The proposal supports the ‘Economic Strategy for South Lanarkshire 2013 – 2023’ in
a number of ways, most notably providing opportunities for more businesses and more local
people to work in and financially benefit from the income it generates the local economy.

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Harryburn Wind Farm: Socio-economic Statement

3          Socio-economic Benefits

Introduction

3.1        This section sets out the positive economic impacts Harryburn Wind Farm will have
on the region, with a specific focus on:

•     Construction Benefits - the regional impact from the financial value of contracts and
      resultant employment opportunities of the construction stage;

•     Operational and Maintenance Benefits - the regional impact from the financial value of
      contracts set up to maintain and operate the wind farm;

•     Business and Employability Benefits – how local and regional businesses can
      financially benefit from the investment;

•     Community Investment Benefits - scale and scope of the community benefits, notably
      the significant Community Benefit Fund as well as the potential for Community Shared
      Ownership.

Economic Benefit

Construction Phase

3.2        Based on RenewableUK/DECC research 4, the average construction cost per MW is
estimated to be around £1.23 million, however, this rate varies between ±15% depending on
the precise nature of each development. For the basis of this assessment the RenewableUK
figure of £1.23 million per MW has been used.

3.3        At this stage of the development process it is not know which model of turbines will be
installed on the site but the installed capacity is expected to be between 54.4 MW and 69.7
MW, which equates to a total construction value in the region of £66.91 million to £85.73
million for Harryburn Wind Farm.

3.4        On average, 45% of the construction costs are spent in the UK (in other words 55%
are spent outside the UK), of which 7% benefits the local area and 29% benefits the Scottish
economy (this includes the 7% spent at the local level). Figure 3.1 illustrates the locational
impact of expenditure across spatial levels and Table 3.1 summarises the construction costs
across each area.

4
    RenewableUK / DECC (2012), Onshore Wind: Direct and Wider Economic Benefits

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Harryburn Wind Farm: Socio-economic Statement

Figure 3.1: UK, Regional and Local Economic Contracts (Direct & Supply Chain –
Construction Phase)

Source: RenewablesUK / DECC

Table 3.1: Construction Costs per MW
    Indicator                                % of spend                   £ equivalent
    Harryburn Wind Farm                                           £66,912,000 - £85,731,000
    South Lanarkshire                                6.50%          £4,349,280 - £5,572,515
    Scotland                                       29.10%         £19,471,392 - £24,947,721
    UK                                             44.80%         £29,976,576 - £38,407,488
Source: MKA Economics / RenewableUK / DECC

3.5         Applying the assumptions from the RenewableUK/DECC research to the proposed
level of development (54.4MW – 69.7MW) suggests the turnover in the UK associated with
Harryburn Wind Farm during the construction stage is estimated to between £29.98 million
and £38.41 million. Of this, there is potential for £4.35 million to £5.57 million to benefit the
South Lanarkshire economy and between £19.47 million and £24.95 million to benefit the
Scottish economy.

Table 3.2: Economic Benefit of Harryburn Wind Farm (Construction Phase)
                                   Jobs                        GVA                                Turnover
    South Lanarkshire               29 – 38          £1,700,568 - £2,178,853                 £4,349,280 - £5,572,515
    Scotland                     131 – 168           £7,613,314 - £9,754,559             £19,471,392 - £24,947,721
    UK                           202 – 259        £11,720,841 - £15,017,328              £29,976,576 - £38,407,488
Source: MKA Economics / Renewables UK / DECC

3.6         The contract data from RenewableUK/DECC has been combined with turnover per
employee data and ratio of GVA to turnover for relevant industries.                                  Utilising the
RenewableUK/DECC assumptions provides an estimate on the level of employment 5 at the

5
    Employment figures given here and throughout the report are full-time equivalent jobs.

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Harryburn Wind Farm: Socio-economic Statement

Scottish level for the construction of Harryburn Wind Farm as between 131 and 168 jobs and
contributing between £7.61 million and £9.75 million in GVA.

3.7     At the South Lanarkshire level the construction phase of Harryburn Wind Farm could
generate between 29 and 38 jobs and contribute between £1.70 million and £2.18 million in
GVA.

3.8     There will be a range of contract opportunities for regionally based companies,
including national contractors who employ people from the local/regional area. Innogy will
host a Meet the Buyer event in 2017 to ensure local, regional and national companies are
aware of the contracts being let and the procurement process being adopted. Regional
businesses would have the opportunity to be involved in areas of work including: Civil
Engineering Design, Geotechnical Ground Investigations, Groundworks, Fencing, Civil
Works, Onsite Electrical Network Design and ‘Contestable’ installations, Aggregate Supply,
Haulage and Plant Hire

3.9     In addition to the direct spend by the developer, main contractor and subcontractors,
local accommodation providers and food and drink outlets could potentially benefit from the
spend of contractors that come into the area during the construction phase.

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Harryburn Wind Farm: Socio-economic Statement

Maldie Economic Impact Case Study

 Innogy commissioned an independent and economic impact assessment of its Maldie
 Hydro Scheme in October 2015. The New Economics Foundations were commissioned to
 appraise the scheme to their LM3 (Local Multiplier 3) model. This assessment deployed an
 innovative approach to calculating “local” economic impact on a consistent basis, devising a
 “business watershed” approach (“bizshed”), which considers “local” as being the 750
 closest businesses to the site which operate in hydro scheme supply chain industries.

 Innogy spent £9.8m on the civil and plant installation works during the construction of the
 Maldie Hydro Scheme, with two prime contractors (i.e. the first round of investment). Of this
 spending, £7.24m was then spent in a second round by prime contractors on sub-
 contractors. For this report, the final contractor -, which supplied the electrical works, has
 not been included due to issues around data collection.

 Considering the £7.24m spending by prime contractors on sub-contractors, £2.71m went to
 firms in the local area. A further £1.76m went to firms in the rest of Scotland, with the
 remainder £2.77m going to firms in England and Northern Ireland (£1.4m), Spain
 (£116,000), France (£528,000) and Germany (£720,000). These three final figures
 represent capital expenditure on items that could not be sourced in the UK.

 Email and telephone survey work has established a reasonable estimate of where sub-
 contractors then spent this money in a third round on supplies, materials, staff and further
 sub-contractors. This data and additional modelling reveals that £1.35m of spending
 occurred in the local economy in this round, with a further £710,000 in the rest of the
 Scottish economy and £303,000 in the rest of the UK.

 In summary, for every £1 that innogy invested in civil and plant contracts at Maldie, an
 additional 56p was subsequently re-spent in the local economy through the supply chain in
 all three rounds. Considering Scotland as a whole, for each £1 of investment an additional
 90p was subsequently re-spent in the local economy through the supply chain in all three
 rounds.

 Calculating a bespoke multiplier ratio, which excludes that part of the prime contracts which
 were retained by prime contractors (i.e. through internal markets to these firms); it is
 evident that the Maldie Hydro investment resulted in an LM3 ratio of 1.56 for the local
 economy and 1.90 for Scotland as a whole.

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Harryburn Wind Farm: Socio-economic Statement

Operation and Maintenance Phase

3.10       Throughout the 25-year operational phase of the Harryburn Wind Farm maintenance
of the turbines and the site will be required. The site will support a number of jobs in routine
as well as unscheduled maintenance.

3.11       According to RenewableUK / DECC research 6 the annual cost of operations and
maintenance per MW installed ranges from £12,000 to £110,000 per annum; this variance is
due to the wide range of the operational onshore wind farms that were interviewed as part of
the research. The operation and maintenance costs are affected by the size of development,
land contracts and whether the turbines are still under warranty.

3.12       As noted in the RenewableUK / DECC research the average cost was found to be
around £52,659 per MW installed per annum, this figure has been assumed for the purposes
of this assessment.

3.13       The vast majority, 90%, of the operation and maintenance spend benefits the UK
(10% is spent outside the UK) of which 29% benefits the local area and 65% benefits the
Scottish economy (this includes the 29% spent at the local level). Figure 3.3 illustrates the
locational impact of expenditure across spatial levels and Table 3.3 summarises the operation
and maintenance costs across each area.

Figure 3.3: UK, Regional and Local Economic Contracts (Direct & Supply Chain –
Operation and Maintenance Phase)

Source: RenewableUK

6
    RenewableUK / DECC (2012), Onshore Wind: Direct and Wider Economic Benefits

                                                                                           8
Harryburn Wind Farm: Socio-economic Statement

Table 3.3: Operation & Maintenance Costs per MW
    Indicator                             % of spend            £ equivalent
    Harryburn Wind Farm                                    £2,864,650 - £3,670,332
    South Lanarkshire                         28.80%         £825,019 - £1,057,056
    Scotland                                  65.00%       £1,862,022 - £2,385,716
    UK                                        90.40%       £2,589,643 - £3,317,980
Source: MKA Economics / RenewableUK / DECC

3.14       Applying the assumptions from the RenewableUK research to the proposed level of
development (54.4MW – 69.7MW) suggests the turnover in the UK associated with Harryburn
Wind Farm during the operation and maintenance stage will be between £2.59 million and
£3.32 million. Of this, there is potential for £825k to £1.01 million to benefit the Lanarkshire
economy and between £1.86 million and £2.39 million to benefit the Scottish economy.

Table 3.4: Economic Benefit of Harryburn Wind Farm (O & M Phase)
                              Jobs                     GVA                           Turnover
South Lanarkshire                 4–5           £419,110 - £536,984            £825,019 - £1,057,056
Scotland                         9 – 12       £945,907 - £1,211,944         £1,862,022 - £2,385,716
UK                             13 – 17      £1,315,539 - £1,685,435         £2,589,643 - £3,317,980
Source: MKA Economics / RenewableUK / DECC

3.15       The contract data from RenewableUK / DECC has been combined with turnover per
employee data and ratio of GVA to turnover for relevant industries. Utilising these
RenewableUK / DECC assumptions provides an estimate on the level of employment at the
Scottish level for the operation of Harryburn Wind Farm as between 9 and 12 jobs and
contributing between £946k and £1.21 million in GVA. At the South Lanarkshire level the
operation phase of Harryburn Wind Farm could generate between 4 and 5 jobs and
contributing between £419k and £537k in GVA.

Community Investment

3.16       In line with Scottish Government guidance 7, Innogy has undertaken a detailed
consultation with local communities including a proactive dialogue about the associated
community fund and potential opportunities for CSO.

3.17       The funding coming from a community benefit fund and potentially CSO could have
potential to build capacity and empower communities with the benefits being reflected in
economic and social impacts. Net economic benefit from the community investment funds
could accrue in a number of ways including (1) the allocation of funding to local communities

7
    Local Energy Scotland on behalf of the Scottish Government (2015), Good Practice Principles for Community
Benefits    from   Onshore    Renewable     Energy   Developments’,    http://www.localenergyscotland.org/good-
practice/onshore-community-benefit/

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Harryburn Wind Farm: Socio-economic Statement

through a ‘Community Benefit Fund’ (2) the potential for the community to invest in a CSO
Scheme, and (3) environmental benefits through carbon savings.

3.18   As part of the consultation process Innogy prepared and shared a questionnaire with
residents to capture their needs, views, on how the CB fund could be managed.           The
questionnaire explored preferences about priorities the funding could address drawing from
South Lanarkshire’s Glencaple & Lowther Local Community Led Plan (2010), how a fund
could be managed and who could benefit to best help improve the quality of life and economy
of the local communities. The consultation also aimed to gauge whether there is any interest
in the potential for communities to invest in the scheme through a CSO scheme.

                                                                                       10
Harryburn Wind Farm: Socio-economic Statement

Novar 2 Wind Farm Economic Impact Case Study

 The Novar 2 Wind Farm is located in Ross-shire, north of Inverness and comprises sixteen
 2.3 megawatts (MW) turbines and has a generating capacity of up to 36.8MW. The Local
 Multiplier 3 (LM3) used in the study was developed by the New Economics Foundation
 (NEF) as a simple and understandable way of measuring local economic impact.

 The geography of spending through prime contractors, RJ McLeod Contractors Ltd and
 Balfour Beatty Engineering Services Ltd and their sub-contractors was measured using
 survey methods.

 RWE spent £7.93m on the civil and engineering works during construction of the Novar 2
 Wind Farm, with two prime contractors (the first round of investment). Of this spending,
 £4.92m was spent in a second round by prime contractors on sub-contractors of which
 £2.83m went to local firms. £935,000 went to firms in the rest of Scotland.

 A survey established a reasonable estimate of where sub-contractors spent this money in a
 third round on supplies, materials, staff and additional sub-contractors. This data revealed
 that a further £1.31m of spending occurred in the local economy, and an additional
 £560,000 in the rest of the Scottish economy.

 For every £1 that RWE invested in civil and electrical contracts, an additional 52p was
 subsequently re-spent in the local economy through the supply chain in all three rounds.
 Considering Scotland as a whole, each £1 of investment resulted in a total of 71p of
 additional spending in all three rounds.

 Calculating a bespoke multiplier ratio, excluding that part of the prime contracts retained by
 prime contractors, the research found that the Novar 2 investment resulted in an LM3 ratio
 of 1.84 for the local economy and 2.14 for Scotland as a whole.

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Harryburn Wind Farm: Socio-economic Statement

4         Community Benefits

Introduction

4.1       This section sets out the proposals for community benefits as a result of Harryburn
Wind Farm.

Community Benefit

4.2       If consented, a Community Benefit Fund of £5,000 per MW installed capacity will be
made available to communities that neighbour the site. This will be worth between £272k and
£349k per annum for up to 25 years, subject to the final installed capacity of the site.

4.3       Innogy propose to work with the community to set up a bespoke funding structure
with local decision making that is separate from the South Lanarkshire Council Renewable
Energy Fund. This will involve either setting up a new organisation with the appropriate legal
structure and governance to administer funds or working with an appropriate third party grant
maker.

4.4       As part of either option, Innogy will put in place a package of support to ensure that
an open, straight forward and transparent grant making and monitoring process. The support
will include training for panel member and assistance in signposting applicants to additional
match funding opportunities. The panel and wider community will be encourage to use this
long term, reliable income stream to plan for their communities future with more certainty.

4.5       The findings from the questionnaire are outlined in the [teal Green] Harryburn Wind
Farm Community Investment Questionnaire. The key project toned to improve broadband
coverage in the area. Some areas neighbouring the wind farm fall outside of the Digital
Scotland Superfast Broadband program and so Community Broadband Scotland would be
approached in the first instance for technical advice and in respect of options to secure
additional match funding.

4.6       Other potential projects focussed on key issues experienced by rural and isolated
communities as well as initiatives that help bring communities together and build community
cohesion. A community fund with broad, flexible criteria and openness to supporting capital
and revenue projects could be used to fund initiatives including:

•     Development of rural transport options
•     Support for residents who are rurally isolated
•     Projects that support and promote tourism opportunities
•     Maintenance of public toilets
•     Support for rural businesses including funding
•     Support for Capital and running costs for community buildings

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Harryburn Wind Farm: Socio-economic Statement

4.7        Since 2010, Innogy has invested over £2.8 million into Scottish communities through
community benefit funds associated with the renewable energy projects it operates. These
funds have helped communities address key issues including: retaining rural services;
increasing tourism opportunities; helping local people access training; creating and sustaining
local jobs; tackling rural isolation and supporting community facilities. Innogy is also working
with a local community in East Ayrshire to develop a wind farm shared ownership project and
has worked facilitated a community hydro project in Argyll and Bute making use of excess
grid from our Braevallich hydro scheme.

Case Study – Community benefit fund supporting rural businesses

An Suidhe Wind Farm Community Fund has supported its rural economy by providing funding
for rural business through a grant to the SK Noble Trust. The SK Noble Trust will provide
grants and loans to new start or existing micro businesses. Applicants must demonstrate that
the investment will create employment and training opportunities; The Trust is also particularly
interested in supporting provision of new or innovative services. Examples of businesses
supported by include village shops or post offices, a chimney sweeping service, boatbuilding,
local seafood producers, and an apprenticeship in industrial diving. In addition to funding, the
organisation offers advice and sign-post applicants to other sources of support where
relevant.

Case Study – Community benefit fund developing rural transport

Little Cheyne Court Wind Farm has funded Rye and District Community Transport which aims
to fill gaps in transport provision in the Rye area. It takes the elderly to/from voluntary sector
day centres, clubs and activities and children to/from school and inter school activities and
events. The funding helps then to continue to run the 326 bus route six days per week
connecting Rye town centre to other more rural and isolate parts of the local area.

4.8        The Scottish Government guidance on Shared Ownership 8 sets out three potential
models for shared ownership. Innogy is proposing to offer a Shared Revenue model as it is
seen as a lower risk route for the community as Innogy will take responsibility for the
development process, the construction and operation process and own the asset.

4.9        Initial meetings with members of the community have taken place and there is interest
in continuing a discussion on CSO. Those who were interested were invited to a meeting with
Innogy and Local Energy Scotland which was held in March 2017 to discuss how such a
scheme could be developed.

8
    Local Energy Scotland on behalf of the Scottish Government (2015), Good Practice Principles for Community
Benefits from Onshore Renewable Energy Developments’, http://www.localenergyscotland.org/media/79714/Shared-
Ownership-Good-Practice-Principles.pdf

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Harryburn Wind Farm: Socio-economic Statement

4.10        The next meeting will be supported by Local Energy Scotland and will be an
opportunity for Innogy to present more detail on the type of shared ownership model that
could be offered at Harryburn Wind Farm.

4.11        It is expected that it is likely the profit from any shared ownership scheme would be
delivered alongside the community benefit fund to ensure appropriate governance,
streamlining of processes and maximise the benefit delivered to the local area. The schemes
could have the potential to create an additional, long term, flexible income stream for the local
community.

Environmental Benefits

4.12        The environmental impact of a wind farm is dependent on the total amount of energy
it produces. it is estimated that Harryburn Wind Farm could produce an average of between
141 GWh and 180 GWh of electricity annually (based on an average capacity factor of
29.5%), this will equate to the power consumed by between 32,739 and 41,947 homes in
South Lanarkshire, which equate to between 23% and 30%of homes in South Lanarkshire 9.

4.13        In terms of carbon savings, the industry standard for estimating the carbon savings is
based on 420 kg3 of carbon dioxide emissions saved for each MWh of wind power
produced 10. When Harryburn Wind Farm is fully operational and assuming it has an efficiency
rating similar to the industry standard, it would be expected to save between 60,000 and
77,000 tonnes of carbon dioxide emissions each year.

Summary

4.14        Utilising RenewablesUK / DECC assumptions, it is estimated that Innogy will invest
between £68 million and £86 million in the project. The total value of contracts that could be
secured in South Lanarkshire has been estimated to be between £4.35 million and £5.57
million and in Scotland businesses could secure contracts worth between £19.47 million and
£24.95 million.

4.15        The development could support between 131 and 168 jobs in Scotland including
between 29 and 38 jobs in South Lanarkshire during the construction phase. In GVA terms
the construction phase has the potential to inject between £1.70 million and £2.18 million into

9
    Estimated energy generation (140,580 – 180,119 MWh p.a) has been calculated using an assumed load factor of
29.5% (Department for Business, Energy and Industrial Strategy (July 2016) Digest of United Kingdom Energy
Statistics (DUKES) 2016) and is based on an installed capacity of up to 54.4 - 69.7MW. The homes powered
equivalent is based on an annual electricity consumption per home in South Lanarkshire of 4,294kWh (Department
for Business, Energy and Industrial Strategy (November 2016) Energy Consumption in the UK 2015). Number of
households in South Lanarkshire sourced from National Records of Scotland (2013). The energy generation and
homes powered equivalent figures may change depending on turbine model installed and site specific conditions.
10
     DEFRA environmental reporting guidelines – April 2008

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Harryburn Wind Farm: Socio-economic Statement

the South Lanarkshire economy and between £7.61 million and £9.75 million to the Scottish
economy.

4.16   The operations and maintenance of Harryburn Wind Farm could support between 9
and 12 jobs in Scotland, of which between 4 and 5 could be in South Lanarkshire. In GVA
terms the operational phase has the potential to inject between £420k and £537k per annum
into the South Lanarkshire economy and between £945k and £1.21 million to the Scottish
economy.

4.17   Local benefits will accrue in a number of ways, and these will include (1) allocation of
funding (£272k - £349k per annum) to local communities through the Community Benefit
Fund (2) the potential for the community to invest in a Share Ownership Scheme, and (3)
environmental benefits through carbon savings.

4.18   There will be a range of contract opportunities for local and regionally based
businesses, including national contractors who employ people from the local and regional
areas. Innogy will host a Meet the Buyer event to ensure local, regional and national
businesses are aware of the contracts being let and the procurement process being adopted.

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Harryburn Wind Farm: Socio-economic Statement

5         Socio-economic Baseline Position

Introduction

5.1       This section outlines the baseline characteristics of the proposed Harryburn Wind
Farm area and compares this against regional and national statistics. More detailed, and
supporting, socio-economic tables are presented in Annex A. In order to provide a
comparison with other spatial areas the following geographic areas have been appraised:

•     Local: defined as Harryburn Wind Farm area, which is the official ‘Crawford’ statistical
      datazone, essentially the towns of Abington, Crawford and Leadhills and their rural
      hinterland;

•     Regional: South Lanarkshire local authority area; and

•     National: defined as the Scottish economy

Population

5.2       The South Lanarkshire local authority area is home to just over 311,000 people and is
one of the largest and most diverse areas of Scotland.        There are four towns in South
Lanarkshire each with a population over 20,000 and a further 23 towns and settlements with a
population over 1,000.

5.3       The proposed Harryburn Wind Farm is situated in the south of the area, and sits
within the Clydesdale Committee Area. As shown in the population breakdown (Table A1) the
local area (Crawford datazone) has a population of fewer than 600 residents.

5.4       Table A1 highlights that the local area has a lower proportion of residents under 19
(18.5%), compared to both the regional (22.0%) and national averages (21.8%). The local
area also has a significantly higher proportion of residents aged over 50, 48.0% compared to
39.6% at the South Lanarkshire level and 38.1% nationally.

Employment

5.5       In terms of those in work, Table A2 highlights that the local area has a lower
proportion of its residents in employment (51.9% compared to 57.2% and 55.8%). This is the
case across all age bands.

5.6       Table A3 presents an overview of self-employment at the local, regional and national
levels. It shows the local area has a significantly higher proportion of self-employment than
the regional and national levels.

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Harryburn Wind Farm: Socio-economic Statement

5.7     In terms of employment by industry, the local area has a higher proportion of
residents working in lower primary and secondary sectors such as agriculture, forestry and
fishing, construction, transport and storage and hotel and catering, than recorded regionally
and nationally (Table A4).

5.8     When assessing employment by occupation, the local area has more residents in
skilled trade occupations, as well as a higher proportion of local people employed as drivers,
assemblers and other similar occupations.       The area is less dependent on professional,
clerical, personal and customer service posts and elementary skilled occupations (Table A5).

5.9     Combining the above assessment with the degree of labour market containment
figures shown in Table A6, highlights that the local area has a higher level of out migration of
workers than the regional situation.

Unemployment

5.10    In terms of those unemployed, according to Census statistics the local area has a
lower ‘total’ rate of worklessness (3.5%) than the regional average (5.1%) and the national
level (4.8%). However, the local area has a significantly higher proportion of unemployed
young people aged 16 – 24 in comparison to the regional and national levels (Table A7).

5.11    A more up to date assessment of unemployment, through a review of Job Seeker
Allowance (JSA) claimants, indicates that in 2015 the local area had a higher proportion of
people out of work and claiming benefits than the regional average and national average
(Table A8).

Education

5.12    School attendance rates drawn from Scottish Neighbourhood Statistics indicate that
there are around 40 children in primary education and 30 in secondary education at the local
level. In terms of the education attainment levels of the local population, Table A9 highlights
that the local and regional attainment levels are similar in that they have a higher proportion of
residents with ‘no qualifications’ and a lower proportion of residents with ‘degrees’ than
recorded nationally.

5.13    When assessing the initial destination of school leavers, Table A10 indicates that a
there were ten school leavers at the local level in 2013, and the local situation in terms of
initial destination of leaver was comparable to the regional and national picture.

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Harryburn Wind Farm: Socio-economic Statement

Local Business Base

5.14      In terms of the local business base, the Table A11 indicates that there are 34
commercial properties in the local area. The table highlights the number of properties by their
rateable value, the value broadly represents the annual value the property could be let for,
and indicates that 70% of the properties locally had a rateable value below £7,000. This
compares to a figure under 50% at the regional level, where there are more businesses with a
higher rateable value than recorded locally.

5.15      Table A12 indicates that almost two-thirds of the local commercial properties obtained
some sort of rates relief, either by being a small business, an empty property or another form
of relief. This suggests that of the 37 local businesses around 25 were either small or
mothballed businesses, in other words there were 12 businesses with a rateable value above
£6,000.

5.16      The local area has a low number of local businesses, and when assessing their scale
(in terms of rateable value and rates relief) most are small businesses, with only three
businesses with a rateable value above £50,000.

5.17      South Lanarkshire, which is in Visitscotland’s ‘Clyde Valley’, is not a major tourism
destination in terms of domestic and overseas visitors, particularly when compared to
‘Glasgow’, ‘Argyll and Bute’ and the ‘Trossachs’. Also, the visitors who do visit the ‘Clyde
Valley’ tend to visit attractions nearer to Glasgow, including New Lanark (330,000 visitors)
and Chatelherault Country Park (700,000 visitors).

5.18      The tourism sector is not a significant contributor to local economic well-being,
however Harryburn Wind Farm could help boost this industry through its construction and
operational phases, as contractors will stay overnight in the local area during the construction
phase.

Summary

5.19      The local area is sparsely populated, with a population less than 600 residents, many
of whom are aged over 50 years, 48.0% compared to 39.6% at the South Lanarkshire level
and 38.1% nationally. The local area also has a lower employment rate than the regional and
national average, with employment skewed more towards primary and secondary sector
activities, notably agriculture and construction.

5.20      At the regional level it is noticeable that South Lanarkshire has a larger proportion of
manufacturing employment (8.9%) compared to the national level (7.7%). This would tend to
suggest the region is well positioned to benefit from the development of wind farms, both in
terms of construction and maintenance. South Lanarkshire also has an unemployment level
above the national level, and this particularly the case amongst local people at the local level.

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Harryburn Wind Farm: Socio-economic Statement

5.21        The area has a small business base, with only 12 businesses with a rateable value
above £50,000, and where 70% of business premises are receiving some form of rate relief.

5.22   The local area is a typical rural economy which is more reliant on both primary and
secondary sector employment, but benefits from its links to the M74 and proximity to major
conurbation, this assists local people find work across a variety of sectors. This is evidenced
by the comparatively high percentage of people in the local area that commute out of the area
for work.

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Harryburn Wind Farm: Socio-economic Statement

6           Socio-economic Policy Position

Introduction

6.1         This assessment includes a review of existing economic development policy at
national and regional levels.

National Economic Policy

6.2         The Scottish Government replaced the Government Economic Strategy (GES) in
2015 with Scotland's Economic Strategy 11. The strategy sets out 'an overarching framework
for a more competitive and a fairer Scotland and identifies four broad priority areas where our
actions will be targeted to make a difference.' The strategy is built on two key pillars, namely
'tackling inequality' and 'increasing competitiveness'.

6.3         The strategy framework is structured around four broad priority areas, where Scottish
Government actions will be targeted; these are (1) investment (2) innovation (3) inclusive
growth and (4) internationalisation. Within 'investment' there is a commitment to 'invest in
Scotland's infrastructure to help Scottish businesses to grow, innovate, and create good
quality employment opportunities' and also 'to prioritise investment to ensure that Scotland
protects and nurtures its natural resources and captures the opportunities offered by the
transition to a more resource efficient, lower carbon economy'.

6.4         As an inward investment in a key economic sector, the Harryburn Wind Farm
proposal supports both pillars of the strategy and each of the broad priority areas set
out in the new economic strategy.

6.5         The Scottish Government has developed a refreshed Routemap for Renewable
           12
Energy          which sets policy framework to deliver energy targets by 2020. The updated and
expanded Routemap reflects the challenge of the Scottish Government's new target to meet
an equivalent of 100% demand for electricity from renewable energy by 2020, as well as the
target of 11% renewable heat. The Routemap also identifies the scale of the economic
opportunity renewable energy projects can provide and emphasises that Scotland's workforce
needs to be prepared to meet the opportunities that will emerge.

6.6         Harryburn       Wind     Farm      will   directly     contribute      towards      the    Scottish
Government’s renewable energy target to meet an equivalent of 100% demand for

11
     Scottish Government, Scotland’s Economic Strategy, 2015, http://www.gov.scot/Publications/2015/03/5984
12
     Scottish Government, 2020 Routemap for Renewable Energy in Scotland, 2011,
http://www.scotland.gov.uk/Publications/2011/08/04110353/0 updated in 2013 http://www.gov.scot/Topics/Business-
Industry/Energy/RoutemapUpdate2013 and 2015 http://www.gov.scot/Topics/Business-
Industry/Energy/RoutemapUpdate2015

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Harryburn Wind Farm: Socio-economic Statement

electricity from renewable energy by 2020, and in doing so supporting the ambition of
creating 40,000 new jobs.

6.7         Scottish Planning Policy (SPP, 2014) makes clear the Ministers desire to see net
economic benefit realised. Paragraphs 28 and 29 state ‘The planning system should support
economically, environmentally and socially sustainable places by enabling development that
balances the costs and benefits of a proposal over the longer term. The aim is to achieve the
right development in the right place; it is not to allow development at any cost. This means
that policies and decisions should be guided by the following principles…. giving due weight
to net economic benefit’. Similarly, Paragraph 169 states ‘Proposals for energy infrastructure
developments should always take account of spatial frameworks for wind farms and heat
maps where these are relevant. Considerations will vary relative to the scale of the proposal
and area characteristics but are likely to include… net economic impact, including local and
community socio-economic benefits such as employment, associated business and supply
chain opportunities’.

6.8         Following publication of the revised Scottish Planning Policy (SPP, 2014), Scottish
Ministers have committed to developing further guidance to assist in assessing and giving
due weight to the net economic benefit of proposed planning applications which may be
                                      13
contrary to the Local Development Plan . The new guidance outlines the importance of
demonstrating the net economic benefit of a proposed scheme, highlighting the importance of
taking economic benefits into account when determining a planning decision.

6.9         The guidance states, 'where net economic benefit is likely to be a material
consideration in the decision, the onus will be on the developer to provide the relevant
information in support of the planning application. The planning authority will evaluate the
assessment of net economic benefit provided by the applicant.'

6.10        This report has been commissioned in line with the new guidance on
measuring net economic benefits with a view to enabling the net economic benefit to
be assessed.

Regional Economic Policy

6.11        ‘An Economic Strategy for South Lanarkshire 2013 – 2023’ 14, which is branded
‘Promote’, is South Lanarkshire Council’s economic strategy covering the period to 2023.
The local economic strategy’s overarching vision is ‘for South Lanarkshire to have one of the

13
     Scottish Government, Draft Advice Note on Economic Benefit and Planning, 2016,
http://www.gov.scot/Resource/0049/00498008.pdf
14
     South Lanarkshire Council, An Economic Strategy for South Lanarkshire 2013 – 2023, 2013,
http://www.southlanarkshire.gov.uk/downloads/file/8508/south_lanarkshire_economic_strategy_2013_-2023

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Harryburn Wind Farm: Socio-economic Statement

strongest and most dynamic economies in Scotland, where businesses, communities and
residents achieve their full potential and prosper’

6.12    ‘Promote’ is guided by nine strategic priorities and this assessment identifies that
Harryburn Wind Farm can support each priority, particularly the following four priority areas:

•   Capitalises on its exceptional natural, physical and human assets – by harnessing the
    geography of the area to create economic and community benefits;

•   Grows local companies and meets fully their needs and aspirations – through contract
    opportunities at various stages of the renewable project’s construction and operational
    lifecycle;

•   Responds positively to new investment opportunities – new investment which otherwise
    would not be available in the absence of the proposal, for example Innogy selecting South
    Lanarkshire ahead of another Scottish local authority area;

•   Supports partnership working particularly public sector agencies working with the private
    and voluntary sector – essentially working with agencies to develop investments and
    activities that maximise the impact on local businesses and communities.

6.13    The strategy states the local economy has faced considerable challenges during and
since the economic recession of 2008 - 2011, and outlines how the recession hit South
Lanarkshire harder than Scotland as a whole. The strategy recognises that although there
have been signs of recovery, significant issues remain to be tackled in relation to the local
business base, economic development infrastructure and skills of local people.

6.14    The regional economic strategy is closely aligned to the previous Government
Economic Strategy (GES), in that it has a focus on ‘growth sectors’, of which renewable
energy is one, (Harryburn Wind Farm would contribute to this) and importantly for this
assessment the strategic aim of supporting ‘a transition to a low carbon economy’.

6.15    The regional economic strategy ‘Promote’ has three ‘development themes’, these
being (i) business development and growth, (ii) physical infrastructure and place and (iii)
skills, learning and employability.

6.16    Within ‘business development and place’ one of the key priorities is to ‘promote
opportunities around the transition to a low carbon economy’ and Harryburn Wind Farm
directly supports this priority action.       The development of Harryburn Wind Farm can
impact residents and businesses by providing employment and contract opportunities within
the renewable energy sector. The public sector partners tasked with delivering the strategy
state they will ‘examine ways to help businesses to adapt and grow through resource
efficiency, new carbon products and service and stimulate the private sector supply chain.’ In

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