ssen003 nests - stage gate - decision to proceed v1

SHE Transmission New Suite of Transmission Structures: NeSTS (SSEN003)

Stage Gate – Decision to Proceed

September 2018

Contents and Overview

© Scottish and Southern Electricity Networks SSEN003 NeSTS: Stage Gate – Decision to Proceed Rev 1.0

Uncontrolled if Printed of 20

Contents

Overview of NeSTS .................................................... 2

Executive Summary ................................................... 3

NeSTS Stage 1 Progress ............................................. 4

Stage Gate Inputs ...................................................... 6

Stage Gate Outputs:

Refreshed NIC Business Case ........................................ 10

Refreshed NIC Business Case Supporting Information . 15

Decision to Proceed ................................................. 18

Appendices

1. SSEN003 NeSTS: Design Selection (SDRC 11.1)

2. SSEN003 NeSTS: Outputs of Stakeholder Engagement (SDRC 11.2)

3. SSEN003 NeSTS: Creation of Technical Specifications (SDRC 11.3)

4. Main Contractor’s Design Endorsement Report

5. Main Contractor’s Cost Comparison Report

6. TNEI Refresh of Overhead Line Volumes

Note: Appendices 4 & 5 are considered confidential.

Overview of NeSTS

Scottish Hydro Electric Transmission plc (SHE Transmission) is developing a New Suite of Transmission Structures (NeSTS), which are planned to be deployed on the Transmission Network

Overhead lines (OHLs) built using transmission structures are the most visible element of the transmission network, and the impact OHLs have on the environment can cause stakeholders concern.

The only available alternative to the steel lattice structures traditionally used in OHL construction is the T‐Pylon. Developed by National Grid Electricity Transmission (NGET), the T‐Pylon reduces the visual impact of OHLs but may be unsuited to areas with challenging terrain and propensity for severe weather events.

Establishing new infrastructure in these areas is essential to connect renewable generation, so there is a need for a new type of structure to address stakeholder concern.

The NeSTS project will develop innovative designs for OHL structures based on new technologies and techniques. The new suite of structures will then be deployed on the transmission network.

The NeSTS Project seeks to prove the following benefits:

o Improved OHL environmental performance by lowering visual and construction impacts; and

o Lower OHL whole life asset costs via reduced land, construction, maintenance and outage requirements.

Executive Summary



The Project has designed a new suite of transmission structures in response to stakeholder inputs.

Stakeholders support the project and have assessed that the new supports could reduce the environmental impact of overhead lines.

The NeSTS designs have been endorsed by a main construction contractor and have been used to design an overhead line in parallel with a traditional lattice design.

The main contractor estimates that the costs of construction using NeSTS are comparable to those using lattice steel, and there is potential for cost saving in operation of the OHL assets.

A refreshed analysis of future OHL requirements has indicated that there is still substantial need for new OHLs which could benefit from lower environmental impact enabled by NeSTS.

The Project is making good progress towards its aims and objectives on paper, and SHE Transmission has approved its progress to Phase 2.

This report summarises the Project’s Phase 1 design progress and the evidence SHE Transmission have used to make this decision. It is submitted to seek approval of the decision by Ofgem, as instructed in the Project Direction.

Figure 1: NeSTS 132kV Medium Duty Double Circuit D2

Support

NeSTS Stage 1 Progress



The Project initially targeted its design focus at 275kV

OHLs, and selected its design concept based on this

insulation level.

During the subsequent development of a design

prototype, the business case for the OHL being used for

the NeSTS parallel design was reviewed in response to

changing background generation.

The OHL was re‐specified to be insulated at 132kV, and

the NeSTS prototype and parallel design processes were

re‐focussed to produce corresponding 132kV designs.

The translation of form, fit and function from 275kV to

132kV has been successfully implemented, and the

comparative environmental benefits retained.

Comparative visualisation of the NeSTS 275kV Medium

Duty design and a L8RD lattice equivalent are shown in

Figure 2.

Comparative visualisation of the NeSTS 132kV Medium

Duty Double Circuit design and a L7c lattice equivalent are

shown in Figure 3.

Figure 2: Visualisation of NeSTS 275kV Medium Duty and L8RD Benchmark in Upland Moorland

NeSTS Stage 1 Progress

© Scottish and Southern Electricity Networks SSEN03 NeSTS Design Selection Rev 1.0


Figure 3: Visualisation of NeSTS 132kV Medium Duty Double Circuit and L7c Benchmark in Upland Moorland

The parallel design process used to inform this Stage Gate is based on the NeSTS 132kV Medium Duty Double Circuit suite.

However, due to better fitting the Project’s programme, the current intention is to construct a 132kV single circuit NeSTS OHL in Phase 2 of the project, and this design is currently being developed.

The Project plans to complete the technical specification of the 275 and 132kV medium duty double circuit suites, as reported in Appendix 3: SSEN003 NeSTS: Creation of Technical Specifications.

Stage Gate Inputs



Stakeholder Support

The Project has engaged with many different stakeholders, and the outputs of these engagements are driving the NeSTS design.

Work with statutory and non‐statutory consultees to understand their concerns regarding the environmental impact of OHLs has been undertaken. This has included detailed explanation of the OHL design process and the practical constraints involved.

Consultee assessment was used to select the NeSTS design concept and customers have been polled to confirm that their opinion aligns with that expressed by their consultee representatives.

The assessment and selection process is reported in Appendix 1: SSEN003 NeSTS: Design Selection.

Design Response to Stakeholder Input

The engagement with consultees provided several inputs

to the subsequent design refinement process.

International Transmission Owners (TOs) and their supply

chain have been engaged to understand lessons learned

from steel monopole OHL projects, and thus embody the

best available technology into the NeSTS designs.

These outputs of stakeholder engagement are reported in

Appendix 2: SSEN003 NeSTS: Outputs of Stakeholder

Engagement.

A chart summarising consultee stakeholder assessment of

NeSTS improved visual impact performance compared to

lattice steel designs is shown in Figure 4. A neutral

response is translated into a 3, a very good response into

a 5, and a very poor response into a 1. The thin lines

superimposed on the chart bars indicate the range of

responses.

The chart shows that consultee stakeholders anticipate a

substantial reduction in the visual impact of OHLs

constructed using NeSTS supports in comparison to lattice

steel alternatives, and that their assessments of NeSTS

are more convergent than their assessments of lattice

steel.

Figure 4: Consultee Stakeholder Visual Impact Assessment Summary

Stage Gate Inputs



Design Endorsement and Publication

NeSTS designs are intended for use across Great Britain’s (GBs) network, and licensees have been engaged to understand lessons learned from previous projects, explain the Project objectives and designs, and share its learning.

The designs have been subjected to scrutiny by structure manufacturers and main construction contractors as part of the process of developing technical specifications.

A design endorsement report for the NeSTS 132kV Medium Duty Double Circuit suite from a main construction contractor is shown in Appendix 4: Main Contractor’s Design Endorsement Report.

The Project has an agreement in principle that the NeSTS

technical specifications will be published by the ENA as

part of the 43 series of OHL technical specifications,

subject to their review by the ENA OHL panel.

These publication plans are detailed in Appendix 3:

SSEN003 NeSTS: Creation of Technical Specifications.

Figure 5: Visualisation of a NeSTS 132kV Double Circuit Medium Duty versus a L7c Overhead line

Stage Gate Inputs



Cost Comparison from Parallel Design

Parallel designs for an overhead line have been

compared: one using the NeSTS 132kV double circuit

medium duty suite of structures, and the other using the

traditional L7c lattice steel suite.

Visualisations of each design are shown on the Project’s

website, and excerpted images are shown in Figure 5.

A main construction contractor has estimated the costs of

each design. Their analysis is presented in Appendix 5:

Main Contractor’s Cost Comparison Report, and a

summary infographic of it is shown in Figure 6.

It shows that the estimated costs of each option are

comparable.

An increase in structure procurement and delivery costs is

almost balanced by a reduction in installation and

foundation costs, leaving a 1.7% higher estimate for

construction using NeSTS.

Figure 6: Summary Infographic of NeSTS Parallel OHL Cost Comparison

Stage Gate Inputs



Refresh of Future OHL Requirements

The Project commissioned TNEI to refresh the overhead

line volumes in the market assessment report presented

in the NeSTS NIC full bid submission. The result is shown

in Appendix 6: TNEI Refresh of Overhead Line Volumes.

It reports that following the changes to renewable energy

policy in 2015 and changes in NGET’s Electricity Ten Year

Statements (ETYS), on average, 121km of new OHL are

forecast to be required annually through to 2026. This

compares to the forecast average requirement for 250km

annually which was referenced in the NeSTS NIC bid

submission in 2015.

Using this and NGET’s Future Energy Scenarios (FES), the

total forecast OHL demand by 2050 in Scotland in each of

the FES is shown in Table 1.

Future Energy Scenario Total OHL Demand by 2050 in Scotland (km)

Community Renewables 4,528

Consumer Evolution 4,349

Two Degrees 4,466

Steady Progression 4,320

Table 1: Total Need for OHL in Scotland by 2050 in Each Future Energy Scenario

Stage Gate Outputs:

Refreshed NIC Business Case



Introduction

SHE Transmission, NGET and Scottish Power Transmission

(SPT) share statutory duties as transmission licensees: to

ensure the development and maintenance of an efficient,

coordinated and economical system of electricity

transmission; to facilitate competition in the supply and

generation of electricity; and to have due regard for

preservation of amenity. The drive toward a low carbon

electricity sector, and in particular, the growth in new

renewable generation in remote areas, requires an

increase in network capacity through the creation of new

infrastructure. The cost of new infrastructure will be

factored into GB electricity consumers’ bills.

TNEI analysis, based upon information contained in

NGET’s Electricity Ten Year Statement, shows that on

average, up to 121km new OHL projects are planned each

year on the GB transmission network until 2026 (see

Appendix 6 for further details). Increasing volumes of

renewable generation combined with the anticipated

increase in future electrical demand require significant

investment to provide the necessary network capacity.

SHE Transmission is investing to upgrade and reinforce

the network, with a £3bn ‐ £5bn investment programme

in progress. The other TOs have similar investment plans

during this period.

Deriving the business case

This section describes the approach used to ensure the

NeSTS business case is robust and how results from the

project are designed to be statistically sound.

SHE Transmission, with support from TNEI, has used

several sources of data to calculate the project’s business

case. These include (i) National Grid’s Electricity Ten Year

Statement (ETYS) (ii) National Grid’s Future Energy

Scenarios 2017 (FES) and (iii) NGET’s Transmission Entry

Capacity(TEC) Register, supplemented by additional

information from SHE Transmission and Project

stakeholders.

Future OHL Build Requirements

The ETYS was analysed to identify the projected volumes

of additional OHL required by each of the TOs during the

2017‐2026 period. This new infrastructure is largely

driven by the growth in new renewable generation and

increased electricity demand. This analysis is described in

more detail in TNEI’s report, contained in Appendix 6.

Beyond 2026, the FES have been used as a basis for

assessing the need for new infrastructure in the longer

term. The FES models a range of scenarios for the

development of the GB transmission system, which have

been used for TNEI’s analysis.

The TEC Register holds details of generation projects

seeking to connect to the transmission network, at

various stages of scoping, consenting and construction.

The TEC Register was also considered as part of TNEI’s

analysis. Overall, the analysis contained in Appendix 6

suggests that on average 121km of new infrastructure will

be required each year.

Stage Gate Outputs:




Calculating financial benefits

In the FES, four scenarios are considered; Steady

Progression, Two Degrees; Consumer Evolution and;

Community Renewables. In order to avoid overstating

the business case for NeSTS, SHE Transmission and TNEI

have used a cautious approach to quantify benefits.

Therefore we have opted to consider only the Steady

Progression and the Two Degrees scenarios to assess the

potential financial benefits.

The new designs are applicable to 132kV, 275kV and

400kV and learning will be made available to all GB

network licensees. However, it is recognised that NeSTS

will not be applicable for every new OHL project.

Therefore, TNEI’s analysis of new infrastructure plans to

2050 is based on the following assumptions:

1. Most new infrastructure at 132kV will take place

in Scotland. A review of the RIIO: ED1 business

plans for English and Welsh distribution network

operators did not indicate a significant volume of

new 132kV OHL build. For this reason, the

business case has discounted 132kV in England

and Wales.

2. NGET are likely to use the T‐Pylon for new 400kV

OHL projects, as it has been specifically designed

for application in the NGET territory. 400kV

projects in England and Wales have therefore

also been excluded from the business case.

3. Analysis of the TEC register suggests that there

are a limited number of renewable projects

which will require new build OHL infrastructure

to connect to the network. Therefore, these

have also been excluded from the analysis.

Full details of the methodology, assumptions and results

are contained in Appendix 6.

Stage Gate Outputs:




NeSTS Financial Benefits

NeSTS construction costs for the trial OHL are forecast to

be comparable to those of building an equivalent lattice

steel OHL.

SHE Transmission considers this a reasonable basis for

constructing a NeSTS OHL to allow the assessment of

actual and potential costs.

The Project is targeting cost savings in several elements of

OHL construction, as detailed in the NeSTS NIC bid

submission. Updates on the learning related to these

elements and the main contractor’s cost comparison

follow in Appendix 5: Main Contractor’s Cost Comparison

Report:

Foundations: The benefits in moving to a monopole style

construction that is less invasive and generally simpler are

supported by stakeholder feedback and the main

contractor’s cost comparison, although the scale of the

cost benefit will vary with ground conditions.

The Project has designed caisson foundations, and

discussed their construction with the GB and international

supply chain, but is unable to use them on the rocky

ground which has been encountered on the OHL design

work so far.

The potential benefits of this type of foundation will be

reported in Phase 2.

Installation: The forecast benefits of shorter and less

complex construction are supported by the main

contractor’s cost comparison and stakeholder feedback.

This element has not yet been exposed to competitive

tendering, and, TOs in the USA report that construction

contractor costs for steel monopole OHL construction

have decreased with experience and innovation of

installation processes in their territory.

The Project plans to explore and report on the potential

of related benefits in Phase 2.

Structure Costs: The cost parity to lattice steel structures

foreseen is not supported by the main contractor’s cost

comparison or supply chain feedback. The increased steel

weight required and the inclusion of tertiary coating in

the factory mean that unassembled structure costs will be

higher than for lattice steel supports.

However, this element has not yet been exposed to

competitive tendering, and, a competitive market for the

supply of steel monopoles exists globally.

The Project plans to explore and report on the potential

of related benefits in Phase 2.

Conductor Systems: The twin earth wire costs reported in

the NIC submission have not been realised as the design

chosen only requires a single earth wire. The conductor

system costs will therefore be the same as those of an

equivalent lattice steel design.

Off‐site Manufacture: The reduced number of

components and reduced assembly requirements are

supported by the main contractor’s estimate of

preliminary cost and stakeholder feedback.

Operating Costs: Ownership cost benefits may exist in the

form of lower land and maintenance costs. NeSTS

footprints are c75% lower than the lattice equivalent, and

consequently wayleave costs are expected to be lower.

The NeSTS supports facilitate easier inspection and

factory applied paint systems are expected to offer longer

intervals between re‐painting.

These benefits will be estimated in Phase 2 of the Project.

Project Management and Consenting Costs: The reduced

project duration implied by the reduced installations and

preliminary costs are expected to result in lower TO

project management costs. Similarly, if stakeholder and

customer support results in faster consenting, TO

consenting costs may be reduced.

The potential for these benefits will be estimated in Phase

2 of the Project.

Following Phase 1 of the Project, SHE Transmission

continues to anticipate that these elements could

generate considerable savings if a successful trial leads to

GB‐wide deployment.

Based on updated information from the supply chain

engagement, SHE Transmission continues to estimate that

the cost of new OHL projects could be reduced by up to

10% over a whole asset life, where projects could realise

all the available benefits.

Stage Gate Outputs:




The information contained in Appendix 6 indicates that

the majority of the OHL work planned by the TOs is for

reinforcement or refurbishment projects. The financial

benefits for TO reinforcement and refurbishment projects

flow directly to transmission customers through

Transmission Use of System charges.

SHE Transmission has adopted a conservative view that

NeSTS will be suitable for up to 15% of the anticipated

projects and has calculated cost savings on this basis.

Should NeSTS be applied to up to 15% of new OHL

projects between 2023 and 2050 and achieves a

reduction in costs of 10%, this could facilitate savings of

up to £68.9 million, as shown in Table 2: Potential NeSTS

Benefits.

Number of projects 2023 to 2050 Two Degrees Steady Progression

Benefit at 5% cost saving (£m) if 5 % of OHL projects are NeSTS‐compatible

£11.5M £11.2M

Benefit at 10% cost saving (£m) if 15% of OHL projects are NeSTS‐compatible

£68.9M £67.1M

Table 2: Potential NeSTS Benefits

Stage Gate Outputs:




Accelerates Low Carbon Sector

New transmission infrastructure is driven by the TOs’

requirement to respond to increasing renewable energy

generation connections.

By offering a new lower impact option for OHL

construction, NeSTS should enable improved stakeholder

and consultee response to some OHL developments,

thereby speeding up the consenting and connection

processes.

This combined with reduced construction time will

accelerate some renewable energy connections, and

hence the low carbon sector.

Innovation with a Purpose

NeSTS will enable GB TOs to offer alternative options to

customers where some lattice steel overhead lines or

underground cables are impractical.

The lower requirements for operative hours at site, both

during construction and for planned maintenance, aligns

with SHE Transmission’s health and safety policy by

reducing staff and contractor exposure to hazards, and its

strategy to focus on safe and efficient operations of

assets.

Relevance and Timing

The Project aligns with SHE Transmission’s strategy to put

the needs of current and future customers at the heart of

everything it does, and to use resources sustainably.

NeSTS is suited to SHE Transmission’s portfolio of

renewable generation connection projects in challenging

and sensitive environments.

The Project is on schedule to deliver its learning by 31

March 2022 as defined in the Project Direction.

Stage Gate Outputs:

Refreshed NIC Business Case Supporting Information



OHL Line Costs using Traditional Designs

To assess the cost benefit of the proposed solution it is

first necessary to understand the cost of traditional OHL

projects. There can be significant cost variance

depending on specific project requirements. However, the

benefits have been assessed using information available

in the TO Charging Statements. Note that NGET costs

were not available for this analysis. To enable comparison

with the original business case in the NIC submission,

these values have not been updated in this refresh.

Base Case Costs per OHL Voltage in £000s/km

TO 275kV 132kV

SPT £1,833 £834

SHE Transmission £1,103 £793

Average Cost £1,468 £814

Table 3: Base Case Costs per OHL Voltage

Stage Gate Outputs:




OHL Costs using NeSTS

Using NeSTS instead of traditional lattice steel supports

has the potential to reduce the cost of OHL projects in the

following areas:

Foundations: The estimated foundation costs for the

NeSTS OHL line in the parallel design reported in

Appendix 5 are 3.6% less expensive than those for the L7c

lattice steel OHL line.

This comparison is based on ground conditions which do

not allow use of the caisson style of foundation detailed

in the NIC submission, which is favoured by owners of

steel monopole transmission lines. Consequently, the full

benefits available could not be realised on this OHL

project.

The Project has designed caisson foundations, similar to

those referenced in the NIC submission, whose costs will

be estimated and reported in Phase 2.

Installation: The estimated installation costs for the

NeSTS structures are 49.4% lower than those for L7c in

the main contractors cost comparison. The Project

anticipates that experience and innovation of installation

processes, and competition for supply of these services in

GB could deliver further benefits.

Structure Costs: The estimated costs of NeSTS structures

are 130% more expensive than L7c supports in the main

contractor’s cost comparison. Delivery costs are 182%

higher, as there is no GB manufacturing capability for this

scale of folded steel monopole.

The Project has engaged with several suppliers of steel

monopoles but has yet to expose NeSTS designs to

competition for their supply to an OHL project.

A competitive market for the supply of steel monopoles

exists globally and the Project anticipates that this cost

differential would be substantially reduced by a GB‐wide

deployment, possibly involving the evolution of a GB

manufacturing capability.

Off‐site Manufacture: The estimated preliminary costs for

supply of a NeSTS OHL are 9.9% lower than for the L7c

equivalent in the main contractor’s cost comparison. The

Project anticipates that experience and innovation of

steel monopole line project and construction

management, and competition for supply of these

services in GB could deliver further benefits.

Reduced Operating Costs: Ownership cost benefits may

exist in the form of lower land and maintenance costs.

NeSTS supports have been designed to facilitate lower

maintenance costs. The reduced complexity of the

structures should enable faster and higher quality

inspections, both by climbing operatives and by drone

mounted cameras.

The factory applied paint system should enable less

frequent repainting and therefore lower refurbishment

costs. These attributes should enable reduced

maintenance outage requirements.

Wayleaves have not been agreed for the NeSTS designs,

and therefore this benefit cannot be reported yet. It is

anticipated that the footprint related component of these

costs will fall in proportion to the c75% reduction in as‐

built footprint.

In anticipating the future volumes of OHL required, it has

been presumed that the majority of OHL required by

NGET in England and Wales will use the T‐Pylon design;

therefore, they have been excluded from the calculations.

Similarly, it has been assumed that 400kV works in

Scotland will be delivered using recent designs such as the

SSE400 used for the Beauly‐Denny line.

In order to ensure a conservative, sensible view of

potential benefits, SHE Transmission postulated that a

traditional steel lattice or T‐Pylon may be used for new

OHL deployment at 132kV and 275kV – to this end, we

have assumed that only between 5% and 15% of future

new build OHL will be suitable for NeSTS.

SHE Transmission has focussed on the two most prudent

scenarios in the FES to estimate benefits. Note that all of

the benefits arising from cost reductions in infrastructure

projects will flow directly to transmission customers

through TNUoS

Stage Gate Outputs:




NeSTS continues to represent good value for customers

with only relatively modest volumes of OHL requiring to

be built in order to recover the Project’s costs. Based on

the costs identified in the TOs Charging Statements

referenced in the NIC submission, the volume of new

275kV or 132kV OHL required to recover the Project costs

is shown below in Table 4.

Table 4: Minimum OHL Distance to Recover NIC Cost

Average Cost

£000s/km

10% Cost Reduction Minimum distance

to recover NIC cost

275kV OHL £1,468 £146k 45km

132kV OHL £813 £81k 82km

Decision to Proceed



The SHE Transmission Steering group has considered the

evidence detailed in this report and has concluded that

the Project is making good progress towards its aims and

objectives.

Stakeholders support the project and have assessed that

the new supports could reduce the environmental impact

of overhead lines.

The NeSTS designs have been endorsed by a main

construction contractor and have been used to design an

overhead line in parallel with a traditional lattice design.

The main contractor estimates that the costs of

construction using NeSTS are comparable to those using

lattice steel, and there is potential for further cost saving

in a deployment to business as usual if the trial is

successful.

A refreshed analysis of future OHL requirements has

indicated that there is a substantial need for new OHLs

which could benefit from lower environmental impact

enabled by NeSTS.

SHE Transmission has therefore decided that the Project

should proceed to Phase 2 including the construction of a

trial OHL, and seeks Ofgem approval in response to this

submission as instructed in the Project Direction.

This page is intentionally blank.



SSEN003 NeSTS: Stage Gate – Decision to Proceed Rev 1.0 – September 2018

Scottish and Southern Electricity Networks is a trading name of: Scottish and Southern Energy Power Distribution Limited Registered in Scotland No. SC213459;

Scottish Hydro Electric Transmission plc Registered in Scotland No. SC213461; Scottish Hydro Electric Power Distribution plc Registered in Scotland No.

SC213460; (all having their Registered Offices at Inveralmond House 200 Dunkeld Road Perth PH1 3AQ); and Southern Electric Power Distribution plc Registered

in England & Wales No. 04094290 having its Registered Office at No.1 Forbury Place, 43 Forbury Road, Reading, RG1 3JH which are members of the SSE Group

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