UK: Report Says Planning Contributing To Infrastructure Project Costs

Last Updated: 27 June 2012
Article by Angus Walker

Today's entry looks at a report aiming to drive down the costs of infrastructure, addressing planning amongst other causes.

Two reports were published last week on cutting the cost of offshore wind, which is supposed to form the majority of new renewable energy production over the next few years so the UK meets the European Union target of 15% of all energy from renewable sources by 2020.  The resulting planning and consenting recommendations are generally applicable to infrastructure projects.

The first is the Offshore Wind Cost Reduction Pathways Study produced by the Crown Estate, who is in charge of leasing the sea bed for offshore wind projects, and the second is the Offshore Wind Cost Reduction Task Force Report, produced by a task force of industry representatives chaired by the chair of RenewableUK.

Wind energy currently costs an average of £140 per megawatt hour, and the plan is to reduce this to below £100 by 2020.

The first report identifies four 'pathways', i.e. ways in which things could pan out. The good news is that three of them: 'technology acceleration', 'supply chain efficiency' and 'rapid progression' result in the cost of offshore wind energy falling below £100/MWh, and the bad news is that the fourth scenario, 'slow progress', is probably the most likely without some intervention, although even with that one the cost falls to £115/MWh.  The pathways essentially look at two factors - the degree of innovation in finance and supply chain efficiency and innovation in technology.

The second report recommends that the government and the industry should set up an Offshore Wind Programme Board (OWPB) and has 28 further recommendations, seven of which involve planning and consenting.  This suggests that planning and consenting is a significant issue when it comes to the cost of infrastructure (roughly 25%, it would seem) but also that it is by no means the only one.  The seven recommendations are as follows

  1. the OWPB should monitor 'implementation of changes to the consenting process' and their effectiveness;
  2. the OWPB should monitor project timings, aiming for no more than three years at the pre-application stage and 15 months once an application has been made;
  3. the government should implement its review of the way the Habitats Directive is involved in project consenting;
  4. the Planning Inspectorate should give merits advice at the pre-application stage;
  5. flexibility in applications should involve the 'Rochdale envelope' approach and allow changes after applications have been made;
  6. guidance should be issued on what constitutes a material change after a project has been consented; and
  7. statutory advisers should be resourced properly so that they can participate in the process effectively, in particular the Joint Committee on Nature Conservation (whose name belies that it is effectively the offshore Natural England).

Analysis

The first two recommendations are good news, because apart from this blog there is not much external monitoring of the effectiveness of the regime and changes to it, and the time that projects are taking.  Indeed I may proffer my services to the OWPB in this regard.  One point, though, I doubt that any project will take less than 15 months from application to decision in the foreseeable future.

The way the UK implemented the Habitats Directive has been considered by the government to be slowing down infrastructure projects and on 22 March it published a review into the regime.  Although a stakeholder meeting is promised for September, a progress report on this won't be produced until March 2013 (see paragraph 89), whereas the OWPB wants to monitor effectiveness by this autumn. The review also says at paragraph 89 that a monthly update is available on the No. 10 website, but (a) the link from the No. 10 website to the Defra business plan update doesn't work (b) the update is quarterly and (c) it doesn't refer to the Habitats review.  If I am being unfair and looking at the wrong thing, please let me know, but it seems that the OWPB has some work to do in this area.

The fourth recommendation (merits advice) is certainly now legally possible given the changes made by the Localism Act, but not much merits advice has been apparent yet.  I'm not sure that promoters would actually want this, though, given the continuing policy of openness.  Do they really want it on the record that the Planning Inspectorate thinks their project is of no merit?  This may therefore need to be coupled with a review of openness (e.g. delaying publication of sensitive information). Incidentally, I would be careful not to characterise this report as a Cost Reduction Action Plan, given its initials, although the businessgreen news site fell in to this trap.

I support the fifth recommendation, that applications should be able to vary within the overall envelope of the worst-case environmental effects that have been assessed (see this blog entry for more on the Rochdale envelope), and also that there must be a post-application change procedure.  The latter could potentially allow changes outside the environmental assessment envelope provided that further assessments are provided to enlarge the envelope so that the changes are within it.

The sixth recommendation sounds like a good idea, and would give some comfort and certainty to project developers at this stage, even though we are some way off any offshore wind projects being consented, never mind needing changes after that.

Finally on resourcing statutory bodies, good luck with that.  I have been impressed by the willingness of statutory bodies to engage in the consenting process but it is clear that they are seriously overstretched.

All in all these are welcome recommendations that could apply to the Planning Act regime across the board.  I will be monitoring the monitoring to gauge its effectiveness and I hope that the OWPB is formed and becomes another voice for ongoing improvements to the regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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