Willling to Pay?

Social cost benefit analysis seeks to assess the net value of a policy or project to society as a whole while recognising that the valuation of non-market impacts such as loss of visual amenity or environmental assets may introduce concerns for health, well-being, family and community stability cannot simply be inferred from market prices [30]. One way to overcome this problem is to attach a value to non-market goods by looking at the impact these things have on utility – in the broadest sense the satisfaction an individual may derive from the consumption of a particular good. Because it is difficult to observe utility directly it is usually inferred from hypothetical choices people make based on their willingness to pay (WTP) (ix) or willingness to accept (WTA) (x).  National Grid [31], in acknowledging the difficulty in determining consumers WTP to mitigate the visual impact of electricity infrastructure impact in National Parks and Areas of Outstanding Beauty (xi), commissioned research to evaluate the social cost benefit placed on visual amenity for the UK as a whole. The results from this large-scale qualitative and quantitative research programme are interesting in so far as:
1 Respondents appear to have more appetite to pay to mitigate the visual impact of future infrastructure rather than existing infrastructure.
2 The most valued mitigation interventions are those associated with large projects of distances up to 50 miles in all types of area, including rural areas.
3 The highest benefit is believed to be obtained by undergrounding.
4 Around 70% of those living in urban or town and fringe areas visit a non-designated (not an NSA area) at least three times each year.
5 The most widely mentioned usage of the countryside in NSAs or other rural areas were cycling, running and walking with two thirds visiting the other rural areas for such pursuits.
6 Transmission infrastructure is considered ‘ugly and an eyesore’ by 55% of respondents.

Beyond these general findings, which apply equally to Scotland as to the rest of the UK, respondents were willing to pay up to £13.40 per household for 8 years to underground cables up to 10 miles in length in both NSAs and other rural areas. This increases to £16.27 for NSA areas up to 20 miles in length and at 50 miles this increases further to £20.33 for NSAs and £14.81 for other rural areas. Overall, therefore, the study finds that 59% of respondents believe there is a need to lessen the visual impact of transmission infrastructure – with the bias firmly in favour of new infrastructure – and that the countryside would be improved by doing so (at 64%).

In recognition of the concept of the consumer WTP, Ofgem [32] has increased the cap for transmission operators to explore mitigating impacts of existing infrastructure in designated areas from £100m to £500m. Meanwhile SPEN [1] acknowledge that this allowance for mitigating measures would potentially apply to their proposed new OHL project in Dumfries & Galloway.

Returning now to what WTP might mean for SPEN and their proposal for Dumfries & Galloway, assuming that the majority of the proposed network runs through what might be regarded as ‘other rural areas’ this suggests that based on their number of consumers [26] the available mitigation allowance would be almost £50m per year for each of eight years (= £14.81 * 3,354,000) which is roughly equivalent to undergrounding 5km each year over 8 years or around 1/3 of the total
400kV OHL.

Alternatively, given the growing importance of sub-sea interconnectors to the security of supply within the UK as well as to the provision of cheaper electricity from overseas markets (Norway particularly with 92% hydro-electric power) there is an argument for SPEN considering their customer base to be represented by the number of UK households [33] which would increase their visual amenity mitigation allowance to £397m (= £14.81 * 26,700,000) each year which would be more than sufficient to install an HVDC link between Auchencrosh and Heysham while downgrading the proposed super-grid to 132kV and undergrounding much of this route.

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