Economic Impact of SSEN Transmission’s capital investment programme

Grid investment is a crucial requirement for the energy transition. Our latest study for SSEN Transmission considered the impact of its investment programme on the economy of Scotland and the UK.

Background to Study

SSEN Transmission is investing significantly in the grid network in Scotland to support the energy transition. This includes eight projects which make up the Pathway to 2030 programme. The Pathway to 2030 programme is crucial because it will allow the renewable energy potential of the north of Scotland, and the surrounding seas, to connect to population centres further south.

Map of Pathway to 2030 projects and current SSENT Investments

BiGGAR Economics had worked with SSENT previously to consider the potential jobs and Gross Value Added that would be supported during the construction of the Peterhead to Drax and to South Humber projects (numbers 6 and 7 in the map above). SSENT then asked us to support them in understanding the full economic impact potential of the entire Pathway to 2030 programme.

In addition to this work, we also worked with the Economics Team in SSENT to develop a tool that enables it to estimate the economic impacts of future capital projects and the implications of future projects on the operational impacts of the organisation.

Economic Analysis Findings

Turnover and GVA Impacts

The SSENT Pathway to 2030 investment programme is expected to total £9.4 billion. This will include the manufacturing of electrical equipment, the construction of the connections and the supporting services. It is estimated that:

  • Scotland will secure approximately 40% of these contracts, equivalent to £3.7 billion; and
  • the UK as a whole will secure approximately 60% of these contracts, equivalent to £5.5 billion.

The £9.4 billion of investment in Pathway to 2030 is equivalent to five Queensferry Crossings

The cumulative economic impact of this expenditure is estimated to support £6.3 billion of Gross Value Added (GVA) in the UK over the investment period. This includes £4.4 billion in the companies directly working on the project (Direct GVA) and in the wider supply chain (Indirect GVA). In addition to this, it is estimated that the Induced GVA, which is the knock-on impact from the spending of staff salaries, would be equivalent to a further £1.9 billion GVA in the UK economy.

Across Scotland, it is estimated that the total impact will be £2.6 billion GVA.

The spending in Scotland would be significant. The £3.7 billion of expenditure on these projects is equivalent to one-fifth of the turnover of the entire Scottish construction sector in 2020.

Employment Impacts

The projects' timescales will ensure a steady schedule of work for businesses across Scotland and the UK over the next decade. The expenditure and economic activity from the Pathway to 2030 programme are expected to peak in 2029/2030. At this point, the construction of these projects is estimated to support 9,250 jobs across Scotland.

The impact will be greater across the UK as a whole. At its peak, it is expected that the Pathway to 2030 programme will support 20,570 jobs across the UK.

Catalytic Impact

The real economic benefits from the investment in the Pathway to 2030 programme will come from the catalytic impacts of this infrastructure and the additional generation capacity that the grid will enable. Early investment in grid infrastructure will be crucial to maximising the economic benefits to Scotland from the ScotWind offshore leasing round. Delays in grid connection investment may result in a compression of timescales for the delivery of ScotWind projects, creating capacity issues for the Scottish supply chain and reducing the potential economic impact.

The SSENT Pathway to 2030 Programme is expected to support the development of 12.4GW of ScotWind projects. While these will require investments from a range of other organisations, the role of SSENT will be critical to ensuring that they have a route to development.

On average, during the construction period, these offshore wind projects could support £2.8 billion GVA and 42,000 jobs each year in the UK, including £1.1 billion GVA and 18,000 jobs each year in Scotland.

Further Reading

More information about the Pathway to 2030 programme, and its economic impact, can be found via the links below:

Posted 14.06.23

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