Data connectivity is almost a given today, but many may not be aware that over 98% of communications are empowered by fiber optic submarine (subsea) cables. These multi-country, inter- and intra-regional cables underpin the global economy and are themselves a source of significant investment: in 2021, it was reported that US$8 billion is to be invested in subsea data cables over the next 3 years.
These cables are also increasingly playing an even more vital role for renewable energy, connecting power supply from offshore wind and solar farms to the onshore communities. Recent market analysis forecasts the global submarine power cable market to grow by over 14% CAGR from 2020 to 2026, with primary growth driven by offshore wind farms and inter-country and island connects.
However, laying renewable and subsea cables is never an easy feat. Whether a government, telco, tech company, electricity service provider, cabling manufacturer or system integrator, organizations wanting to utilize sustainable and safe renewable and subsea cabling face a number of challenges.
Five key environmental, health, safety and sustainability challenges to navigate
Based on ERM’s experience successfully implementing several hundred renewables and subsea cabling projects worldwide, here are five common environmental, health, safety and sustainability (EHS&S) challenges we’ve observed:
1.) Obtaining permits and approvals
Obtaining permits is one of the critical paths to determine a project’s viability and schedule. But regulatory systems vary significantly by region, with some permitting processes and requirements being prescriptive, whilst others are evolving, or even opaque depending on the availability of regulatory guidelines, transparency around decisions and authority timeframes. Permitting requirements are constantly evolving as they try to keep pace with the changing nature, scale and technology of international projects.
Early, advanced understanding and reviews of permitting requirements (from international, national, regional, and local authorities) are essential to plan, document and manage the regulatory permitting and approvals process. Wherever possible, engagements with the relevant authorities on the requirements and process (e.g. Environmental Impact Assessment (EIA) scoping) should be established early and maintained throughout the permitting process. Schedule management, contingency planning, and authority engagement are critical to managing these project risks.
2.) Managing environmental and social financing requirements
International financing for projects often entails specific requirements relating to the addressing lenders’ environmental, biodiversity and social concerns. International lending standards typically require additional baseline surveys (which can potentially take a long time) and assessments across a spectrum of aspects which may be above and beyond those required at a national level. One example of this involves international standards requiring biodiversity surveys across several seasons (e.g. wet and dry seasons). Companies that don’t plan and schedule for the longevity of these survey requirements can have months – and in some extreme cases year(s) – added to their project, as well as significant cost implications.
Knowing the scope and level of requirements of lenders in the early project stages will enable effective strategies to manage schedules and costs.
3.) Meeting corporate stakeholder expectations
Expectations for addressing environmental, biodiversity and social concerns can vary considerably, depending on the country of interest, regulators, international lender requirements, as well as site-specifics (nature of biodiversity, or land use etc).
What is needed are focused, well-planned studies to address the specific needs of the various stakeholders (including public and corporate stakeholders). A critical phase for the environmental (and social) impact assessments (EIA) is what is internationally known as the “scoping phase”, to identify the project area, the project’s area of influence and the issues that are likely to be of most importance (i.e. significance) to deep dive in the later baseline surveys (where possible) and impact assessment.
Recognizing this vital step in the EIA and ESIA process, having effective and early stakeholder engagements, and avoiding the urge to steer clear of such engagements, allows project developers to align expectations early on. Through early engagement ERM has helped companies mitigate the risk of having unplanned/ extended baseline surveys, or needing additional design changes to address stakeholder concerns, and obtain a “social license to operate”.
4.) Ensuring design flexibility
Permitting approvals and associated conditions, which are typically established at the initial project development, feasibility, conceptual or preliminary design phase; can heavily influence the detailed design, construction and even operation of the project.
Perhaps what’s even more critical is ensuring that the projects described in permit approvals are sufficiently flexible and provide a “design envelope” for the developers to work within.
Ensuring that any future evolution in the size, nature, location, design, construction techniques and even technologies etc are captured within the permits. The key being to avoid any material changes to the projects and thus the permits, therefore avoiding any need for re-assessments, re-submissions or re-approvals at the construction or operational phases causing project delays. Thoughtful consideration in these early project stages has helped ERM’s clients manage later detailed design, construction and operational schedules and costs, and avoid expensive contract and permit variations tied to inflexible concept and preliminary designs.
5.) Understanding climate-related physical risk
Whether to meet corporate and project risk management needs, or Equator Principle 4 and Taskforce on Climate-related Financial Disclosures (TCFD) requirements, it is vital to understand the physical climate change risks to a project to ensure the longevity and sustainability of an investment.
Organizations are challenged to innovate to adapt and mitigate climate change risks at both corporate and project levels. One way to do this is through climate scenario analysis and assessments of the company’s or project’s potential vulnerabilities due to, for example, changes in flood risks, landslides, extreme climatic conditions (temperature rise etc). These can be important as these may lead to (amongst others) damage to assets; harm to employees and third parties, including lost productivity; service disruption; business interruption; loss of insurance facilities; and legal action.
Taking early actions to understand, engage, plan, and manage some of these key EHS&S challenges for renewable and subsea cable projects has been proven to be effective in mitigating schedule, project, and cost risks in the initial project development phases.