Latest Public Sector News

16.04.14

Powerhouse Central

Source: Public Sector Executive April/May 2014

Stoke-on-Trent City Council leader Cllr Mohammed Pervez discusses the development of the UK’s first large-scale
low-carbon heat network, which will be delivered as part of his authority’s City Deal. David Stevenson reports.

Stoke-on-Trent is to deliver the UK’s first large-scale low-carbon heat network, which will help heat thousands of homes and businesses across the city, as part of its environmentally-friendly City Deal – worth an estimated £113m.

The overall City Deal – called Powerhouse Central – is built around unique plans to supply locally-produced, sustainable energy to major employers. By addressing the cost and stable supply of power, the programme tackles one of the biggest challenges for local manufacturers, safeguarding jobs and enabling thousands more to be created.

The City Deal programme will be delivered by Stoke-on-Trent City Council, Staffordshire County Council and the Stoke-on-Trent and Staffordshire Local Enterprise Partnership (LEP), working with more than 40 businesses and partners.

As part of the initiative, the District Heat Network will use deep geothermal heat energy to produce up to 45GWh a year, save 10,000 tonnes of CO2 a year and lower energy costs by up to 10%, which will support more than 200 jobs directly, with 1,350 jobs protected in the supply chain. The network will be funded by £20m from the government and £32m of local funding.

Energetic plans

For most businesses, energy accounts for a small proportion of total costs – less than 3% on average for the UK manufacturing sector. However, the local economy of Stoke features a high proportion of heavy energy users, from the ceramics sector to IT-related business. For these energy-intensive businesses, energy accounts for up to 35% of their overall business costs. And the average price of energy purchased by manufacturing businesses in the area rose by 46% between 2007 and 2012.

Cllr Mohammed Pervez, leader of Stoke-on-Trent City Council, told PSE that because of speculation on energy security and price volatility, progress is significantly being hampered in terms of enabling effective planning for businesses.

“So, by being able to supply these industries with a secure source of energy that is local, green and sustainable, it will give them so much extra confidence,” he said. “It will also be competitively priced.”

Additionally, by setting up the District Heat Network, the partners hope that even more jobs will be created as a consequence. Currently, the project is still in its planning stage but homes and businesses could start seeing benefits by 2018. Cllr Pervez said:
“At this stage there is a fair degree of confidence that this timeframe is deliverable, especially as we are in positive discussions with the private sector.

“This won’t be delivered by the city council alone – we will partner with the private sector. They will be responsible for pumping out the hot geothermal water from the ground and we will have a level of partnership in creating the pipework through the two main sites, which is the City Centre Spine and the Etruria Valley. However, the partnership arrangement with respect to the supply of heat to specific buildings, thereafter, has not yet been worked through.

“It will take a little bit of time to get it up and running, but I am confident that with the right private sector partner and the right technical expertise we will be able to deliver this project.”

Smart ideas

Other key aspects of the Powerhouse Central programme include the creation of a Smart Energy Network demonstrator at Keele University to test cutting-edge energy and carbon reduction technologies; harnessing energy from the Four Ashes waste plant
in South Staffordshire; establishing a new power station at Meaford to supply local business with energy; and delivering pilot programmes and investment to create 3,900 apprenticeships, 1,100 traineeships and skills training for 9,000 jobseekers.

As part of the Smart Energy Network project at Keele University, scientists will test new lower carbon energy sources, which could save 37,300 tonnes of CO2 per annum if applied to the Stoke-on-Trent District Heat Network. This will support 180 construction jobs,
create 30 permanent jobs, and safeguard 1,350 local jobs. The project will be funded with £5m from the government to go alongside £5m from the European Union and £5m funding from Keele University.

Cities minister Greg Clark added: “The businesses, local councils and universities of Stoke-on-Trent and Staffordshire have joined forces to propose a deal that would make the area a flagship for research and development in energy. I am delighted to say ‘yes’ to it.

“The area’s industrial strengths are world famous, and with many businesses large consumers of energy, Stoke and Staffordshire is an ideal place to be a centre for innovation in energy. As well as investment in energy, the City Deal will bring into use new employment sites across Stoke-on-Trent and Staffordshire, and ensure that local people have the right skills to fill the jobs that will be created.”

Stoke-on-Trent’s council leader, however, told us that as a local authority it does not create jobs directly in the private sector, it can only create the right conditions for private sector confidence. “We believe that getting ‘energy’ right is the condition which will attract businesses to Stoke-on-Trent and, as a consequence of doing this, creating the right conditions for business growth and jobs,”
said Cllr Pervez.

Combined heat and power

Local partners will also deliver a £140m ‘Energy from Waste’ Plant at Four Ashes in South Staffordshire, which will be operational and commissioned this year. Through flexibilities agreed through the City Deal, a business case will be developed with government departments, including with the Department of Energy and Climate Change’s Heat Network Delivery Unit, to assess the future potential to offer combined heat and power (CHP) to local facilities and businesses. This project has the potential to lever £8m in private investment.

There will also be local investment by the private sector in a Combined Cycle Gas Turbine power station at Meaford. This has the potential to add a CHP unit to a strategic employment site, which could create 2,500 jobs. Currently in the consultation stage,
the power station is planned to be operational by 2018.

Cllr Philip Atkins, leader of Staffordshire County Council, said: “Staffordshire and Stoke-on-Trent has long been a hotbed of innovation and industry, from Josiah Wedgwood to JCB and more recently Jaguar Land Rover.

“This groundbreaking deal will unlock our potential and accelerate our work to create a connected county and the right conditions
for business to thrive.

“The biggest of all the second wave of city deals in terms of direct cash from government, it recognises and rewards our track record of delivery and ambition for the future.”

High value jobs

The deal, which is the culmination of months of hard work and negotiations, will also deliver ‘Innovation for Growth in Stoke-on-Trent and Staffordshire’ and ‘Stoke-on-Trent and Staffordshire Business Support Programmes’, engaging 1,300 businesses, primarily small and medium enterprises, to support the commercialisation of new technologies and expansion of high growth potential firms; directly creating or safeguarding 384 high value jobs by March 2016.

Ron Dougan, chair of the Stoke-on-Trent and Staffordshire LEP, said: “Stoke-on-Trent and Staffordshire’s public and private sector have worked as one to bring this bid together, united by their desire for economic growth across the city and county, so that we generate jobs and greater prosperity for business and local people.”

Looking to the future, Cllr Pervez told us that the City Deal is a huge learning opportunity to increase not only the city and county’s knowledge about new, green sources of energy, but the country’s.

“This is going to be the UK’s first large-scale District Heat Network,” he said, “and once it has been set up, and is operational, it
will create a degree of confidence not only for it to be spread across the city but with the potential to be used elsewhere.”

A deal is a deal

The City Deals programme is a flagship policy for the coalition government, emphasising localism, service transformation and private enterprise. “We believe that transferring powers from government to cities will make it easier for cities to achieve economic growth,” it says. Each deal gives a city new powers and devolved funding in exchange for greater responsibility to stimulate and support economic growth in their area. The 28 areas currently part of the City Deals programme account for 71% of England’s population and 68% of the jobs. 

First wave of City Deals (2011 & 2012):

• Birmingham

• Bristol

• Leeds

• Liverpool

• Manchester

• Newcastle

• Nottingham

• Sheffield

Second wave of City Deals (2013 & 2014):

• Black Country

• Bournemouth

• Brighton and Hove

• Coventry and Warwickshire

• Greater Cambridge

• Greater Norwich

• Hull and the Humber

• Ipswich

• Leicester and Leicestershire

• Milton Keynes

• Oxford and Central Oxfordshire

• Plymouth

• Portsmouth and Southampton

• Preston and Lancashire

• Southend

• Stoke and Staffordshire

• Sunderland and the North East 

• Swindon and Wiltshire

• Tees Valley

• Thames Valley Berkshire

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