Heat Mapping and Masterplanning for Development of District Energy Networks in Blaenau Gwent

Project Number: S0596 Version: 3 Checked by: Chrissy Woodman Date of issue: 14/9/15

Prepared for: Prepared by:

Christian Cadwallader and Amy Taylor Gabriel Gallagher and Lee Evans Blaenau Gwent County Borough Council Sustainable Energy Ltd Business Resource Centre 2 Alexandra Gate Tafarnaubach Industrial Estate Cardiff Tredegar CF24 2SA NP22 3AA Direct: 02920 894940 Direct: 01495 355850 Email: [email protected] Email:christian.cadwallader@blaenau- gwent.gov.uk

CONTENTS

EXECUTIVE SUMMARY 3

TABLE OF FIGURES 8

1 INTRODUCTION 9

2 HEAT MAPPING 17

3 MASTERPLANNING & PRIORITISATION 37

4 SENSITIVITY & RISK ANALYSIS 65

5 CONCLUSIONS 75

6 NEXT STEPS 81

APPENDIX 1 – ENERGY DATA 84

APPENDIX 2 – NETWORK ASSESSMENT 89

APPENDIX 3 – HEAT DEMAND MODELLING 93

APPENDIX 4 – INTRODUCTION TO TECHNOLOGIES 95

APPENDIX 5 – BUSINESS CASE ASSESSMENT 101

APPENDIX 6 – GAS MAIN LAYOUT 110

DOCUMENT CONTROL Document Reference Version Date Issued Produced by Reviewed by S0596 1 13/7/15 LE & GG CW S0596 2 19/8/15 LE & GG CW S0596 3 14/9/15 LE & GG CW

EXECUTIVE SUMMARY

This report presents the findings of a heat mapping and masterplanning study for district energy networks in the Blaenau Gwent County Borough Council area. The areas investigated include Ebbw Vale (Rassau Industrial Estate and adjacent industrial estates and development areas), Brynmawr (Blaenant Industrial Estate and Barleyfield Industrial Estate), Tredegar (Tredegar Business Park and adjacent areas) and Abertillery (Anvil Court and adjacent areas). The tasks undertaken and results of study are outlined below. All proposals and assumptions are developed in line with the CIBSE and ADE Heat Networks: Code of Practice for the UK.

Data collection and review Previous work was reviewed including the Rassau district energy network report1. A further data collection exercise was undertaken comprising the collection of key energy and building data from local authority buildings and other key stakeholders.

Heat mapping / demand analysis Hourly heat demand models were produced for potential key heat load buildings/sites based on site specific details referenced against hourly ambient temperature data. The resultant heat demand profiles were then combined to assess the overall heat demands of different sized network scenarios.

Identification of priority scheme and network In consultation with the client, network scenarios were selected for the most technically and financially feasible assessments. A technology assessment was conducted to identify optimum energy sources for each network scenario and phase. Gas CHP, biomass heating, biomass CHP, heat pumps, anaerobic digestion and EfW were selected for viability assessment and the associated business cases developed.

Sensitivity and risk Key project risks include changes to development plans, lack of take up of heat sales and electricity private wire offer by potential key loads and disproportionate increases in energy prices. A detailed spreadsheet tool was developed to allow Blaenau Gwent County Borough Council to vary key business case parameters including connection risk fossil fuel tariffs, electricity tariffs, RHI tariffs, electricity sale prices, inflationary increases and capital costs.

Planning BGCBC Policy DM4 encourages major development proposals to incorporate schemes that generate energy from renewable and low and zero carbon technologies but policy tools are employed by BGCBC to require new developments to consider district heating specifically. The potential for connection should be set out in development briefs and developers should be required/encouraged to investigate district energy as part of their proposals to support district energy plans at sites such as The Works and Rassau Industrial Estate. Engagement with developers is critical in relation to the existing network at The Works site where further connection opportunities are likely to arise from new developments in the short and medium term.

Ebbw Vale (Rassau) The business cases for the prioritised phased network is shown below:

Location Phase Scheme Network Estimated 25 Year Financial Case length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings Ebbw Vale 1 6 MWth 5.3km £12,082,006 11 years 9% £6,530,698 7,876 NA gas CHP tonnes 2 10 MWth 9.3km £20,434,115 11 years 9% £9,367,892 12,363 gas CHP tonnes 3 12 MWth 12.3km £26,036,358 11 years 9% £13,756,713 16,959 gas CHP tonnes

The proposed network routes are shown below:

1 In 2014, Arup were funded by the Carbon Trust and Welsh Government to deliver an ‘Outline Assessment for District Energy at Rassau Industrial Estate’ report with the following agreed scope of work (see section 1.3.1).

Ebbw Vale – Phase 1

Ebbw Vale – Phase 2

Ebbw Vale – Phase 3

Although there are significant associated risks in developing a district energy network, the Rassau site potentially offers substantial benefits including improved electrical capacity, reduced carbon emissions and energy costs, reduced fuel poverty, increased energy security and the ability attract new business and retain existing businesses at the site.

The project would support the economic, social and environmental principles of ‘Blaenau Gwent Energy’, BGCBC’s Smart Business Parks project and Welsh Government’s Green Growth Wales: Local Energy, Smart Living Vision and may be eligible for support from Welsh Government’s Smart Living Demonstrator Framework.

Stakeholders include the key heat load businesses, BGCBC Economic Development, Regeneration and Planning departments, the Heads of the Valleys Development Corporation and the Welsh Government.

There are significant associated risks particularly in relation to engaging with the Circuit of Wales development and existing businesses. BGCBC’s business case requirements and perception of these risks may make the project unviable to be taken to the feasibility stage. The economic model, risks and benefits for this project should be assessed internally by BGCBC and a decision made on whether to progress to the feasibility stage.

The Works BGCBC operates a district energy scheme at ‘The Works’ site in Ebbw Vale. The energy centre currently supplies space heating and domestic hot water to a district heating network comprising Council Offices, ‘The Learning Zone’, Ebbw Vale Sports Centre, Ebbw Fawr Phase School and Gwent Archive Building. Heat is supplied by four 1.5MW gas boilers, two 499kW wood pellet boilers and a 400kWth gas CHP unit.

This district energy network offers significant benefits including reduced carbon emissions and energy costs, reduced fuel poverty, increased energy security and the ability attract new business and retain existing businesses at the site. While The Works site has not been considered in any detail as part of this study, the network design is future proofed and there is capacity to serve far greater future heat

demands than the network currently serves. It is calculated that the network could deliver 11MW of peak heat load and it currently delivers less than 3MW.

There is a significant opportunity to increase the benefit of the existing network at The Works site as there is capacity to serve far greater future heat demands. This low carbon network may provide an incentive for businesses to locate at the development sites and there will be opportunities for the network to serve future developments. There may also be an opportunity for the nearby Ysbyty Aneurin Bevan to connect to the network and this requires detailed assessment and engagement with Aneurin Bevan University Health Board.

Further work is required to develop a strategy for the future development and expansion of this network.

Tredegar The business case for the prioritised network is shown below:

Location Phase Scheme Network Estimated 25 Year Financial Case length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings Tredegar 1 600 kWth 500m £1,223,130 14 years 7% £215,117 822 17 tonnes gas CHP tonnes

The proposed network route is shown below:

There is a marginal business case for a network at this site and there are a number of risks associated with the nature and timing of the development of the employment site. It is unlikely that this project can be progressed without significant developments at the Business Park. The Tai Calon Housing Association complex could provide a key anchor load and engagement with this stakeholder is essential if the project is to be progressed.

When details emerge on the development of the employment land, the economic model for this project should be further investigated. BGCBC should then make a decision on whether to progress this project.

Abertillery The business case for the prioritised network is shown below:

Location Phase Scheme Network Estimated 25 Year Financial Case length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings Abertillery 1 500 kWth 750m £1,298,359 18 years 3% -£234,698 564 417 gas CHP tonnes tonnes

The proposed network route is shown below:

This network is unlikely to be financially feasible as the low heat density adversely affects the business case. However, the connection risks associated with this project are lower as the key anchor loads are all local authority operated buildings.

Brynmawr Due to low heat demands and densities and high risks, the network and scheme scenarios investigated for the Brynmawr area were deemed unfeasible.

TABLE OF FIGURES

Figure 1: Heat mapping and masterplanning from Rassau Industrial Estate District Energy Study . 11 Figure 2: The Works site (2013) ...... 11 Figure 3: The Works masterplan ...... 12 Figure 4: The Works network pipework and instrumentation diagram ...... 13 Figure 5: Priority areas for heat mapping ...... 14 Figure 6: Ebbw Vale priority heat map investigation...... 15 Figure 7: Tredegar priority heat map investigation ...... 15 Figure 8: Abertillery priority heat map investigation ...... 16 Figure 9: Brynmawr priority heat map investigation ...... 16 Figure 10: A465 enhancement ...... 18 Figure 11: Circuit of Wales location ...... 19 Figure 12: Circuit of Wales Outline Plan ...... 19 Figure 13: Rhyd-y-Blew Enterprise Zone ...... 20 Figure 14: Bryn Serth Enterprise Zone ...... 20 Figure 15: Tredegar Business Park ...... 21 Figure 16: Example annual heat demand profile ...... 22 Figure 17: Heat map for Blaenau Gwent area ...... 23 Figure 18: Map for Rassau Industrial Estate and Circuit of Wales ...... 24 Figure 19: Heat map for Rassau Industrial Estate and Circuit of Wales ...... 25 Figure 20: Map of Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew development sites ...... 26 Figure 21: Heat map for Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew development sites ...... 27 Figure 22: Heat map for Tredegar ...... 28 Figure 23: Heat map for Abertillery ...... 29 Figure 24: Heat map for Barleyfield Industrial Estate, Blaenant Industrial Estate and Noble Square Industrial Estate ...... 30 Figure 25: Ebbw Vale cluster identification ...... 32 Figure 26: Tredegar cluster identification...... 34 Figure 27: Abertillery cluster identification ...... 35 Figure 28: Brynmawr cluster identification ...... 36 Figure 29: Ebbw Vale Phase 1 building use and building ownership ...... 38 Figure 30: Ebbw Vale Phase 1 - pipe route and energy centre location ...... 39 Figure 31: Ebbw Vale Phase 1 average daily heat demand ...... 40 Figure 32: Ebbw Vale Phase 2 building use and building ownership ...... 44 Figure 33: Ebbw Vale Phase 2 – pipe route and energy centre location ...... 44 Figure 34: Ebbw Vale Phase 2 average daily heat demand ...... 45 Figure 35: Ebbw Vale Phase 3 building use and building ownership ...... 47 Figure 36: Ebbw Vale Phase 3 – pipe route and energy centre location ...... 47 Figure 37: Ebbw Vale Phase 3 average daily heat demand ...... 48 Figure 38: Tredegar building use and building ownership ...... 51 Figure 39: Tredegar pipe route and energy centre location ...... 52 Figure 40: Tredegar average daily heat demand ...... 53 Figure 41: Abertillery building use and building ownership ...... 56 Figure 42: Abertillery pipe route and energy centre location ...... 57 Figure 43: Abertillery average daily heat demand ...... 58 Figure 44: Brynmawr network building use and building ownership...... 61 Figure 45: Brynmawr pipe route and energy centre location ...... 61 Figure 46: Brynmawr average daily heat demand ...... 62 Figure 47: Sensitivity analysis tool ...... 71 Figure 48: Financial Case Sensitivity - Ebbw Vale Phase 1 ...... 72 Figure 49: Financial Case Sensitivity - Ebbw Vale Phase 2 ...... 72 Figure 50: Financial Case Sensitivity - Tredegar ...... 73 Figure 51: Financial Case Sensitivity - Abertillery ...... 74

1 INTRODUCTION

1.1 General

The contract for the Blaenau Gwent County Borough Council (BGCBC) District Energy Network Heat Mapping and Masterplanning Study was issued following a tender process. The project was initiated on 4th December 2014 and SEL’s main client contacts were Christian Cadwallader and Amy Taylor of BGCBC.

All proposals and assumptions are developed in line with the CIBSE and ADE Heat Networks: Code of Practice for the UK.

1.2 Scope

The agreed scope of work for the heat mapping and masterplanning study comprised:

 A review of previous work and data collection exercises  A review of the heat mapping boundary for sites in four areas of Blaenau Gwent namely: 1. Ebbw Vale 2. Tredegar 3. Abertillery 4. Brynmawr  A heat mapping exercise for four areas in Blaenau Gwent  Identification of scheme and network options, technology appraisal and District Energy Network expansion opportunities  An assessment of financial viability and development of business cases for network scenarios  Project meetings to present findings and receive feedback  Production of a sensitivity analysis spreadsheet and final report  Meetings and workshops

1.3 Council Drivers and Priorities

Council drivers and priorities for developing district energy networks include improving reducing carbon emissions and energy costs, alleviating fuel poverty, increasing energy security, improving energy capacity and creating and safeguarding jobs by attracting new business and retaining existing business within the region.

‘Blaenau Gwent Energy’ BGCBC Officers in the Regeneration Division are working closely with Welsh Government Officials to develop a new energy project for Blaenau Gwent. The project’s working title is ‘Blaenau Gwent Energy’ and it will provide a catalyst for wider energy activity in Blaenau Gwent and could include opportunities such as:

 The Council facilitating the supply of reduced price energy to residents  Investment in generation technology to provide electricity and/or additional income  Behavioural change projects to reduce energy usage  Energy efficiency projects (including residential and commercial properties)  Developing innovation opportunities for smart metering etc.

Potential benefits of the project include:  Economic o Competitiveness and economic growth o Job creation o Revenue generation

 Social o Fuel poverty reduction o Regeneration

o Skills and education o Fairness e.g. tariff discrepancy

 Environmental o Carbon emissions reduction o Air quality o Local accountability and control

The project is in the development stage and the approach is being supported by Welsh Government and will be included in a new Smart Living Development Framework (as one of seven proposed pilot energy projects) (see below).

Smart Living Welsh Government’s Green Growth Wales: Local Energy, Smart Living Vision is as follows:

‘Wales has the opportunity to influence how we live with energy and resources in the future through demonstrators that will innovatively transform homes, businesses and communities providing multiple benefits for all’.

Smart Living principles include:  Learning via demonstrators (in which BGCBC are keen to participate)  A Team Wales approach  Balancing low carbon, affordability and security attributes

The scope of Smart Living includes:  Smart Users (homes, businesses and the public sector  Connected Assets (new generation, Smart Energy Enterprise)  Smarter Networks (optimised networks offering resilience and security)

The Smart Living Demonstrator Framework provides support and resource for enabling, empowering, safeguarding, value aggregating and communicating selected demonstrator projects. Key sectors for support include energy and environment, construction, ICT, Advanced manufacturing and Materials and development of Supply Chains. A range of funding and support exists that can be accessed by demonstrator projects and may be applicable to progress any approved projects arising from this study.

1.4 Review of Previous Work

1.4.1 Rassau Industrial Estate District Energy Report

In 2014, Arup were funded by Carbon Trust and Welsh Government to deliver an ‘Outline Assessment for District Energy at Rassau Industrial Estate’ report with the following agreed scope of work:

 Development of a high level heat map of the Rassau Industrial Estate  Consider possible district energy sources and conduct a high level assessment on possible plant sizing and costs  Provide recommendations and route map for implementation

The report used data collected from the energy users by Richard Davies of Davies Management Services Ltd. Where data was not available, a prediction on energy use was made by utilising benchmarks. The heat mapping exercise resulted in the analysis of two district energy options which found district energy to be technically feasible at the site. The results from this heat mapping exercise and the district energy options are shown in Figure 1.

A scenario comprising a 3MW gas CHP plant and 27MW of gas auxiliary boiler capacity was found to have a payback of 108 years; alternatively a scenario comprising a 2MW biomass boiler and 27MW of gas boiler capacity was found to have a payback of 31 years.

This report did not consider the heat and power demands associated with the nearby development sites (Circuit of Wales and Welsh Government designated Enterprise Zones).

Figure 1: Heat mapping and masterplanning from Rassau Industrial Estate District Energy Study

1.4.2 The Works District Energy Network

BGCBC operate a district energy scheme at ‘The Works’ site in Ebbw Vale (see Figure 2) and The Works masterplan is shown in Figure 3. The Energy Centre currently supplies space heating and domestic hot water to a district heating network comprising Council Offices, ‘The Learning Zone’, Ebbw Vale Sports Centre, Ebbw Fawr Phase School and Gwent Archive Building. Heat is supplied by four 1.5MW gas boilers, two 499kW wood pellet boilers and a 400kWth gas CHP unit.

Figure 2: The Works site (2013)

1 Town Centre 14 Business area 2 Christ Church 15 Hospital 3 Ty Llwyn Village 16 Blaenau Gwent Learning Zone 4 A4046 17 Central Valley Wetland Park 5 Steelworks Road 18 Basements 6 Victoria Business Park 19 Football pitches 7 General offices 20 Bridge 8 Station Square 21 Sports Centre 9 Parkway Station 22 Arts and Cultural Centre 10 Primary Distributor Road 23 Ebbw Fawr Learning Community 11 Christ Church Link and Square 24 Main Square 12 Residential 25 Market Square 13 Residential and local amenity 26 Multi-storey carpark and energy centre Figure 3: The Works masterplan

In 2014 SEL were commissioned by Carbon Trust Wales to complete a feasibility study assessing the viability of incorporating the biomass heat source. This project was delivered with SEL acting as client’s engineer and the boilers were commissioned in June 2015.

The network design is future proofed and there is capacity to serve far greater future heat demands than the network currently serves. It is calculated that the network could deliver 11MW of peak heat load and it currently delivers less than 3MW. As depicted in Figure 4, there are a number of ‘tees’ in the ground awaiting connection. BGCBC are fully aware of the significant opportunity for further development.

Figure 4: The Works network pipework and instrumentation diagram

1.5 Priority Areas for Heat Mapping

Eight sites (across the four areas: Ebbw Vale, Tredegar, Brynmawr and Abertillery) were identified by BGCBC to be investigated during the heat mapping exercise. These areas were acknowledged as accommodating heat loads considerable enough to warrant further investigation into the potential viability of a district energy scheme. The key heat loads within these areas were identified and analysed. Figure 5 shows the areas that were investigated during the heat mapping exercise.

Figure 5: Priority areas for heat mapping

The consultant team reviewed and provided advice regarding the Council’s proposed heat assessment boundary, depicted as blue lines in Figure 6, Figure 7, Figure 8 and Figure 9. After investigations (that included site visits), SEL mapped the key heat / energy loads in the areas outlined in red. This ensured that no key heat loads were omitted and that future potential heat demands were included.

Figure 6: Ebbw Vale priority heat map investigation

Figure 7: Tredegar priority heat map investigation

Figure 8: Abertillery priority heat map investigation

Figure 9: Brynmawr priority heat map investigation

2 HEAT MAPPING

2.1 Data Collection

The purpose of the data collection exercise was to enable detailed heat mapping of existing and future heat demands, and potentially heat sources. One of the main project risks associated with the heat mapping exercise was the accessibility of accurate and robust energy data from a diverse range of stakeholders.

In the first instance, SEL compiled an extensive list of potential key heat / power / cooling loads / sources at each site. This was completed in discussion with clients and stakeholders, site inspections and analysis of BGCBC business directories.

SEL then reviewed energy data, provided by Peter Morgan, Senior Energy Officer at BGCBC, which included gas and electricity data for all main buildings in the heat map areas and the energy data collected by Richard Davies for the ARUP report. All information gaps were identified and a list of required data was compiled (together with an action plan for data collection).

The consultant team presented a bespoke data-collection template to each potential energy user/source. This required provision of information such as key site contacts, historic energy consumption data, half-hourly data (where available), energy and heat meter readings, occupancy levels and patterns, heating set points, heat and cooling processes used on site, production patterns, heating medium and details of waste heat. This was then presented to the stakeholders by email and, where possible, via face-to-face meetings. The opportunities for heat supply were also considered in relation to waste industrial process heat.

2.1.1 Data Supplied by BGCBC

SEL met with Peter Morgan, Senior Energy Officer at BGCBC and data collected as a result of two meetings, telephone and email exchanges are shown in Table 1.

Table 1: Data supplied by BGCBC

Site Building Name Annual Gas Consumption (kWh)

Abertillery Comprehensive 1,228,108 Abertillery Primary 61,558 Abertillery Cwrt Mytton 788,471 Anvil Court 140,932 Abertillery Leisure Centre 1,086,373 Brynmawr Blaen-y-Cwm Primary 381,250 ViTCC Building 157,937 Glanhowy Primary 146,797 Tredegar Tredegar district Office 21,197 Tredegar Library 134,866 Deighton Primary 312,413 Ebbw Vale The heat demand data produced by ARUP was also provided by BGCBC

2.1.2 Data Received From Potential Key Energy Users

Emails were sent to representatives at non-local authority buildings and telephone calls made to establish contact. Where contact was established, and the site contact was inclined to liaise with SEL, sites were visited to facilitate effective data collection (this was the case for potential key heat loads such as Yuasa, Zorba Delicacies Ltd, Continental Teves and Monier Ltd). Data received from potential energy users is shown in Table 2.

Table 2: Data supplied by BGCBC Annual Fossil Fuel Consumption Site Building Name (kWh) Abertillery Tillery Valley Foods 4,058,813 Zorba Delicacies 4,128,420 Ebbw Vale Yuasa 6,614,914 Continental Teves 2,260,000

A relatively low number of businesses responded to SEL’s enquires, with a number of contacts at Rassau Industrial Estate (including potential key heat load EnviroWales Ltd) indicating signs of engagement fatigue.

Wherever possible current data was used for the heat demand assessment. Where this was not available, the consultant team used data from within the previous report completed by ARUP. Where the ARUP report included benchmark values these were compared to benchmark values taken from CIBSE guide F.

2.1.3 Future Developments

In addition to the existing buildings in the Blaenau Gwent area, SEL considered a number of planned developments that represent potential heat loads. The consultant team liaised with BGCBC and reviewed strategic site maps and the Local Development Plan to ensure that future heat demands were modelled to inform network development, phasing and future proofing.

Ebbw Vale The A465, shown in Figure 10, is being developed into a dual carriageway. This provides a major opportunity to contribute to the regeneration of the Heads of the Valleys area, supporting delivery of the Welsh Government's Turning Heads Regeneration Strategy.

Figure 10: A465 enhancement

The development of the A465 was considered with regard to its potential to drive regeneration and the proliferation of developments that could result in potential heat loads.

Circuit of Wales Racetrack The Circuit of Wales is planned as an international motorsport circuit, technology park and training facility. The 830 acre development is proposed to be a business hub for the automotive and technology sectors, serving the national motorsport industry. It will be developed by the Heads of the Valley Development Company. The location of this proposed development is shown in Figure 11 and an outline plan shown in Figure 12.

Figure 11: Circuit of Wales location

SEL reviewed the outline planning proposal and site plans to identify different building types and sizes and to model potential energy use at the site. The Circuit of Wales is planned to be developed in three phases: The first phase will include the construction of the main racetrack and buildings, hotel, showrooms, retail buildings and club house developed; the second will include the development of a driver training centre, brand centre and headquarters; and the third innovations centres and industrial warehousing.

Figure 12: Circuit of Wales Outline Plan

The outline plans contain no reference to a district energy scheme and SEL did not receive any further information when the scheme architects and planners were contacted. As a result the potential heat loads were modelled according information and details from the outline planning application only. There is a risk that the plans will change as the development is progressed and it is not certain when the various phases will be developed. Conversations with the planning team employed by Circuit of Wales indicated that these will occur over the next eight years.

Rhyd-y-Blew Enterprise Zone This 13 hectare Welsh Government strategic site is earmarked for development for business, general industrial and storage and distribution. This site is shown in Figure 13.

Figure 13: Rhyd-y-Blew Enterprise Zone

Bryn Serth Enterprise Zone This 24 acre Welsh Government strategic site is earmarked for development for business, general industrial, storage and distribution restaurants, cafes, hotels and hostels. This site is shown in Figure 14.

Figure 14: Bryn Serth Enterprise Zone

Tredegar Business Park There are 5 acres of development land on Tredegar Business Park that would be suitable for business and general industrial type building uses. This site is shown in Figure 15.

Figure 15: Tredegar Business Park

2.1.4 Fossil Fuel Consumption Benchmarking

Where suitable site contacts could not be made, appropriate data was unavailable and for future developments, non-domestic building and industrial benchmarks were used to calculate the expected fossil fuel consumption to be used in energy profiling. These were taken from CIBSE Guide F, Energy Efficiency in Buildings (2008), BSRIA, Rules of Thumb (4th Edition) (2003) and CIBSE TM46 (2008). The fossil fuel consumption value was calculated using gross floor area determined from the site operator or satellite mapping software.

If data is not provided, and for future heat demands, SEL generated demand profiles based on building type and use. SEL has a database of hundreds of hourly annual demand profiles for a wide range of building types and these were adapted to provide an indicative heat demand for sites.

2.1.5 Electricity Consumption Benchmarking

For consideration of private wire arrangements, electricity data was derived from data taken from the ARUP report, actual data and benchmark data.

2.2 Heat Demands

As described, annual fossil fuel consumption values (existing site data) and benchmark calculations were used to determine an annual heat demand value for each energy user within the heat map areas. Where information was not available for heating plant, a nominal boiler efficiency of 75% was used to allow for energy losses during the conversion of consumed fossil fuel to useful heat output.

The calculated annual heat demand values for each site can be found in Appendix 1.

2.3 Heat Demand Profiling

In order to further analyse heat demands at each of the sites, hourly heat demand profiles were constructed. For the sites with hourly consumption data available, the heat demand profiles were constructed from the existing data (whilst allowing for heating plant efficiency). Where the existing fossil fuel data for a building was obtained as an annual figure, or the heat demand was calculated by means of benchmarking (such as for future developments), an hourly heat demand profile was created. The profiles were generated using in-house modelling software which proportions the annual heat demand figure into hourly loads over the year, taking into account degree day data for the area and building use and occupancy.

For each building/site, the annual demand model was then used to identify the average, maximum and minimum hourly demand throughout the year. The profiles of typical winter and summer days were also produced to identify the demand variation on both a day-by-day and seasonal basis. An example average, maximum and minimum heat demand profile is shown in Figure 16.

Figure 16: Example annual heat demand profile

2.4 Heat Mapping Results

Geographic Information System (ArcGIS) software was used to map the identified key heat demands across the Ebbw Vale Area. These are displayed using graduated symbols to show the spread and intensity of key heat loads across the region. The symbols are coupled with site location and graduate in area according to heat demand. The heat map for key heat loads at the sites investigated Blaenau Gwent area is shown in Figure 17.

Figure 17: Heat map for Blaenau Gwent area

The Ebbw Vale area has the largest key heat demands and the highest heat density and these demands arise mainly from existing businesses and the Circuit of Wales development. The Tredegar area has low heat density with key heat demands arising from a mix of manufacturing business, offices and social housing. The Abertillery area has low heat density with key heat demands consisting of public sector buildings and Tillery Valley Foods. The Brynmawr area has low heat density with key heat demands consisting of mainly small businesses, Blaen-y-Cwm Primary School and a Primary Care Resource Centre development.

The heat mapping results for each priority area are shown below.

2.4.1 Ebbw Vale heat demands

Figure 18 highlights the locations of businesses and developments for the north of the Ebbw Vale heat map area that incorporates Rassau Industrial Estate and the planned Circuit of Wales development.

Figure 18: Map for Rassau Industrial Estate and Circuit of Wales

Figure 19 highlights the heat demands for the businesses and planned developments shown above i.e. Rassau Industrial Estate and the planned Circuit of Wales development.

Figure 19: Heat map for Rassau Industrial Estate and Circuit of Wales

As stated, the Ebbw Vale area has a relatively high heat demand and there are a number of potential key heat loads. The potential heat demands for the Circuit of Wales are located to represent the positions of buildings on the development plan that was examined during the background review (see Figure 12). These include hotels, warehouses, retail, educational buildings and an innovation centre and could potentially provide key anchor loads for the network.

Figure 20 highlights the locations of south of the Ebbw Vale heat map area that incorporates Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew Development Sites and denotes the off-gas area around the Waun-y-Pound Industrial Estate.

Figure 20: Map of Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew development sites

Figure 21 highlights the potential heat demands for the south of the Ebbw Vale heat map area that incorporates Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew Development Sites.

Figure 21: Heat map for Crown Business Park, Waun-y-Pound and the Bryn Serth and Rhyd-y-Blew development sites

The sites shown Figure 21 have a lower heat density than Rassau Industrial Estate but have a number of potential key heat loads, most notably Sogefi Filtration and the two development sites (that, after consultation with BGCBC, are assumed to comprise manufacturing, warehousing and retail buildings). Waun-y-Pound has a single significant heat demand in Continental Teves (taken from actual data). The other heat demands on the estate are small and sparse consisting mainly of retail warehouses.

2.4.2 Tredegar heat demands

Figure 22 highlights the key potential heat demands for the area of Tredegar (in and around Tredegar Business Park).

Figure 22: Heat map for Tredegar

The most obvious key heat load in Tredegar is the Tai Calon housing association complex at St George’s Court. It has been assumed that the development site consists of industrial/office buildings that occupy 33% of available space (based on the other buildings on the business park). ViTCC Training Services is a council run organisation and BGCBC are responsible for energy provision.

2.4.3 Abertillery heat demands

Figure 23 highlights the key potential heat demands for the area of Abertillery centring on and around public sector buildings including Anvil Court and Abertillery Leisure Centre.

Figure 23: Heat map for Abertillery

Abertillery has a low linear heat density with the only large load being Tillery Valley Foods. Many of the other potential key heat loads are public sector buildings including schools, a fire station and a leisure centre. Many of the surrounding buildings are terraced houses and small shops that were not considered as potential key heat loads.

2.4.4 Brynmawr heat demands

Figure 24 highlights the potential key heat demands for an area of Brynmawr including Barleyfield Industrial Estate, Blaenant Industrial Estate and Noble Square Industrial Estate. Brynmawr’s key heat loads include Varichem, Performance Masterbatches and the planned Blaen-y-Cwm Primary Care Resource Centre. The overall heat demand density of the site is low, with a majority of small heat demands.

Figure 24: Heat map for Barleyfield Industrial Estate, Blaenant Industrial Estate and Noble Square Industrial Estate

2.4.5 Existing heat sources

Heat sources with potential to supply networks at the subject sites that were investigated included waste industrial heat, EfW plants, existing networks, anaerobic digestion, water, ground and air source heat pumps and deep geothermal energy.

Of those sites where contact was successfully made EnviroWales Ltd (Building 11 in Figure 18) was identified as a potential source of waste heat. Unfortunately the site contact made it clear that he was not interested in providing any further information until there were firm plans for implementation of a network.

SEL understands that EnviroWales Ltd operates secondary smelting process to recycle waste lead into lead bullion. This process may provide modest opportunities for heat capture from extraction plant. If the project is progressed then this opportunity should be further investigated.

Planning permission has been granted at the Rassau Industrial Estate for the construction and operation of a gas fuelled 16MW Short Term Operating Reserve (STOR) generating plant at the south of the site. The ‘peaking’ plant will provide electricity generation to the network at short notice. The

plant is unlikely to operate for more than three hundred hours per year and so is not considered as a viable heat source.

2.4.6 Existing cooling demands

Existing (significant) cooling demands were investigated for each of the heat map areas. No telephone exchanges or data centres were identified and of those businesses where contact was successfully made, no significant cooling demands were identified.

External site inspections and consideration of business types do not indicate any major cooling loads although businesses in the food sector (such as Zorba Delicacies Ltd and Celtic Oriental) and the plastics sector (such as Performance Masterbatches) have some refrigeration and process cooling requirements respectively. If the project is progressed to the feasibility stage and further engagement with key business achieved, then this opportunity should be further considered.

2.5 Identification of Clusters

The heat mapping exercise identified heat demand clusters that could potentially become part of a network. The larger heat demands were identified and these key heat loads were then assessed with regard to linear heat density. Areas with a higher heat density offer a heat network a greater annual load whilst minimising capital costs and heat loss on distribution pipework. The cluster boundaries were also influenced by obvious physical obstructions such as major roadways, built-up areas and areas with special engineering difficulty. The clusters that were identified at each site are shown in Figure 25, Figure 26, Figure 27 and Figure 28 below.

Key risks such as engaging with private sector businesses to connect to a network were considered, but at this stage, heat clusters have been designated according to the above technical viability issues.

2.5.1 Ebbw Vale heat demand clusters

Rassau Industrial Estate, Circuit of Wales, Crown Business Park, Waun-y-Pound Industrial Estate and the Bryn Serth and Rhyd-y-Blew development sites were assessed and number of clusters were identified within the area as shown in Table 3 and Figure 25.

Figure 25: Ebbw Vale cluster identification

Table 3: Ebbw Vale heat demand clusters Total Key Heat Demands Cluster Demand, No. Cluster Name kWh Yuasa Batteries, Zorba Delicacies, Express 1 Rassau Main 22,872,019 Contract Drying 2 Rassau West 7,715,293 G-Tem, NMC 3 Circuit of Wales main 11,418,335 Showrooms, hotel, pit buildings Circuit of Wales phases 2 4 and 3 3,686,428 Brand Centres Circuit of Wales Innovation Centre and 5 Warehousing 6,818,773 Innovation Centres 6 Crown Business Park 12,584,974 Sogefi Filtration Ltd, Pramac, Eurocaps Bryn Serth and Rhyd-y- Potential development of advanced 7 Blew Development Sites 14,816,467 manufacturing businesses

Conclusions The Rassau Main and Circuit of Wales clusters include large heat demands and provide the key anchor loads for a phase 1 network. The total demands for Cluster 2 - Rassau West and Cluster 6 – Crown Business Park are smaller than Rassau Main but buildings are in close proximity.

The total heat demands for Cluster 7 - Bryn Serth and Rhyd-y-Blew Development Sites are potentially significant but timescales for development have not been allocated and developments may occur at different times.

Despite there being no mains gas at the site, Waun-y-pound Industrial Estate was not included as a cluster as the linear heat density is very low. However, after discussions with senior staff at Continental Teves, it was established that, if RHI can be secured, there was a business case to develop a biomass pellet heating project at the site and the company are currently requesting internal funding to progress the project.

There are high levels of connection risk associated with all of these clusters as they are made up of existing private sector businesses and private sector developments.

As the Circuit of Wales planning application is currently being considered by BGCBC (and there are no plans or conditions relating to district energy) this cluster, the associated connection risk is high.

2.5.2 Tredegar heat demand clusters

A cluster of five sites was identified for Tredegar, including the two key heat loads of St George’s Court and Camtronics Vale and extends down the proposed employment land as shown in Table 4 and Figure 26.

Figure 26: Tredegar cluster identification

Table 4: Tredegar heat demand clusters Cluster Name Total Demand, kWh Key Heat Demands Tai Calon Housing Association (St George’s Court), Camtronics Vale and Tredegar 3,605,206 potential development

Conclusions Heat demands and densities are relatively low and the potential network cluster needs to encompass the Tredegar Business Park development site and the nearby social housing at St George’s Court in order to improve potential viability.

The timing and nature of the development at this site will have a critical impact on any future network. The heat demands to the west and south of the cluster are low, there is a low density and very steep incline that would provide a challenge to development of a heat network (increasing costs and decreasing feasibility).

2.5.3 Abertillery heat demand clusters

The Abertillery area has a low linear heat density and no cluster is immediately evident. A low connection risk cluster boundary was drawn from the Sports Centre following Alma Street and incorporating a number of public sector buildings down to Abertillery Library as shown in Figure 27 and Table 5. The majority of heat demands outside this cluster arise from terraced houses and small retail outlets.

The potential key heat load of Tillery Valley Foods was discounted as a part of a cluster due to its distance from other heat loads (low linear density in relation to pipe length) and its specific requirement for high temperature hot water (steam).

Figure 27: Abertillery cluster identification

Table 5: Abertillery heat demand clusters Cluster Name Total Demand, kWh Key Heat Demands Abertillery Sports Centre and Cwrt Abertillery 3,175,621 Mytton

Conclusions Building heat demands and linear heat densities are low. The potential cluster includes mainly BGCBC owned buildings and this would reduce the connection risk of any potential network.

One of the public sector office buildings, Anvil Court, has 55% of expected heat demand2 and this is likely to be due to the modern building and use of electrical heating via split DX units.

2.5.4 Brynmawr heat demand clusters

The Brynmawr cluster includes Blaen-y-cwm Primary School, Blaenant Industrial Estate, Barleyfield Industrial Estate and the planned Primary Care Resource Centre as shown in Figure 28. The total heat demand for the cluster is indicated in Table 6. Most of the heat demands surrounding the cluster arise from houses and small retail buildings.

2 Based on CIBSE TM45 Good Practice

Figure 28: Brynmawr cluster identification

Table 6: Brynmawr heat demand cluster Cluster Name Total Demand, kWh Key Heat Demands Varichem, Performance Master Batches, Avon TSA and the planned Primary Care Brynmawr 5,687,367 Resource Centre

There is also a potential development at the NMC Factory site that is allocated in the LDP for mixed use but as few details are currently available, this has not been considered (and is unlikely to significantly affect linear heat density).

Conclusions Heat demands and densities are low and connection risks are high as the potential network cluster includes mainly privately owned and leased units that accommodate mainly small businesses.

3 MASTERPLANNING & PRIORITISATION

The outputs from the heat mapping exercise were considered to identify potential network opportunities for the subject sites. Network options were identified and a technology appraisal conducted to assess the feasibility of each network and the viable energy sources. A description of the assessed technologies is included in Appendix 4 – Introduction to Technologies.

The technology appraisal involved a simulation of the hourly heat demands for the network options being provided by a central energy source (or sources), using typical operating parameters and financial values. Base financial cases were then produced for each technology, identifying those that were technically and financially feasible. These options were then further investigated.

3.1 Assumptions and Sources of Data

Table 7 shows the parameters used for the financial assessments and the sources of this data.

Table 7: Parameters used in financial assessments Parameter Value Source of Data Unit price for heat sales (£/MWh) 25 Competitive tariffs based on information Electricity price day (£/MWh) 90 received from BGCBC and businesses Electricity price night (£/MWh) 60 (for 2014) Electricity price export (£/MWh) 45 Current market value Cost for CHP fuel (£/MWh) 25 Current market value Cost for biomass fuel (£/MWh) 35 Current market value Cost for gas fuel (£/MWh) 25 Current market value Cost of heat from EfW / AD or other heat 8 Assumption based on experience from source (£/MWh) previous project experience (including HNDU project) Carbon value (£/tonne) 16 Current CRC value CCL charge (£/MWh) 1.93 Current charge Efficiency of biomass 80% Experience of operating plant Efficiency of auxiliary gas 85% Experience of operating plant Plant parasitic load (as % of Ʃ heat generated) 2% Experience of operating plant RHI value Current Non-domestic RHI tariffs, Ofgem

3.2 Ebbw Vale

The seven Ebbw Vale clusters, shown in section 2.5.1, were considered for connection to a single phased network. The network and subsequent analysis was divided into three phases that reflect technical viability and the timing of planned developments. The network in its entirety, with each phase distinguished, is shown in Figure 36. The pipe route follows existing roads and, where possible, soft verges. After discussion with the client, it was considered that a likely location for the energy centre could be to the North East of the Rassau Industrial Estate, although as phases 2 and 3 are developed there may be opportunities to locate additional energy centres (including peak and reserve fossil fuel boilers) at different locations including the Bryn Serth and Rhyd-y-blew development sites and to the north west of the Rassau Industrial Estate.

The first phase, shown in Figure 30, includes the Rassau main cluster and the primary cluster of the Circuit of Wales Racetrack, which encompasses the central site buildings (if planning permission is secured these are to be constructed in the next 12 months). It is possible that the development of the Circuit of Wales could provide a catalyst to the implementation of the phase 1 network.

Phase 2, shown in Figure 33, includes the rest of the Rassau businesses and the later developments at the Circuit of Wales (it is currently unclear as to when these will be developed).

Finally the third phase, shown in Figure 36, crosses the A465 to connect to the Crown Business Park and the Bryn Serth and Rhyd-y-Blew development sites (it is currently unclear as to when these will be developed). The total pipework trench length of the complete network is approximately 12.3km.

3.2.1 Phase 1 – Rassau Industrial Estate Main & Circuit of Wales West

Heat demand categories Figure 29 categorises the nature and ownership of key heat loads within the network based on the total heat demand. It can be seen that the majority of heat demand comes from industrial units and workshops with 67% of the heat demand from private sector buildings and 33% from planned developments.

Figure 29: Ebbw Vale Phase 1 building use and building ownership

The network Phase 1 of the Ebbw Vale network, shown in Figure 30, has a pipework trench length of approximately 5.3km. Key potential heat loads include Circuit of Wales (first phase development), Yuasa Batteries Ltd, EnviroWales Ltd, Express Contract Drying and Zorba Delicacies Ltd.

The network has been sized and costed to an appropriate extent in order to future-proof for additional phases to serve both existing buildings and planned developments. As Phase 1 provides a realistic

option that includes the majority of existing and planned heat loads, careful consideration is given to future proofing, whilst not at the expense of efficient operation in the short and medium term.

SEL has considered the design implications of future proofing and ensured that network options (including pipe diameters, energy centre sizes and associated costs) are suitable and appropriate in the short term but with clear route to expand. Future proofing will need to be further considered at the feasibility stage (or when information is received on key developments).

Figure 30: Ebbw Vale Phase 1 - pipe route and energy centre location

Hourly demand profile The hourly heat demand profiles for each of the sites were combined to create one total annual profile for the phase, shown in Figure 31. The heat losses were calculated as 12%3 and added to the total heat demand profile. This profile was analysed to provide an understanding of the heat load for technology sizing and was used in the hourly simulation of heat demand and supply to the network.

Figure 31 shows the average, maximum and minimum hourly heat demand profile for phase 1 of the Ebbw Vale network. The peak heat demand can be seen as approximately 11.5 MW occurring at 10.00am, with a steady average demand throughout the day of between 6.3 MW and 4.0 MW between the hours of 7.00am and 10.00pm.

3 CIBSE/ADE Heat Networks: Code of Practice for the UK states that for best practice network heat losses should not exceed 10%. However, low density heat networks with low carbon and low cost heat sources can be viable with higher heat losses and still be considered best practice. The Code also states that heat losses of 15% or more would indicate either a low density development or a need for re-evaluation.

Figure 31: Ebbw Vale Phase 1 average daily heat demand

Technology appraisal The total hourly annual heat demand profile was used in the technology appraisal. In-house modelling software was used to develop base financial cases for different suitable technologies, to compare the feasibility of each. The models include a capital cost estimate for each technology and associated plant. The model calculates all typical costs and incomes on an hourly basis for a full year; the calculated financials are then linked to a nominal inflationary value of 2.5% (agreed with BGCBC to reflect the client’s standard business case assessments) to determine the business cases.

All technologies were given high level consideration, with a number being selected for further analysis, the results of which (for Ebbw Vale Phase 1) are shown in Table 9.

Other technologies given high level consideration include ground and water source heat pumps and deep geothermal as shown in Table 8.

Table 8: High level technical viability considerations for Ebbw Vale Technology High level technical viability considerations Further consideration?

Anaerobic digestion  Feedstocks available for ~1 MW plant Yes – in context  Heat demand not large enough to serve of private sector network demands developer  Not in keeping with nature of site, although planning contact may change  Large scale investment

Biomass heat  Consistent heat demand Yes  Compatible with existing operating conditions and delivers required water temperatures to buildings (up to 85oC)  Potentially cost effective carbon reduction technology (£ per tonne carbon)  Potential air quality issues  Uncertainty of RHI

Biomass or biofuel CHP  Consistent heat demand Yes – in context  Potential air quality issues of private sector  Not in keeping with nature of site, although developer planning contact may change  Large scale investment

Energy from Waste  Consistent heat demand Yes – in context  Potential air quality issues of private sector  Not in keeping with nature of site, although developer planning contact may change  Large scale investment

Gas CHP  Consistent heat demand Yes  Suited to industrial location (readily available fuel supply)  Electricity users in close proximity (private wire arrangement potential)  Compatible with existing operating conditions and delivers required water temperatures to buildings (up to 85oC)  Potential financial viability  Potential air quality issues

Geothermal  The geothermal heat flow value for the No Blaenau Gwent area is 40-50 mW/m-2 and does not present a viable opportunity4.

Ground source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited land availability for horizontal array  Uncertainty of RHI

Water source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited availability of water resource  Uncertainty of RHI

4 Figure from British Geological Survey heat flow map http://www.bgs.ac.uk/research/energy/geothermal/

Table 9: Ebbw Vale Phase 1 technology appraisal Technology Gas CHP Biomass Biomass ORC EfW / AD5 / CHP other heat source Heat Output 6 MW 7.5 MW 7.5 MW 11.5 MW Electrical Output 5.4 MW - 1.5 MW - Capital Generation £5,563,580 £8,918,250 £9,965,450 N/A7 Expenditure technology6 Network £6,518,426 £5,434,376 £6,518,426 £5,434,376 Total £12,082,006 £14,352,626 £16,483,876 £5,434,376 IRR 9% N/A N/A 7% Net Present Value £6,530,698 -£31,362,957 -£17,086,238 £1,265,705 Payback 11 years >25 years >25 years 13 years 25 Year Income £35,123,371 -£34,165,013 -£1,136,695 £12,643,484 Carbon Savings 7,876 tonnes 6,667 tonnes 12,107 tonnes 8,062 tonnes

Gas CHP provides the strongest financial case for development (assuming 100% private wire arrangements). Biomass ORC CHP and standard biomass heating are deemed unfeasible. A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 10.

Sourcing secondary heat from a third party EfW or biomass power station also provides a viable business case, but currently there are no plans to locate such a facility at the site.

Table 10: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 6 MW Electricity output 5.4 MW Capital Generation £5,563,580 expenditure technology Network £6,518,426 Total £12,082,006 IRR 9% 10% Net present value £6,530,698 £11,792,099 Payback 11 years 12 years Total income £35,123,371 £65,033,146 Carbon saving 7,876 tonnes

Energy Centre The phase 1 energy centre construction costs include the cost to accommodate and operate plant of the nature, scale and location specified for phase 1 only. At industrial locations Gas CHP central plant and auxiliary peak and reserve plant may be installed in modular buildings excluding the requirement for a single large energy centre. A modular arrangement also provides an option to locate future phase energy centres in different locations such as on the development sites or the Circuit of Wales site. Providing heat to the phase 2 and 3 networks from different locations will also have benefits for futureproofing including reduced pipe diameters and heat losses.

5 Anaerobic digestion There may be food waste feed stocks of around 20,000 tonnes per annum available within the Heads of the Valley region. This would include organic waste from local households and businesses together with additional possible third party food waste. It would provide feedstock to generate ~1MW of electrical power, over 1MW of heat energy and produce a biofertiliser by-product. For reference, a development of this scale would cost in the region of £8,000,000.

As the treatment of waste and generation of power are the primary business drivers for AD plant operation, heat maybe sold to a heat network operator at a low cost. However, this is a small amount of heat relating to the Ebbw Vale development and it is highly unlikely that the technology would be suitable for any of the other sites investigated.

6 The generation technology and network costs include 10% contingency.

7 The business case for the Energy From Waste (EfW) / Anaerobic Digestion (AD) / other heat source appraisal does not include the cost of developing the heat generation technology and assumes that the heat provided would be a by-product of another process at a fixed cost of £0.008 / kWh.

If the energy centre is to be located on allocated employment land8 it will need to be clearly demonstrated that the building provides a service to the existing and proposed employment use.

The Energy Centre would have an indicative floor area of 162m2. This includes space for CHP plant, auxiliary boilers and pumps etc.

Gas connection Wales and West Utilities have confirmed that a 180mm gas main runs next to the proposed Energy Centre site (see Appendix 6 – Gas Main Layout) and that there is likely to be available capacity (this would only be guaranteed as part of a formal application).

Private wire In all cases it is assumed that all electricity is consumed by the buildings on the network and there is currently a requirement for additional electrical supply capacity at the Rassau site. The annual electrical demand from Monier Redland Ltd, Yuasa Batteries Ltd, Zorba Delicacies Ltd, EnviroWales Ltd, Sears Seating Ltd, Tilon Composites, Hille Educational Products, Armoured Auto Group, GTEM, GTS Flexible Materials and AB Cardinal amounts to ~45,000 MWh. The annual electrical output from the gas CHP scheme for phase 1 is 28,413 MWh. As there is a requirement for extra electrical capacity and a large demand from a number of key businesses (that operate three shifts) there is an opportunity for private wire arrangements and this is reflected in the financial case analysis.

Private wire costs have been included in the financial assessment and, in line with the ethos of Smart Business Parks, are based on the cost of providing electricity sales to buildings and businesses in phases 1, 2 and 3. BGCBC (in partnership with the Welsh Government) are currently considering options for developing ‘Smart Business Parks’9 and Smart Grids and the development of a district energy scheme at Rassau Industrial Estate would provide a key driver.

The installation of network infrastructure at the site may provide a further opportunity to install new telecommunications and internet connections and this may drive funding from other sources.

Timescale This phase is reliant upon the development of the Circuit of Wales site. If the development receives planning consent then it is due to commence early 2016. Effective early engagement with the Heads of the Valley Development Company is therefore essential and senior staff at BGCBC will have a key role to play in this process.

Conclusions Gas CHP provides the strongest business case as the sale of electricity provides significant revenue. As such, the electricity sales tariff (including private wire versus export to the grid) significantly affects the business case.

Separate technology assessments for Cluster 1 – Rassau Main and Clusters 3&4 – Circuit of Wales are shown in Appendix 2 – Network Assessment.

8 BGCBC Policy EMP1.4 identifies the allocation as a business park in the employment hierarchy which only permits B1, B2 and B8, an appropriate SG use, and an ancillary facility or service to the existing and proposed employment use. 9 These industrial areas will promote energy efficiency, smart grids, energy storage and low carbon energy generation and supply.

3.2.2 Phase 2 – Rassau Industrial Estate & Circuit of Wales

Heat demand categories Figure 32 categorises the nature and ownership of key heat loads within the network based on the total heat demand. The majority of heat demands are industrial with approximately 58% of the heat demand from private sector buildings and approximately 42% from planned developments.

Figure 32: Ebbw Vale Phase 2 building use and building ownership

The network Phase 2 of the Ebbw Vale network is shown in Figure 33. The total pipework trench length is approximately 9.3km with associated heat losses of 13%. Key potential anchor loads include the Circuit of Wales developments.

Figure 33: Ebbw Vale Phase 2 – pipe route and energy centre location

Hourly heat demand profile Figure 34 shows the average, maximum and minimum hourly heat demand profile for phase 2 of the Ebbw Vale network. The peak heat demand is approximately 18.5 MW occurring at 10am, with a steady average demand throughout the day of between 5.5 MW and 10 MW between the hours of 7am and 10pm.

Figure 34: Ebbw Vale Phase 2 average daily heat demand

Technology appraisal The results from the technology appraisal for Ebbw Vale Phase 2 are shown in Table 11.

Table 11: Ebbw Vale Phase 2 technology appraisal Technology Gas CHP Biomass (inc. EfW / AD / RHI) other heat source Heat Output 10 MW 11 MW 18.5 MW Electrical Output 8.99 MW - - Capital Expenditure Generation technology £9,070,600 £11,586,300 N/A Network £11,363,515 £9,317,515 £9,317,515 Total £20,434,115 £20,903,815 £9,317,515 IRR 9% N/A 6% Net Present Value £9,367,892 -£43,074,951 £1,603,646 Payback 11 years >25 years 14 years 25 Year Income £56,238,303 -£44,934,270 £20,608,933 Carbon Savings 12,363 tonnes 9,939 tonnes 12,337 tonnes

Gas CHP provides the strongest business case for further network and scheme development. A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 12.

Table 12: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 10 MW Electricity output 8.99 MW Capital Generation £9,070,600 expenditure technology Network £11,363,515 Total £20,434,115 IRR 9% 10% Net present value £9,367,892 £17,711,553 Payback 11 years 12 years Total income £56,238,303 £103,908,931 Carbon saving 12,363 tonnes

Energy Centre The phase 2 energy centre construction costs include the cost to accommodate and operate plant of the nature, location and scale specified for phase 2 only. As stated, at industrial locations Gas CHP central plant and auxiliary peak and reserve plant may be installed in modular buildings without need for a single large energy centre (minimising pipe diameters and heat losses).

If there were issues in locating the additional Energy Centre required for Phase 2 at the Phase 1 site, then a suitable location would be further to the west of the site, on the boundary of the Circuit of Wales development.

If at a single location The Energy Centre would have an indicative floor area of 250m2. This includes space for CHP plant, auxiliary boilers and pumps etc.

Timescale This development could take place within the next four to eight years to compliment the next phases of development at the Circuit of Wales. Consultation with the planners employed by the developer indicated that the next phases would be likely to be developed within eight years of commencement of operations.

Conclusions As stated above Gas CHP provides the strongest business case as the sale of electricity provides significant additional revenue with the electricity sales tariff significantly affects the business case.

Sourcing secondary heat from a third party EfW or biomass power station also provides a viable business case but currently there are no plans for such a development.

3.2.3 Phase 3 – Bryn Serth, Rhyd Y Blew & Crown Business Park

Heat demand categories Figure 35 shows the use and ownership of buildings within the network based on the heat demand. It can be seen that the majority of heat demand comes from industrial units and workshops with 66% of the heat demand from private sector buildings and 34% from planned developments.

Figure 35: Ebbw Vale Phase 3 building use and building ownership

The network Phase 3 of the Ebbw Vale network is shown in Figure 36. The total pipework trench length of the complete network is 12.3km with associated heat losses of 12%.

Figure 36: Ebbw Vale Phase 3 – pipe route and energy centre location

Hourly heat demand profile Figure 37 shows the average, maximum and minimum hourly heat demand profile for the complete Ebbw Vale network. The peak heat demand is approximately 28 MW occurring at 10am, with a steady average demand throughout the day of between 8.5 MW and 15.0 MW between the hours of 7am and 10pm.

Figure 37: Ebbw Vale Phase 3 average daily heat demand

Technology appraisal The results from the technology appraisal for the complete Ebbw Vale network are shown in Table 13.

Table 13: Ebbw Vale Phase 3 technology appraisal Technology Gas CHP Biomass Biomass EfW / AD/ (inc. RHI) Gasification other heat CHP10 source Heat Output 12 MW 17 MW 17 MW 27.9 MW Electrical Output 10.8 MW - 9.15 MW - Capital Generation £11,529,210 £17,808,450 £44,239,800 Expenditure technology Network £14,507,148 £11,801,148 £8,228,101 £11,801,148 Total £26,036,358 £32,315,598 £52,467,901 £11,801,148 IRR 9% N/A 9% 9% Net Present Value £13,756,713 -£64,728,199 £25,287,585 £6,117,141 Payback 11 years >25 years 11 years 11 years 25 Year Income £75,092,084 -£66,159,560 £146,729,604 £33,812,963 Carbon Savings 16,959 16,147 tonnes 18,789 51,302 tonnes tonnes tonnes

A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 14.

Table 14: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 12 MW Electricity output 10.8 MW Capital Generation £11,529,210 expenditure technology Network £14,507,148 Total £26,036,358 IRR 9% 10% Net present value £13,756,713 £25,030,865 Payback 11 years 12 years Total income £75,092,084 £139,107,292 Carbon saving 16,959 tonnes

Energy Centre The assessment considers a single large energy centre located to the east of the Rassau Industrial Estate. Further future-proofing work (at the feasibility stage) may indicate that is more viable to utilise an energy centre located on the boundary of the Circuit of Wales site, or even at the development sites.

In consideration of locating the Energy Centre to the south of the A465, the benefits of connection to the wider network would need to be clearly quantified and considered.

If at a single location The Energy Centre would have an indicative floor area of 339m2. This includes space for CHP plant, auxiliary boilers and pumps and heat exchangers etc.

Timescale This phase of development would coincide with development of the Rhyd-y-blew and/or Bryn Serth sites. At present, it is unclear as to exactly when this would take place. If the developments at the two sites do not coincide, then future proofing measures will need to be given detailed consideration.

10 Biomass gasification CHP This technology was assessed in order to inform future scheme developments. At this scale, the consultant team do not believe that the technology is currently commercially proven and there is too much associated technical and business risk for it to be recommended at this time. However, there is ongoing development of the technology and it presents significant potential. Once proven at this scale, biomass gasification CHP may provide an investable private sector opportunity and form an important part of developing a zero carbon strategy for the scheme.

Conclusions While receiving low cost secondary heat from a power generation plant provides a comparable business case for this large network scenario, gas CHP provides the most likely solution (assuming electricity is sold via private wire arrangements in area with limited existing capacity). Due to the scale of the development and associated costs it is unlikely that phase 3 would be implemented without significant developments being undertaken at the Rhyd-y-Blew and Bryn Serth sites.

Table 15: Ebbw Vale priority network summary Phase Priority network Network Estimated 25 Year Financial Case Completion scenario length CAPEX Payback IRR NPV Carbon savings 1 6 MWth gas CHP 5.3km £12,082,006 11 years 9% £6,530,698 7,876 2020 tonnes 2 10 MWth gas CHP 9.3km £20,434,115 11 years 9% £9,367,892 12,363 2025 tonnes 3 12 MWth gas CHP 12.3km £26,036,358 11 years 9% £13,756,713 16,959 2030 tonnes

It is assumed that the network is served by a single energy centre located on the east side of the Rassau Industrial Estate, although there would be an option to locate another energy centre on one of the development sites.

A significant risk (and potential cost issue) arises from the network crossing the recently opened A465 duel carriageway.

3.3 Tredegar

Heat demand categories Figure 38 shows the use and ownership of buildings within the network based on the heat demand. It can be seen that 50% of the heat demand comes from the residential building owned by Tai Calon Housing Association and 41% comes from industrial units and workshops.

Figure 38: Tredegar building use and building ownership

The network The proposed network layout for Tredegar, comprising approximately 500m of pipework trench, is shown in Figure 39. Heat loss has been calculated at 5% though it is likely the length of pipe may be greater due to the required pipe infrastructure within the development land and St George’s Court. The most suitable location for an energy centre is within the development site. The key heat loads are St George’s Court and the development site.

Figure 39: Tredegar pipe route and energy centre location

Hourly heat demand profile Figure 40 shows the average, maximum and minimum hourly heat demand profile for the proposed Tredegar network. The peak heat demand is approximately 1.7 MW occurring at 9am, with a steady average demand throughout the day of between 350 kW and 750 kW.

Figure 40: Tredegar average daily heat demand

Technology appraisal The results from the Tredegar technology appraisal are shown in Table 17. Other technologies given high level consideration are shown in Table 16.

Table 16: High level technical viability considerations for Tredegar Technology High level technical viability considerations Further consideration?

Anaerobic digestion  Feedstocks available for ~1MW plant No  Space restricted site not suited to technology  Large scale investment

Biomass heat  Compatible with existing operating conditions Yes and delivers required water temperatures to buildings (up to 85oC)  Potentially cost effective carbon reduction technology (£ per tonne carbon)  Potential air quality issues  Uncertainty of RHI

Biomass or biofuel CHP  Air quality issues No  Space restricted site not suited to technology  Large scale investment

Energy from Waste  Air quality issues No  Space restricted site not suited to technology  Large scale investment

Geothermal  The geothermal heat flow value for the No Blaenau Gwent area is 40-50 mW/m-2 and does not present a viable opportunity11.

Ground source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited land availability for horizontal array  Uncertainty of RHI

Water source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited availability of water resource  Uncertainty of RHI

11 Figure from British Geological Survey heat flow map http://www.bgs.ac.uk/research/energy/geothermal/

Table 17: Tredegar technology appraisal Technology Gas CHP Biomass (inc. RHI) Heat Output 600 kW 600 kW Electrical Output 529 kW - Capital Expenditure Generation technology £787,853 £888,800 Network £435,277 £380,277 Total £1,223,130 £1,269,077 IRR 7% N/A Net Present Value £215,117 -£2,498,758 Payback 14 years >25 years 25 Year Income £2,714,063 -£2,633,661 Carbon Savings 822 tonnes 702 tonnes

Gas CHP provides a marginal business case. As there is a low heat density at the site, heat-only technologies are deemed unviable. A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 18.

Table 18: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 600 kW Electricity output 529 kW Capital Generation £787,853 expenditure technology Network £435,277 Total £1,223,130 IRR 7% 7% Net present value £215,117 £511,270 Payback 14 years 15 years Total income £2,714,063 £4,724,511 Carbon saving 822 tonnes

Energy Centre The current energy centre location is allocated employment land12. If the energy centre is to be located on allocated employment land it will need to be clearly demonstrated that the building provides a service to the proposed employment use. The Energy Centre would have an indicative floor area of 22m2. This includes space for CHP plant, auxiliary boilers and pumps and heat exchangers etc.

Private Wire Private wire arrangements and costs have been included to supply electricity to all businesses on the network.

Timescale The construction of this network would coincide with development of the employment land. At present, it is unclear as to exactly when this will take place.

Conclusions Gas CHP provides a marginal business case if all electricity is sold via private wire arrangements. The network development is unlikely to take place without development of the employment land (assuming the new business receives heat and power from the network). Viability may be improved if a heat and power intensive process was located on the development land but due to the nature of the site, and associated development plan, this may not be the case.

The Tai Calon social housing provides the key anchor load and so early engagement with the organisation is essential.

12 BGCBC Policy EMP1.2 identifies the allocation as a business park in the employment hierarchy which only permits B1 and an ancillary facility or service to the proposed employment use.

3.4 Abertillery

Heat demand categories Figure 41 shows the use and ownership of buildings within the network based on the heat demand. It can be seen that the highest proportion of the heat demand (35%) comes from education and the majority is owned by BGCBC.

Figure 41: Abertillery building use and building ownership

The network Figure 42 shows the proposed district energy network for Abertillery. The network design differs from the cluster identified in the previous section as it was determined that the business case was improved by removing the smaller loads thus increasing linear heat density of the network cluster. As such the heat demand was reduced by a small proportion whilst reducing the length of pipe, and hence capital costs, of the project. A summary of the initial technology appraisal for the larger Abertillery network can be found in Appendix 2 – Network Assessment.

The proposed network follows a central main along Alma Street, stretching from the Leisure Centre down to Cwrt Mytton Nursing Home. An indicative energy centre location was identified on the area of council-owned land at the boundary between Abertillery Comprehensive School and the Canolfan- y-Bont Car Park. The required length of pipe is approximately 750m and heat losses are calculated at 10%.

Figure 42: Abertillery pipe route and energy centre location

Hourly heat demand profile Figure 43 shows the average, maximum and minimum hourly heat demand profile for the proposed Abertillery network. The peak heat demand is approximately 1.25 MW occurring at 7am and 11am, with a steady average demand throughout the day of between 200 kW and 450 kW.

The high overnight usage attributable to the requirements Leisure Centre and Cwrt Mytton (Care Home).

Figure 43: Abertillery average daily heat demand

Technology appraisal The results from the Abertillery technology appraisal are shown in Table 20. Other technologies given high level consideration are shown in Table 19.

Table 19: High level technical viability considerations for Abertillery Technology High level technical viability considerations Further consideration?

Anaerobic digestion  Feedstocks available for ~1MW plant No  Space restricted site not suited to technology  Large scale investment

Biomass or biofuel CHP  Air quality issues No  Space restricted site not suited to technology  Large scale investment

Energy from Waste  Air quality issues No  Space restricted site not suited to technology  Large scale investment

Geothermal  The geothermal heat flow value for the No Blaenau Gwent area is 40-50 mW/m-2 and does not present a viable opportunity13.

Ground source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited land availability for horizontal array  Uncertainty of RHI

Water source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited availability of water resource  Uncertainty of RHI

13 Figure from British Geological Survey heat flow map http://www.bgs.ac.uk/research/energy/geothermal/

Table 20: Abertillery technology appraisal Technology Gas CHP Biomass (inc. RHI) Heat Output 500 kW 500kW Electrical Output 441 kW - Capital Expenditure Generation technology £650,837 £734,800 Network £647,522 £565,297 Total £1,298,359 £1,300,097 IRR 3% N/A Net Present Value -£234,698 -£2,151,773 Payback 18 years >25 years 25 Year Income £2,030,917 -£1,812,612 Carbon Savings 564 tonnes 477 tonnes

Gas CHP provided the only marginal business case. As there is a low heat density at the site, heat- only technologies are unviable. A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 25.

Table 21: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 500 kW Electricity output 441 kW Capital Generation £650,837 expenditure technology Network £647,522 Total £1,298,359 IRR 3% 5% Net present value -£234,698 £11,585 Payback 18 years 20 years Total income £2,030,917 £3,712,707 Carbon saving 564 tonnes

Energy Centre The Energy Centre would be located on BGCBC land and the current site has been selected as there are considerable space constraints closer to the Leisure Centre.

The proximity of the residential properties and Abertillery Comprehensive School will need to be considered in the development of the Energy Centre, although this is not deemed to be a high risk.

The Energy Centre would have an indicative floor area of 18m2. This includes space for CHP plant, auxiliary boilers and pumps and heat exchangers etc.

Private Wire It is assumed that 100% of electricity is sold to the BGCBC buildings as part of a private wire arrangement.

Timescale As the key anchor loads are existing public sector buildings the timescale for construction of the network could be within the next three years.

Conclusions Gas CHP provides a marginal business case if all electricity is sold via private wire arrangements. Connection risks are low for this network as most of the heat and power demands are associated with BGCBC buildings.

3.5 Brynmawr

Heat demand categories Figure 44 shows the use and ownership of buildings within the network based on the heat demand. It can be seen that a high proportion of the heat demand (60%) in the network comes from industrial units and workshops and the majority of demand comes from private sector buildings.

Figure 44: Brynmawr network building use and building ownership

The network The proposed network layout for Brynmawr, shown in Figure 45, comprising approximately 1.38 km of pipework trench with a calculated heat loss of 11%. A suitable site to locate the energy centre may be the land to the North East of Blaenant Industrial Estate.

Figure 45: Brynmawr pipe route and energy centre location

Hourly demand profile Figure 46 shows the average, maximum and minimum hourly heat demand profile for the proposed Brynmawr network. The peak heat demand is approximately 3 MW occurring at 9am, with a steady average demand throughout the day of between 500 kW and 1,300 kW.

Figure 46: Brynmawr average daily heat demand

Technology appraisal The results from the Brynmawr technology appraisal are shown in Table 23. Other technologies given high level consideration are shown in Table 22.

Table 22: High level technical viability considerations for Brynmawr Technology High level technical viability considerations Further consideration?

Anaerobic digestion  Feedstocks available for ~1MW plant No  Space restricted site not suited to technology  Large scale investment

Biomass or biofuel CHP  Air quality issues No  Space restricted site not suited to technology  Low heat demand  Large scale investment

Energy from Waste  Air quality issues No  Space restricted site not suited to technology  Low heat demand  Large scale investment

Geothermal  The geothermal heat flow value for the No Blaenau Gwent area is 40-50 mW/m-2 and does not present a viable opportunity14.

Ground source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited land availability for horizontal array  Uncertainty of RHI

Water source heat pump  Lower water temperatures not be suitable for No industrial applications and existing buildings  Limited availability of water resource  Uncertainty of RHI

14 Figure from British Geological Survey heat flow map http://www.bgs.ac.uk/research/energy/geothermal/

Table 23: Brynmawr technology appraisal Technology Gas CHP Biomass (inc. RHI) Heat Output 1.4 MW 1.4 MW Electrical Output 1.26 MW - Capital Expenditure Generation technology £1,576,663 £1,788,600 Network £1,375,682 £1,147,735 Total £2,952,345 £2,936,335 IRR 1% N/A Net Present Value -£1,089,386 -£5,952,879 Payback 22 years >25 years 25 Year Income £3,515,524 -£5,988,171 Carbon Savings 1,221 tonnes 952 tonnes

All technology options and network scenarios proved unviable. A comparison between the 25 year and 40 year business case for gas CHP is shown in Table 24.

Table 24: 25 and 40 year business case for gas CHP Business case period 25 years 40 years Heat output 1.4 MW Electricity output 1.26 MW Capital Generation £1,576,663 expenditure technology Network £1,375,682 Total £2,952,345 IRR 1% 3% Net present value -£1,089,386 -£851,740 Payback 22 years 26 years Total income £3,515,524 £5,722,056 Carbon saving 1,221 tonnes

Conclusions All network scenarios have a low linear heat density and the study has not identified a priority scheme for the Brynmawr site. This site is therefore not considered any further.

4 SENSITIVITY & RISK ANALYSIS

4.1 Issues and Risks

Table 26 outlines potential risks and issues for the project. The key showing the level of risk is shown in Table 25.

Table 25: Risk level key No risk Low risk Medium risk High risk

Table 26: Assessment of risks and issues Risk level

Risk/Issue Mitigating measures Ebbw Vale Tredegar Abertillery

Where businesses Many of the building SEL received actual data As all of the buildings SEL undertook detailed heat demand were unresponsive or heat demands were for ViTCC, the other except Abernant modelling of key buildings according to not open to verified from heat building heat demands Surgery are BGCBC best practice and best available consultation, heat profile modelling that were verified from heat owned, SEL received information. SEL calculated the hourly, demands are verified utilises industry profile modelling that actual data for those daily and annual heat demand of the from the previous benchmarks (see utilises industry buildings. individual buildings and calculated the report and heat Appendix 1 – Energy benchmarks. distribution losses based on proposed pipe profile modelling that Data). Some of the routes, specification and operating utilises industry industrial heat loads parameters to gauge heat demand. Where benchmarks modelled require actual data was not available, energy different temperatures demands were calculated using data from 1 for aspects of their the previous report and benchmark data. processes. Due to a lack of available information If progressed, further work will need to be and, the nature of this conducted at the feasibility stage to fully work, this has not been verify the heat loads and review installed fully considered at this capacity and type of existing heat stage. generating plant, etc. that could be served by the proposed network (particularly for the industrial users at Rassau). The process of integrating the network with the buildings, and processes to maximise heat

that can be delivered by the network e.g. pre heat options where high temperatures are required (such as steam requirements at Envirowales Ltd), will not be accurately understood until this has been conducted.

Heat demands for There is no current heat There are no vacant There are no vacant Heat demands within vacant buildings vacant industrial demand at a number of units. units. have been verified from heat profile units have been vacant industrial units. modelling that utilises industry included This heat demand benchmarks based on space heating only. makes up 10% of the overall demand of the Rassau Industrial Estate 2 businesses and has been included to provide an indication of potential heat demands when these units are occupied.

Changes to plans for Heat demands for Heat demands for There are no large If these plans change, the impact upon the new developments proposed Circuit of potential developments developments currently scheme must be assessed. This risk can be alter the modelled Wales, Rhyd-y-Blew and at Tredegar Business planned for this site. assessed (at a high level) using the heat demand and Bryn Serth Park were assessed sensitivity analysis tool developed. BGCBC business case for the developments were according to latest should ensure they liaise with all potential network options assessed according to knowledge, information developers to consider and safeguard for latest knowledge, and development plans. district energy network plans. information and 3 development plans. This provides a particular risk for the Circuit of Wales development which is a key anchor load and is based on outline planning documents only.

The Circuit of Wales If this development Engage with the Heads of the Valley development does does not go ahead, then Development Corporation to discuss not go ahead or the the feasibility of the district energy options. 4 company are not Rassau development is engaged in district significantly reduced as energy project the business case is

adversely affected (see Appendix 2 – Network Assessment).

An EfW site is not There are no plans for The planning process could be used to developed at Rassau an EfW plant to be influence the location of an EfW. 5 Industrial Estate located at the Rassau site. The business cases It is likely that current It is likely that current It is likely that current The investment criteria required for for the priority business case will be business case will be business case will be BGCBC to take projects to the feasibility projects assessed considered marginal at unattractive to potential considered unattractive stage should be clearly identified via may not be strong best. public and private sector to potential public and detailed internal consultation. BGCBC enough to interest developers. private sector should use the business case models to BGCBC or any developers. flex the business cases in order to further 6 private sector understand how they are affected (and developers may be improved) by changes to energy costs, energy sales prices etc. BGCBC public sector funding / resources that can be used to improve business cases and alleviate risk.

Potential Connection risk is high The business case relies The business case relies If any of the projects are progressed then, heat/electricity users at this site, and the upon the uptake of heat upon the uptake of heat at the feasibility stage, further do not take up the business case relies and power sales from and power sales from engagement will be required with senior district energy offer upon the uptake of heat two existing businesses, mainly BGCBC contacts at key heat / electricity demand and, in particular, power BGCBC (ViTCC) and the buildings. organisations in order to establish their sales from a number of Tai Calon Housing appetite for the district energy offer. This existing businesses Association and so the should be assessed (at a high level) using (some of which have connection risks are not the sensitivity analysis tool developed. expressed engagement as high as at Ebbw Vale. 7 fatigue) and new developments.

The financial stability of key businesses will also need to be considered.

The capital costs for If the financial model The project is not The project is not To ensure that the economic assessments installation of does not provide a complex and associated complex and associated developed are accurate and meaningful, scheme and network representative picture risks are low. risks are low. SEL has drawn upon fifteen years of are higher than of the true cost of the experience of designing and managing the estimated within the network and the likely installation of district heating schemes and business case financial benefits or the the associated financial knowledge gained. assessment economic assessment All project costs are based on a does not provide combination of supplier quotes, industry sufficient information to costing tools and SEL’s project experience secure funding then the of providing technical support throughout network plan will not design, tendering and construction of 8 progress. This business district heating networks. SEL holds a case has slightly higher broad knowledge of the actual costs of risk as it involves a installing a district heating scheme large, complex scheme including costs for plant and equipment and includes a number supply and installation, energy centre of stated assumptions. construction, distribution pipe work supply and installation, trench excavation and re- instatement. A 10% contingency has been built into all capital costs used within the business cases.

Changes in energy For all sites, the prices of gas and electricity have a significant impact on the As the values for energy savings and sales prices make the projects financials. The operating viability of the CHP scheme relies upon the are based on current benchmark values project unfeasible ‘spark gap’ i.e. the difference in price between gas and electricity. If gas prices (and a standard rate of inflation), they rise faster than those of electricity, then the viability is reduced. would need to increase if the costs of 9 generation increased. This is likely to be achievable in the medium and long term as tariffs will also have increased in the wider market.

The network As this is a phased Existing buildings and Existing buildings and SEL has ensured that, as far as is solutions presented scheme important planning documents planning documents appropriate at the masterplanning stage, are not future consideration needs to show that there may be show that there may be careful consideration is given to future proofed be given to future- limited expansion limited expansion proofing (particularly the network), whilst proofing to ensure that opportunities for this opportunities for this not at the expense of efficient operation in the network has the network. network. the short and medium term. SEL has 10 capacity to serve considered the design implications of additional buildings and future proofing and ensured that the future developments. proposed solutions are suitable and appropriate in the short term but with clear route to expand. Future proofing will need to be further considered at the feasibility stage.

Physical barriers Barriers and issues Barriers and issues Barriers and issues To avoid risks, the main physical barriers, prevent the include key utilities include key utilities include key utilities issues and constraints within the study development of a infrastructure, main infrastructure, main infrastructure, main area have been considered during the district heating roads (particularly the roads (Commercial roads (Alma Street), masterplanning process. GIS layers network A465 for phase 3), Street), prohibitive topography (extending including surface water drains and areas of surface water drains, topography (between from Abernant Surgery special engineering difficulty were received hard digging conditions, Business Park and St to the Sports Centre), from BGCBC and analysis. Proposed pipe 11 areas of non-Council George’s Court), surface surface water drains, routes have also been walked. At the owned land. water drains, and areas hard digging conditions feasibility stage the client’s representative of non-Council owned and areas of non- will need to further liaise with local land. Council owned land. Highways, Environmental Health and Planning Departments and utilities companies.

New developments Although BGCBC Policy As the business case There are no large The planning process should be adapted to are not safeguarded DM4 encourages major includes the developments currently ensure that, in the subject areas, all new to facilitate development proposals development of the planned for this site. developments are compatible with a connection to the to incorporate schemes Employment Land, then district energy offering and are network which generate energy risk is high. encouraged / compelled / required to from renewable and low connect to existing / future networks. zero carbon technologies, there are no specific planning 12 mechanisms to ensure new developments are designed to facilitate connection to a network. As there are a number of developments planned in this area, then risk is high.

Existing gas capacity Wales and West Utilities The scale of the plant specified has low associated is not adequate to have confirmed that a capacity risk operate gas CHP 180mm gas main runs plant of the scale next to the proposed specified Energy Centre site and 13 that there is likely to be available capacity (this would only be guaranteed as part of a formal application).

Summary The overall risk associated with progressing these projects is shown in Table 27.

Table 27: Overall project risk Priority network Overall risk Summary of rationale

This project and associated business case is currently deemed as high risk as:

 The business case is marginal  Connection risk is high as all potential heat loads are private sector companies  A number of units are currently unoccupied  Circuit of Wales are not yet engaged in the project Ebbw Vale High  There are currently no firm development plans for the Bryn Serth and Rhyd-y-Blew Enterprise Zones (Phase 3 only)  There are no current plans for an EfW plant at the site  There are no specific planning mechanisms to ensure new developments are designed to facilitate connection to a network  The recently developed A465 provides a physical barrier to the network

This project and associated business case is currently deemed as high risk as:

 The business case is marginal

 There are currently no firm development plans for Tredegar Business Park High Tredegar  Connection risk is an issue as two of the businesses and Tai Calon Housing Association are not yet

engaged in the project

 There are no specific planning mechanisms to ensure new developments are designed to facilitate connection to a network

Even though the business case is weak, this project and associated business case is currently deemed as medium risk as:

Abertillery Medium  The potential key anchor loads are BGCBC buildings (except Abernant Surgery) and so connection risk is low  Barriers include Alma Street and the topography (extending from Abernant Surgery to the Sports Centre)

4.2 Sensitivity

A sensitivity analysis tool was developed for the business cases in order to assess the key variables and associated risks. Detailed discussions were held with the client and the tool allows the client to vary key business case parameters (as per their requirements).

The key variables affecting the business case are identified as: Heat demands Capital expenditure Heat sales (network uptake and tariff) Electricity sales (tariff) Fossil fuel tariffs Scheme efficiency (average and seasonal) Percentage cost / revenue increases in line with interest rates Net present value discount factor

Figure 47: Sensitivity analysis tool

4.2.1 Ebbw Vale

Figure 48 and Figure 49 depict the financial case sensitivity for Ebbw Vale Phase 1 and 2 (against the 25 year business case).

Figure 48: Financial Case Sensitivity - Ebbw Vale Phase 1

Figure 49: Financial Case Sensitivity - Ebbw Vale Phase 2

Reductions in network heat demand and electricity sales and increases in natural gas costs critically affect the financial case (more so than the heat sales tariff and CAPEX). A 20% reduction in electricity sales or network heat demand make the development an unviable proposition.

The key heat loads for each phase have been included in Table 28 to provide context to the above Figure 48 and Figure 49. If two or three of these key heat loads did not connect to the network then it is likely to be unviable.

Table 28: Ebbw Vale key heat loads % of total phase 1 heat % of total phase 2 heat Building / Site demand demand Yuasa Battery Ltd 14% 9% Express Contract Drying 14% 9% Zorba Delicacies 9% 6% Circuit of Wales - 4* Hotel 9% 6% Innovation Centres - 9% Brand Centres - 5%

4.2.2 Tredegar

Figure 50 depicts the financial case sensitivity for Tredegar (against the 25 year business case).

Figure 50: Financial Case Sensitivity - Tredegar

Reductions in network heat demand and electricity sales and increases in natural gas costs critically affect the financial case. A 10% reduction in electricity sales or network heat demand make the project an unviable proposition and indicates extremely high levels of associated risk.

The key heat loads for each phase have been included in Table 29 to provide context to the above Figure 50. If either St George’s Court, Camtronics Vale or the planned Employment Land

Development did not connect to the network, this would lead to a greater than 10% reduction in the network heat demand and would make the project unviable.

Table 29: Tredegar heat demands Building / Site % of total phase heat demand St George's Court 50% Camtronics Vale 26% Employment Land Development 15% British Gas Energy Academy 5% ViTCC 3%

4.2.3 Abertillery

Figure 51 depicts the financial case sensitivity for Abertillery (against the 25 year business case).

Figure 51: Financial Case Sensitivity - Abertillery

Reductions in network heat demand and electricity sales and increases in natural gas costs critically affect the financial case. A less than 10% reduction in electricity sales and network heat demand make the development an unviable proposition. As nearly all the network demand is from BGCBC buildings this is less critical than in other cases but should be considered with regard to any proposed energy efficiency work, weather conditions in 2014 and proposed changes to building use and operation.

The key heat loads for each phase have been included in Table 30 to provide context to the above Figure 51.

Table 30: Abertillery Heat Demands Building / Site % of total phase heat demand Abertillery Comprehensive School 35% Abertillery Sports Centre 31% Cwrt Mytton 22% Abernant Surgery (Canolfan Y Bont) 9% Anvil Court 4%

5 CONCLUSIONS

Sustainable Energy Ltd completed this report as a deliverable of a heat mapping and masterplanning exercise for a number of sites in the Blaenau Gwent region. This report presents the business cases for developing district energy networks around Rassau Industrial Estate (Ebbw Vale), Tredegar Business Park, public sector buildings in Abertillery and three industrial estates in Brynmawr. The viable options have the potential to reduce local authority energy costs (at Tredegar and Abertillery), reduce carbon emissions, generate revenue (business model dependant), promote development opportunities and help alleviate fuel poverty in the immediate area.

As district energy networks are rateable assets (under business rates), and local authorities can collect and retain 100% of rates from renewable energy schemes (there is a review underway, applying from 2017) there is potentially a further incentive to promote delivery of district energy networks in Blaenau Gwent.

5.1 Ebbw Vale

Business case The financial cases for the priority phased network scenarios at Ebbw Vale are shown in Table 31.

Table 31: Ebbw Vale priority network summary Phase Priority network Network Estimated 25 Year Financial Case Completion scenario length CAPEX Payback IRR NPV Carbon savings 1 6 MWth gas CHP 5.3km £12,082,006 11 years 9% £6,530,698 7,876 2020 tonnes 2 10 MWth gas CHP 9.3km £20,434,115 11 years 9% £9,367,892 12,363 2025 tonnes 3 12 MWth gas CHP 12.3km £26,036,358 11 years 9% £13,756,713 16,959 2030 tonnes

There is a business case for the project (using the stated assumptions) and Gas CHP provides the strongest economic case for the network phases as the sale of electricity provides significant additional revenue. Receiving low cost secondary or waste heat from a power generation plant also provides a business case.

Without the Circuit of Wales development then the business cases for all development phases are adversely affected (6% IRR for Phase 1) (see Appendix 2 – Network Assessment).

It is unlikely that phase 3 would be implemented without significant development taking place at the Bryn Serth and Rhyd-y-Blew sites.

The Rassau site at Ebbw Vale potentially offers the most potential benefits of all the network developments. However, there are significant associated risks particularly in relation to the Circuit of Wales development and heat and power uptake from the existing businesses. BGCBC’s business case requirements and perception of these risks could make the project unviable to be taken to the feasibility stage.

Key Stakeholders Stakeholders include the key heat load businesses such as Yuasa Batteries Ltd, Zorba Delicacies Ltd and Express Contract Drying, BGCBC Economic Development, Regeneration and Planning departments, the Heads of the Valleys Development Corporation and the Welsh Government.

While they are not a large energy user, previous experience indicates that Nick Payne, Plant Manager at Monier Ltd is amenable to hosting energy related events targeting the estate businesses and held wind energy related events at his site prior to installing a 500kW turbine. Monier Ltd could therefore act as an important leader on the site.

Many of the businesses were not fully engaged with the process and if the network investigation at this site is to be progressed then significant work will need to be undertaken to engage / reengage the businesses on site, particularly the key heat loads.

To drive engagement, energy audits will need to be conducted on the buildings and processes of the key potential customers to identify how the network can be fully integrated with their operations, and to develop detailed business cases for them to connect. They can then use this information to make internal decisions and become engaged in the process. Previous experience of working with these companies indicates that this will be particularly important in dealing with Yuasa Batteries Ltd and Zorba Delicacies Ltd.

The stability of the businesses on the estate should also be an important consideration in relation to connection risk and will need to be fully tested using the sensitivity analysis tool.

Rassau Industrial Estate – Smart Business Park Many of the businesses on Rassau Industrial Estate are involved in the automotive sector and the Enterprise Zone status is granted to encourage Advanced Manufacturing businesses to locate at the site. These businesses are often required to demonstrate their green credentials (as part of supply chain pressures) and so there are likely to be significant benefits for the retention of businesses associated with a low carbon energy source at the site.

When compared with electricity, heat is a secondary requirement for most businesses on the industrial estate and further business expansion and attracting new business may be inhibited by the lack of electrical capacity. Therefore, any effective energy solution (such as gas CHP) will need to consider the generation and delivery (and potentially storage) of electrical power.

BGCBC, in partnership with the Welsh Government, are currently considering the options for developing ‘Smart Business Parks’. These industrial areas will promote energy efficiency, smart grids, energy storage and low carbon energy generation. Rassau Industrial Estate is one of the main business parks in the region and a district energy scheme would be a key driver towards the development of a Smart Business Park.

The installation of network infrastructure at the site may provide a further opportunity to install new private wire cables, telecommunications and internet connections at the same time and this may drive funding from other sources.

Planning, governance and development BGCBC Policy DM4 encourages major development proposals to incorporate schemes that generate energy from renewable and low and zero carbon technologies but there are no policy tools employed by BGCBC to ensure new developments are required to consider district heating specifically. The potential for connection should be set out in development briefs, and developers should be required to investigate district energy as part of their proposals.

To drive the implementation of a district energy network the Local Authority may wish to consider Rassau as a priority site for EfW or other heat and power generation heat technologies.

The planning process could also be used to:  Safeguard heat network routes identified in this masterplan and any further feasibility work  Ensure that infrastructure, such as cables for private wire, water pipes and telecommunication are integrated into shared / multi-purpose utility trenches  Apply Local Development Orders to extend permitted development rights across the Blaenau Gwent region or to grant permission for district energy developments

Engaging with developers With regard to the Circuit of Wales, or any other planning applications for the Rassau site over a certain size, BGCBC should ensure that throughout the planning process, development proposals should, as far as practicable, include or support the use of district heating. This includes:

 Incorporating multi-building heating systems; heating systems may be fed from energy centres/plant rooms producing low temperature hot water for space heating and domestic hot water

 Requiring the provision of connection points incorporating isolation valves and terminals to facilitate future connection  Reserving space in new plant rooms for heat exchangers to facilitate connection to the heat network  Requiring wet systems to be installed (as opposed to electrical heating systems)  Designing internal heating systems so that they can be connected to supply a district energy network with minimum retrofit requirements  Providing routes and penetrations into new buildings to allow district heat pipe access into plant rooms  Designing systems to operate at optimised flow and return water temperatures

Building Regulations Future updates to building regulations may provide an opportunity for developers to defer installing compliant technologies provided they make provision to connect to a future heat network. If a planned network is not then developed there may be a requirement to retrofit compliant technologies within a set time period.

Governance There are no obvious existing clients to procure the ESCo services for this potentially high risk project. The Heads of the Valleys Development Corporation should be engaged by BGCBC to discuss development and governance arrangements, with the Circuit of Wales acting as one of the key anchor customers. At this stage, it is deemed unlikely that any businesses would act in isolation or come together to form an SPV to undertake this without facilitation from BGCBC and potentially Welsh Government.

Further work The economic model for this project should be further investigated and flexed using the sensitivity analysis tool provided. BGCBC should then make a decision on whether to progress this project to the feasibility stage.

The key stakeholders (identified above) should be contacted to gauge potential interest in the project. The businesses should be individually targeted but a workshop could be held to discuss the project with public sector stakeholders.

If BGCBC decides to proceed with the Rassau network, and more detailed feasibility assessments are conducted, the Council and/or client’s representatives will need to take a key role in facilitating engagement with potential customers. It may also be necessary to form a project group that includes appropriate local authority and private sector stakeholders.

If BGCBC does not plan to directly progress the scheme, but there is an appetite for the project, then a range of corporate actions could be used to promote private sector development of a scheme including:  Provision of land for construction of energy centre and pipe routes (BGCBC has limited land holdings on the site, but the Welsh Government owns some significant sites)  Engagement and support with planning consents and highways activities for a scheme, energy centre building and network  Facilitating other engagement between key stakeholders, such as site businesses, Welsh Government and potential ESCos, GenCos, HeatCos, DistCos, SupplyCos15.

15 Networks and schemes, or elements of both, can be procured via Energy Service Company (ESCo) type arrangements and financed under various Design / Build / Finance / Operate arrangements. District energy projects can be delivered by a single company/vehicle or number of companies / vehicles whose roles include:  Generation Company (GenCo) – responsible for generation of energy to supply to a district energy network, the GenCo may be the owner and operator of a heat and/or power plant.  Distribution Company (DistCo) – responsible for the distribution of energy between the generation company and the end uses / supply company, the DistCo may own and operate heat and private wire networks.  Supply Company (SupplyCo) – responsible for the sale of energy to end users.

Long term contracts would need to be agreed with ESCos, GenCos, DistCos and SupplyCos (that may be private sector, public sector or a public/private sector partnership or SPV) to finance and/or build and/or operate the scheme.

5.2 The Works

Maximising benefits BGCBC is aware that there is a significant opportunity to maximise the benefit of the existing network at The Works site. As stated, there is capacity to serve far greater future heat demands than the network currently serves. It is calculated that the network could deliver 11 MW of peak heat load and it currently delivers less than 3 MW and there are connection points in the ground awaiting connection.

The benefits from connection to this low carbon network may provide an incentive for businesses to locate at the development sites and there may be opportunities for the network to serve future housing developments, although this requires further investigation.

Increasing network heat sales will also increase the financial viability. However the energy centre currently operates gas boilers (as well as gas CHP and biomass), therefore as the network demands increase then so will the carbon emissions associated with heat generation. In order to ensure low carbon heat and security of supply in the future, a zero/low carbon strategy should be developed for the energy centre.

The learning from this site will provide BGCBC with an understanding of the implications of various energy sources available for district energy networks and provide a facility for testing emerging technologies such as electrical storage or additional electrical generation.

There may be an opportunity for the nearby Ysbyty Aneurin Bevan (that operated a biomass boiler) to connect to the network and consultation the Health Board will be required to assess the opportunity.

Key Stakeholders Stakeholders include BGCBC Economic Development, Regeneration and Planning departments, Aneurin Bevan University Health Board.

Further work Further work is required to develop a strategy for the future development and expansion of this network (see section 6) and an initial workshop/meeting could be held to discuss the project with public sector stakeholders. In the first instance, it may be prudent for BGCBC to discuss the strategy with Aneurin Bevan University Health Board at senior level.

5.3 Tredegar

Business case The financial cases for the priority phased network scenarios at Ebbw Vale are shown in Table 32.

Table 32: Scheme and network summary Phase Priority network Network Estimated 25 Year Financial Case scenario length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings 1 600 kWth gas CHP 500m £1,223,130 14 years 7% £215,117 822 17 tonnes tonnes

There is a marginal business case for the priority network at this site (assuming 100% private wire arrangements) and there are a number of risks associated with the nature and timing of the development of the employment site. Without this development it is unlikely that the project will progress. Viability may be improved if a heat intensive process was located on the development site but due to the nature of the site, and associated development plan, this is unlikely to be the case.

The Tai Calon Housing Association complex also provides a key anchor load for this development.

Governance and development If the decision is taken to progress, as BGCBC owns one of the buildings on the network, there may be an option to liaise with the Housing Association to set up a SPV to develop the project. If the employment land site is developed then this option may warrant further investigation with the Council

liaising with the new site owner, Tai Calon Community housing and British Gas to establish their appetite for forming a steering group to consider procuring ESCo services in return for a long term, supply agreements. BGCBC would need to commit to connecting its own building to the network and would also be in a position to enter into a long-term energy contract and therefore reduce levels of risk and in so doing help to attract investment from third-parties.

Further work When details emerge on the development of the employment land, the economic model for this project should be further investigated and flexed using the sensitivity analysis tool provided. BGCBC should then make a decision on whether to progress this project to the feasibility stage.

The key stakeholders (identified above) should be contacted to gauge potential interest in the project. They should be targeted specifically and individually but a workshop could be held to discuss the project with public sector stakeholders.

If BGCBC decide to proceed with the Rassau network, and more detailed feasibility assessments are conducted, the Council and/or client’s representatives will need to take a key role in facilitating engagement with potential customers. It may be necessary to form a project group that includes appropriate local authority and private sector stakeholders.

If BGCBC does not plan to directly progress the scheme, but there is an appetite for the project, then a range of corporate actions could be used to promote private sector development of a scheme including:  Provision of land for construction of energy centre and pipe routes (BGCBC has limited land holdings on the site, but the Welsh Government owns some significant sites)  Engagement and support with planning consents and highways activities for a scheme, energy centre building and network Facilitating other engagement between key stakeholders, such as site businesses, Welsh Government and potential ESCos, GenCos, HeatCos, DistCos, SupplyCos.

5.4 Abertillery

Business case The financial cases for the priority network at Abertillery is shown in Table 33.

Table 33: Scheme and network summary Phase Scheme Network Estimated 25 Year Financial Case length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings 1 500 kWth gas 750m £1,298,359 18 years 3% -£234,698 564 417 CHP tonnes tonnes

There is relatively low heat density at this site and this adversely affects the financial and overall business case. However, the risks associated with this project are lower as the key anchor loads are all BGCBC operated buildings.

Governance and development As BGCBC owns many of the buildings on the network the Council could procure the ESCo services in return for a long term, supply agreement. The current financial case will not be attractive to an ESCo and so the cost of heat from any potential arrangement is likely to be prohibitive for all parties.

Key Stakeholders Stakeholders include BGCBC Economic Development, Regeneration and Planning departments.

Further work Although it is unlikely this project will be progressed, the economic model should be further investigated and flexed using the sensitivity analysis tool provided. BGCBC should then make a decision on whether to progress this project to the feasibility stage.

5.5 Brynmawr

Business case The financial cases for the priority phased network scenarios at Ebbw Vale are shown in Table 34.

Table 34: Scheme and network summary Phase Scheme Network Estimated 25 Year Financial Case length CAPEX Payback IRR NPV Carbon BGCBC savings carbon savings 1 1.4 MWth gas 1.25km £2,952,345 22 years 1% -£1,089,386 1,221 NA CHP tonnes

Due to low heat demands and densities and high risks, the network and scheme scenarios investigated for the Brynmawr area were deemed unviable.

6 NEXT STEPS

BGCBC should carefully consider the findings of this study, and fully utilise the sensitivity analysis tool provided, in order to rigorously asses project risks, decide whether to progress the Ebbw Vale project to the feasibility stage and conduct further work addressing The Works site.

Prior to commencement, BGCBC should discuss the findings and future funding options with the Heat Network Delivery Unit (HNDU) at the Department for Energy and Climate Change.

6.1 Ebbw Vale (Rassau area), Tredegar, Abertillery

If any of the above projects are selected for feasibility assessment, this work should include:

Updated heating / cooling demand and supply assessment to include: An updated energy demand and supply assessment for the prioritised areas. This exercise should build upon the data previously collected and generated data.

Site audits and business case assessments for key heat loads This will be particularly important for Ebbw Vale where, in particular, Yuasa Batteries, Zorba Delicacies Ltd and Express Contract Drying Ltd should be assessed. The plans for Circuit of Wales should also be further assessed and liaison with both the developer and design team is essential.

Concept design of energy centre and central plant to include: Review of suitability of the recommended energy centre location(s) and indicative sizing for all key plant and equipment items. This is of particular importance in relation to the phasing options at the Rassau site.

Concept design of the energy centre and plant including all relevant layouts / general arrangements, drawings and specifications should be developed to RIBA Stage 2 (C).

Identify the optimum operational strategy technically and financially best matched to the identified heating, cooling and power demand profiles and a functional control strategy should be developed for the system that controls the energy centre.

Utilities infrastructure (including gas and electrical grid import/export) connections should be further assessed for compatibility with energy centre requirements and to determine the technical and cost implications in relation to the scheme. Phasing, futureproofing and safeguarding should be considered in all aspects of energy centre design and plant selection.

Concept design of energy distribution systems to include: A detailed network analysis, optimisation and design for the priority recommended networks (including any private wire systems). Concept drawings, process flow diagrams and GIS representations should be developed which illustrate the nominal flow rates, network temperatures, indicative network sizing and specification and network design which will include key equipment items necessary for the control and operation of flow through the network such as pressure independent control valves.

BGCB’s representative liaising with potential end-users to seek assurances for heat take-off to allow BGCBC to confirm the intent and commitment of key end-users to connection to the network, based on indicative tariffs for heat sales. Different options for early sign-up should be investigated such as offering discounted tariffs or contributions to connection costs.

Detailed financial modelling to include: Determining all relevant financing options, scheme costs and income for the recommended schemes. This should involve developing a detailed 25 year and 40 year life cycle, discounted cash flow model. The model should account for appropriate indexing in relation to both RPI and energy prices based on official forecasts (such as those made by DECC) and covering energy purchase and sales prices that vary according to organisation type (i.e. residential, public sector, commercial, industrial).

A detailed business model to progress the project should be decided upon. To do this, key decision- makers within BGCBC are required to understand different levels and type of risk in relation to different business models, the interaction between risk acceptance and control of the project. This can be achieved through workshop consultations to enable decision-makers to work through complex interactions and make informed decisions. In advance of the workshop, soft market testing should take place to further investigate commercial financing and contracting arrangements.

The financial model should update and build upon the original model but also include:

The effect of different costs of capital using alternative sources of finance such as:  Internal financing  Public borrowing options (e.g. Public Works Loan Board and Green Investment Bank)  Private debt and equity  ESCO provided finance  Energy Company Obligation (ECO) (for Tredegar)  Developer contributions  A mixture of funding options creating a Weighted Average Cost of Capital (WACC)

Capital Expenditure to consider:  Land for energy centre/central plant  Central plant and equipment (including auxiliary plant)  Energy distribution networks  Customer hydraulic interface units such as heat exchangers  Energy centre design and construction costs  Mechanical and electrical installation costs  Scheme phasing implications  Detailed operational and maintenance costs over 25 and 40 years

Income to consider:  Energy sales and export income for heat, cooling and electricity. Electricity sales revenue should consider private wire, PPA, tri-partite arrangements, demand and supply side management, standby generation arrangements and payments  Potential additional arrangements required for ESCOs selling electricity considering License Lite, top up/standby arrangements, spill power contract and payment of use of system charges  Options for capital loans and grants  Developer contributions and connection charges  Potential use of ERDF funding, Section 106 agreements, Community Infrastructure Fund, Allowable Solutions and any other relevant funds and tariffs  Grants or subsidies including ROCs and CfD  Other potential sources of income or opportunities for sharing costs or achieving cost efficiencies such as in relation to provision of multi-utility services  Scheme phasing implications  ‘Green incentives’ in the scheme  Avoided life cycle business as usual costs for Council buildings connecting to the scheme

The client’s representative should undertake soft market testing with key potential customers and the outputs from soft market testing will help refine and be reflected within the financial model inputs.

Implementation programme and phasing plan to include: An investment timeline or delivery plan should be developed to detail start dates and durations for each project element, cumulative demand, installed capacity, carbon reduction potential and investment and operating costs.

This feasibility work may take three to five months to complete (from project inception).

6.2 The Works

The Works district heating scheme provides a significant opportunity to further reduce carbon emissions and energy costs, alleviate fuel poverty, increase energy security and attract new business to the Works site.

A future demands assessment and strategy should be developed for the district heating scheme. This project should include the following:

 Detailed investigation into existing supply and demand capacity for the current network  Consultation with BGCBC planning, regeneration and economic development staff to conduct an energy demand / supply assessment to identify existing and future potential heat demands or supplies to the network  Assessment of the viability of expanding the network to serve these heat / electricity / cooling loads  Assessment of the viability of expanding the network to receive existing / future heat sources  Liaison with stakeholders at relevant existing heat demand / source sites to assess viability of connection  If viable, providing a phased district energy masterplan and strategy for The Works site

6.3 Planning Policy

As stated, BGCBC planners should consider all development plans and develop relevant planning policy to:  Safeguard heat network routes identified in this masterplan and any further feasibility work  Apply Local Development Orders to extend permitted development rights across the Blaenau Gwent region or to grant permission for district energy developments

At the Rassau (and surrounding area) and The Work’s sites BGCBC should ensure that throughout the planning process, development proposals should include or support the use of district heating. This includes:

 Ensuring the incorporation of multi-building heating systems; heating systems may be fed from energy centres/plant rooms producing low temperature hot water for space heating and domestic hot water  Requiring the provision of connection points incorporating isolation valves and terminals to facilitate future connection  Reserving space in new plant rooms for heat exchangers to facilitate connection to the heat network  Requiring wet systems to be installed (as opposed to electrical heating systems)  Designing internal heating systems so that they can be connected to supply a district energy network with minimum retrofit requirements  Providing routes and penetrations into new buildings to allow district heat pipe access into plant rooms  Designing systems to operate at optimised flow and return water temperatures

As stated, to drive the implementation of a district energy network BGCBC may wish to consider Rassau as a priority site for EfW or other heat and power generation heat technologies and this should be discussed internally with planners.

APPENDIX 1 – ENERGY DATA

Blaenau Gwent Study Key Heat Loads Annual heat Energy data source for heat demand modelling and profiling Site Building Name (kWh)

Blaenau Gwent Workshops 357788 CIBSE TM46 - Workshop Lakeside Training Centre 42849 CIBSE TM46 - General Office Blaenycwm County Primary School 285938 Actual CIBSE Guide F - primary health care Primary Care Resource Centre 464580 (general practitioners' surgeries and dental practices) CIBSE Guide F - distribution and Barleyfields 1 465060 storage table 20.18(b) CIBSE Guide F - distribution and Barleyfields 2 416220 storage table 20.18(b) CIBSE Guide F - distribution and Barleyfields 3 146580 storage table 20.18(b) CIBSE Guide F - distribution and Barleyfields 4 120300 storage table 20.18(b) CIBSE Guide F - distribution and Barleyfields 5 105180 storage table 20.18(b) CIBSE Guide F - distribution and Barleyfields 6 132180 storage table 20.18(b) CIBSE Guide F - distribution and Honda Gay and Hunt Lawn Mowers 86400 storage table 20.18(b) CIBSE Guide F - chemical plant table Varichem 1440002 20.20 (process benchmark is a third of the given figure) Brynmawr Factory Units 1 - 6 31137 CIBSE TM46 - Workshop Factory Units 7 - 11 27205 CIBSE TM46 - Workshop Factory Units 12 -15 31779 CIBSE TM46 - Workshop CIBSE Guide F - light manufacturing Avon TSA Ltd 549669 table 20.18(b) CIBSE Guide F - distribution and Gwillim & Bacon 30840 storage table 20.18(b) CIBSE Guide F - plastics industry table Performance Masterbatches 1006755 20.20 CIBSE Guide F - engineering table Waterfit 260791 20.20 CIBSE Guide F - distribution and TUS 16620 storage table 20.18(b) CIBSE Guide F - light manufacturing Moorforms Ltd 70133 table 20.18(b) CIBSE Guide F - engineering table Metalweld Fabrications 73631 20.20 CIBSE Guide F - distribution and D.D Concrete 37920 storage table 20.18(b) CIBSE Guide F - distribution and T&H Commercials 8700 storage table 20.18(b) CIBSE Guide F - distribution and CB Commercials 16800 storage table 20.18(b)

CIBSE Guide F - distribution and Empty Unit 33840 storage table 20.18(b) CIBSE Guide F - engineering table Tecweld 630293 20.20 CIBSE Guide F - engineering table Fabweld / Expresss Pumps and Seals 69005 20.20 Actionscreen / Paul's Scaffolding 121538 CIBSE TM46 - Workshop Noble Square 2 - 5 51200 CIBSE TM46 - Workshop CIBSE Guide F - distribution and Noble Square 6 - 9 37860 storage table 20.18(b) ViTCC Training Services 118453 Actual (BGCBC) CIBSE Guide F - office - air British Gas Energy Academy 197538 conditioned standard CIBSE Guide F - electronics industry Camtronics Vale 927525 table 20.20 Assumed FA of all buildings will be 33% gross land area; this is the same Employment land 557934 ratio of ViTCC , BG academy and Camtronics to area of site CIBSE Guide F - department store Gwent Shopping Centre 366886 general table 20.6 Tredegar Police Station 159897 CIBSE Guide F Magistrate's Court 78047 CIBSE Guide F CIBSE Guide F - entertainment - social Moose Hall 31185 clubs Gwent Building Supplies Ltd 63791 CIBSE Guide F - retail - DIY stores Glanhowy Primary School 110098 Actual (BGCBC) Deighton Primary School 234310 Actual (BGCBC) Tredegar Tredegar Library 101150 Actual (BGCBC) Tredegar District Office 15898 Actual (BGCBC) Tredegar Comprehensive 742122 CIBSE Guide F - education - secondary CIBSE TM46 - general Cronin Court 467168 accommodation CIBSE Guide F - residential and Woffington Nursing Home 186399 nursing homes Ty Scott (Unsupported Housing) 543652 CIBSE TM46 - Sheltered Housing St George's Court 2405007 Actual (BGCBC) St George's Church 25056 CIBSE Guide F CIBSE Guide F - Table 20.4 (NI figures) Tredegar Fire Station 72419 (Gross Area) CIBSE Guide F - retail - high street Tredegar 'Crown Buildings' Job Centre 37612 agency Bridge Street Units 1-5 37718 CIBSE Guide F - Industrial Buildings Bridge Street Units 6-9 31298 CIBSE Guide F - Industrial Buildings Bridge Street Units 10-13 28970 CIBSE Guide F - Industrial Buildings Bridge Street Units 14-17 21748 CIBSE Guide F - Industrial Buildings Bridge Street Units 18-19 15809 CIBSE Guide F - Industrial Buildings Anvil Court 106113 Actual (BGCBC) Abertillery Library 45765 CIBSE Guide F CIBSE Guide F - Fire Station (NI Abertillery Abertillery Fire Station 125939 figures) (gross area) Cwrt Mytton 592628 Actual (BGCBC) Abernant Surgery (Canolfan Y Bont) 230202 CIBSE Guide F - primary health care

Abertillery Sports Centre 816793 Actual (BGCBC) Abertillery Comprehensive School 147702 Actual (BGCBC) Abertillery Primary School 46169 Actual (BGCBC) CIBSE Guide F - youth centres (NI Abertillery Youth Centre 83955 Figures) (gross area) Travis Perkins 36688 CIBSE Guide F - DIY store Tillery Valley Foods 3044110 Actual (BGCBC) WH1 Royal Mail 68040 Actual (BGCBC) WH2 97020 CIBSE Guide F CIBSE Guide F - Fire Station (NI WH3 42780 figures) (gross area) WH4 - Units 10-15 21000 Actual (BGCBC) WH5 - Units 16-21 23100 CIBSE Guide F - primary health care EnviroWales/Jamestown 2325000 Arup report Anchor Windows/Tile Benchmark - CIBSE Guide F - light 172665 Supermarket/Panel People manufacturing - table 20.18(b) Benchmark - CIBSE Guide F - Wilts Wholesale Electrical Co 102600 distribution and storage Table Ltd/Replay 20.18(b) Celtic Oriental Ltd 297000 Arup report Express Contract Drying Ltd 4950000 Arup report Castle Oak Timberframe 180000 Arup report Benchmark - CIBSE TM46 - Platt Packaging 151031 Workshops Zorba Delicacies Ltd 3096315 Arup report Monier Ltd 634029 Arup report Armoured Auto Group 270000 Arup report G-TEM 956258 Arup report LCR Capacitors (EU) Ltd 271145 Arup report Benchmark - CIBSE Guide F - Vacant 1 443106 industrial pre-1995 >5000m2 Benchmark - CIBSE Guide F - Vacant 2 305913 industrial pre-1995 >5000m2 Rassau Benchmark - CIBSE Guide F - Vacant 3 694709 industrial pre-1995 >5000m2 Yuasa Battery UK Ltd 4961186 Actual Tilon Composites 15000 Arup report Benchmark - CIBSE Guide F - Vacant 4 248213 industrial pre-1995 <5000m2 Benchmark - CIBSE Guide F - Vacant 5 84824 industrial pre-1995 <5000m2 Fencing And Decking (South Wales) Benchmark - CIBSE Guide F - light 83565 Limited manufacturing - table 20.18(b) Benchmark - CIBSE Guide F - KIWA Quality Services Ltd 942428 laboratories industry - table 20.20 Benchmark - CIBSE Guide F - plastics NMC 1232153 industry - table 20.20 Hille Educational Products 901125 Arup report AB Cardinal Packaging LTD 843382 Arup report Benchmark - CIBSE Guide F - Carnbrook Ltd 148620 distribution and storage Table 20.18(b) Weiss Tecknik UK LTD 180851 Arup report

Benchmark - CIBSE Guide F - Vacant 6 196693 industrial pre-1995<5000m2 Box Litho Ltd 33900 Arup report Prime Pac Solutions 296135 Arup report DT Civils 31500 Arup report EXenergy 64853 Arup report Benchmark - CIBSE Guide F - office, Hitachi Cable 439178 air conditioned, standard Benchmark - CIBSE Guide F - GTS Flexible Materials 2788665 electronics industry - table 20.20 Sears Manufacturing Co (Europe) Ltd 471375 Arup report Benchmark - CIBSE Guide F - general Target Timber System 163815 manufacturing table 20.18(b) Cwmtillery Glass Centre 261375 Arup report Benchmark - CIBSE Guide F - general Vacant 7 68935 manufacturing table 20.18(b) Benchmark - CIBSE Guide F - Techboard 1348708 industrial pre-1995 <5000m2 Robert Price & Sons Limited 71428 CIBSE Guide F - DIY store Continental Teves 1864500 Actual CIBSE Guide F - distribution and U Hire Limited (1) 276945 storage - table 20.18(b) good practice matches existing Waun-y- Travis Perkins 53010 CIBSE Guide F - DIY store Pound CIBSE Guide F - distribution and U Hire Limited (2) 140276 storage - table 20.18(b) good practice matches existing Benchmark - CIBSE Guide F - light Howdens Joinery 251609 manufacturing - table 20.18(b) Wilmorwil 55854 CIBSE Guide F – Industrial Building Brand Centres 2698920 CIBSE TM46 - Large Non-food shop CIBSE Guide F - office air conditioned Driver Training 232851 prestige (good practice) CIBSE Guide F - office air conditioned Innovation Centres 4615153 prestige (good practice) CIBSE Guide F - distribution and Industrial & Warehousing 2203620 storage (good practice) CIBSE Guide F - office air conditioned Headquarters 754657 prestige (good practice) CIBSE Guide F - luxury hotel - table 4* Hotel 3037500 20.16 (good practice) Circuit of CIBSE Guide F - department stores - Retail 215046 Wales table 20.5 (good practice) Showrooms 1718955 CIBSE TM46 - Large Non-food shop CIBSE Guide F - business or holiday 3* Hotel 1895400 hotel - table 20.16 (good practice) CIBSE Guide F - entertainment - social Clubhouse 238140 club ( good practice) CIBSE Guide F - sports ground Kart Building 431714 changing facility (good practice) Rider Academy 1274667 CIBSE Guide F - fitness centre CIBSE Guide F - sports ground Camping facilities 20558 changing facility (good practice) Pit Building - Lower Floors 1195560 CIBSE TM46 - Workshop

CIBSE Guide F - office air conditioned Pit Building - Upper Floors 1287220 prestige (good practice) CIBSE Guide F - sports ground Paddock Services 20558 changing facility (good practice) CIBSE Guide F - Primary Health Care Medical Centre 42282 (good practice) CIBSE Guide F - high street agency Welcome Centre 40736 (good practice) Crown Units 1 - 10 91350 BRE 2005 - Workshop Crown Units 11 - 16 83344 BRE 2005 - Workshop CIBSE Guide F - General Neuson 678094 Manufacturing (Table 20.18 b) CIBSE Guide F - Distribution & Storage E & D Stephens & Sons 34800 (Table 20.18 b) CIBSE Guide F - Distribution & Storage D.F. Stephens & Sons 51600 (Table 20.18 b) CIBSE Guide F - Distribution & Storage Crown Misc. Storage 28200 (Table 20.18 b) CIBSE Guide F - Distribution & Storage GRP 780000 (Table 20.18 b) CIBSE Guide F - General Pramac 1999500 Crown Manufacturing (Table 20.18 b) Business CIBSE Guide F - General Euro Caps Ltd 1794570 Park Manufacturing (Table 20.18 b) CIBSE Guide F - Distribution & Storage CALIS UK Ltd 109920 (Table 20.18 b) CIBSE Guide F - Office - air Crown Misc. Offices 116218 conditioned, standard CIBSE Guide F - Office - air APT Cleaning 41642 conditioned, standard Reflex 68250 CIBSE TM46 - Workshop Butterflies Day Nursery 60173 CIBSE Guide F - Primary School CIBSE Guide F - Office - air Crown Misc. Offices 2 47797 conditioned, standard CIBSE Guide F - General Sogefi Filtration 7037775 Manufacturing (Table 20.18 b) David Spear 85174 CIBSE Guide F - High Street Agency Rhyd Y Blew Rhyd y Blew 5085000 3no. Continental Teves Type Assumed 50% of gross land area is Bryn Serth Bryn Serth 9731467 floor area, benchmark= CIBSE Guide F non-food store (good practice)

APPENDIX 2 – NETWORK ASSESSMENT

Circuit of Wales

The network

The Circuit of Wales network, shown in the figure below, has a pipework trench length of approximately 3km. Key heat loads include the hotels and car showrooms/retail buildings.

Hourly demand profile

The figure below shows the average, maximum and minimum hourly heat demand profile for the Circuit of Wales network. The peak heat demand during the year is approximately 7MW and the peak average demand is 3.25MW occurring at 4am. The average base load overnight is 1MW and the minimum heat demand at any point of the year is 170kW.

Technology appraisal

The results from the technology appraisal for the Circuit of Wales network is shown in the table below.

Technology Gas CHP Biomass Heat Output 4 MW 4 MW Electrical Output 3.6 MW - Capital Expenditure £8,286,520 £8,399,600 IRR 5% 4% Net Present Value £197,203 -£562,334 Payback 15 years 17 years 25 Year Income £16,009,330 £14,789,425 Carbon Savings 3,713 tonnes 2,927 tonnes

Rassau Main Buildings Only

The network

A network comprising of just the Rassau Industrial Estate buildings of the Ebbw Vale Phase 1 network is shown in the figure below. The total trench length for this network is approximately 2.7km.

Hourly heat demand profile

The figure below shows the average, maximum and minimum hourly heat demand profile for the Rassau Phase 1 network. The peak heat demand during the year is approximately 7.75 MW and the peak average demand is just under 4.5 MW occurring consistently through the day from 10am to 18pm. The average base load overnight is 750 kW and the minimum heat demand at any point of the year is 200 kW.

Technology appraisal

The results from the technology appraisal for the Rassau Phase 1 network are shown in the table below.

Technology Gas CHP Biomass EfW / AD / other heat source Heat Output 4 MW 4 MW 7.8 MW Electrical Output 3.6 MW - - Capital Expenditure £9,687,196 £7,960,421 £2,507,421 IRR 6% N/A 12% Net Present Value £880,550 -£17,335,064 £2,405,398 Payback 15 years >25 years 9 years 25 Year Income £19,942,016 -£18,856,484 £9,270,806 Carbon Savings 4,838 tonnes 3,814 tonnes 5,388 tonnes

APPENDIX 3 – HEAT DEMAND MODELLING

Seasonal Demand Profiles The heat demand profiles for priority networks for each day of the week, for two separate months, are shown in the figures below. The green, blue and pink lines indicate minimum, average and maximum respectively.

Ebbw Vale Phase 1

Ebbw Vale Phase 2

Ebbw Vale Phase 3

Tredegar

Abertillery

Brynmawr

APPENDIX 4 – INTRODUCTION TO TECHNOLOGIES

Biomass Boiler – a biomass boiler burns wood in the form of pellets, chips or logs to provide heat in the form of low temperature, medium temperature hot water or steam. A biomass boiler comprises two main parts, the combustion chamber where wood fuel is combusted with unrestricted oxygen and the boiler tubes which carry water which is heated up by heat from the combustion chamber. The heated water is then distributed around the heating system as required.

6MW Wood Chip Boiler at Sawmill Site in Mid-Wales, Photo Courtesy of Sustainable Energy Ltd

Wood Chip Delivery to Wood Chip Store for 6MW Biomass Boiler, Photo Courtesy of Sustainable Energy Ltd

Combined heat and power (CHP) – CHP is an efficient way of generating electricity and useful thermal energy from a single fuel source. CHP is used to either replace or supplement conventional separate heat and power; instead of purchasing electricity from the local utility and burning fuel in a boiler to produce heat, a CHP plant provides both energy services in one step. CHP involves the recovery of otherwise-wasted useful thermal energy. Normally, fuel is combusted in a prime mover such as a gas turbine or reciprocating engine to generate electricity. Energy normally lost in the prime mover’s hot exhaust and cooling systems is instead recovered to provide heating for applications such as space heating, cooling, hot water and industrial processes. CHP plants are normally located at or near the energy –consuming facility, whereas conventional generation takes place in large centrally located power plants. CHP’s higher efficiency comes from recovering the heat normally lost in power generation to provide heating or cooling on site. CHP’s inherent higher efficiency and elimination of transmission and distribution losses from the central power plant results in reduced primary energy use and lower greenhouse gas emissions.

Picture courtesy of www.epa.gov

400kWe Natural Gas CHP Plant. Photo Courtesy of www.viessmann.co.uk

Biomass CHP – Biomass CHP utilises biomass in the form of wood chip or wood pellet as a fuel source for a boiler which is then used to raise steam which drives a steam turbine to generate electricity, with heat recovered from the steam turbine’s exhaust and cooling systems to provide useable heat.

Picture courtesy of www.epa.gov

130kWe Biomass CHP Plant, Photo Courtesy of www.environltd.co.uk

Biomass Organic Ranking Cycle CHP (ORC) – Reciprocating steam engines and steam turbines use a thermodynamic process called the Ranking Cycle. At small scale, this is inefficient due to the high temperatures and pressures involved. However, it is possible to replace water as the working medium with an organic compound with a lower boiler point, such as a silicone oil or organic solvent. This allows the system to work at much lower temperatures, pressures and at smaller scale. The working medium is usually less corrosive than water to components such as turbine blades and the turbine can operate at a lower speed which can improve reliability. CHP systems where biomass fuel is used to produce heat in order to evaporate an organic compound to drive a turbine are known as Organic Ranking Cycle systems.

Picture courtesy of www.endswasteandbioenergy.com

Picture Courtesy of www.bios-bioenergy.at

Biomass Gasification CHP – For Biomass Gasification CHP, instead of wood fuel being combusted to raise steam to generate electricity via a steam turbine, the wood fuel is burned with restricted oxygen levels to produce a wood gas which is then combusted within an internal combustion engine. The engine is then used to generate electricity, with heat recovered from the engine’s exhaust and cooling systems to provide useable heat.

250kWe Wood Gasification System, Photo Courtesy of Sustainable Energy Ltd

Energy from Waste – Energy from Waste plants burn waste to generate electricity via a prime mover such as steam turbine or engine. The waste normally combusted in such plants is the residual waste from Municipal Solid Waste which is left over after all recycling possible has been done. This waste is normally a mix of items made from oil such as plastics and items that are biodegradable such as paper, wood and food. The most common thermal treatment for waste is incineration; waste is incinerated and the heat produced is used to heat water to raise steam which then drives a turbine and generates electricity. Significant amounts of heat are generated in this process which are often dumped, but this could be used to provide a heat source for a district heating scheme by recovering the heat from the exhaust and cooling systems of the steam turbine. Advanced thermal conversion processes such as gasification and pyrolysis can also be used to generate electricity from waste; by converting the waste into a product such as oil or gas that can then be burnt directly in gas engines or turbines. Advanced thermal conversion systems are potentially more efficient but are technically difficult and relatively unproven at commercial scale.

Picture courtesy of www.edouardstenger.com

Anaerobic Digestion – Organic materials can be broken down by micro-organisms and converted into a ‘biogas’ which is a mixture of carbon dioxide and methane. This biogas can then be used to fuel a combined heat and power plant to generate electricity and heat. The remaining ‘digestate’ (by- product) can also be used as a fertiliser.

Picture courtesy of www.rawad.co.uk

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APPENDIX 5 – BUSINESS CASE ASSESSMENT

Factors considered include:  Cost of CHP plant  Cost of auxiliary & plant equipment  Cost of energy centre  Cost of DH network  Cost of connection to existing buildings  Total cost of scheme  District heat network losses (MWh)  Total amount of heat generated (MWh)  CHP modulation limit  Size of auxiliary (kW)  Heat generation CHP (MWh)  Heat generation auxiliary gas (MWh)  CHP electrical generation per annum (MWh)  Percentage of daytime electricity  Percentage of night electricity  Percentage of export electricity  Value of heat sales  CCL  Electricity sales (private wire)  Total income  Cost of gas for CHP  Cost of operation for CHP  Cost of fuel for auxiliary (gas)  Cost of operation for auxiliary  Cost of energy centre operation  Total costs of generation  Net income

The business cases were assessed by calculating:  Capital costs  Internal rate of return  Net present value  Payback  25 year income

The parameters used for financial assessment are outlined in the table below:

Parameters used in financial models Unit price for heat sales (£/MWh) 25 Electricity price day (£/MWh) 90 Electricity price night (£/MWh) 60 Electricity price export (£/MWh) 45 Cost for CHP fuel (£/MWh) 25 Cost for biomass fuel (£/MWh) 35 Cost for gas fuel (£/MWh) 25 Cost of heat from EfW / AD or other heat source (£/MWh) 8 Carbon value (£/tonne) 16 CCL charge (£/MWh) 1.93 Efficiency of biomass 80% Efficiency of auxiliary gas 85% Plant parasitic load (as % of Ʃ heat generated) 2%

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Ebbw Vale

Phase 1 - Gas CHP

Capital costs

Estimated capital costs for CHP energy centre for Ebbw Vale Phase 1 Cost of CHP plant £3,775,800 Cost of auxiliary & plant equipment £1,207,500 Cost of DH network £4,865,842 Cost of connection to existing buildings £74,500 Private wire costs £1,060,000 Design and construction contingency £1,098,364 Total cost of scheme £12,082,006

Financial assessment

Ebbw Vale Phase 1 Gas CHP financial assessment Phase heat demand (MWh) 34,290 District heat network losses (MWh) 4,058 Total amount of heat generated (MWh) 38,348 Size of CHP (kWth) 6,000 Size of CHP (kWe) 2,394 CHP modulation limit 25% Size of auxiliary (kW) 11,500 Heat generation CHP (MWh) 31,606 Heat generation auxiliary gas (MWh) 6,742 CHP electrical generation per annum (MWh) 28,413 % of daytime electricity 80% % of night electricity 20% % of export electricity 0% Value of heat sales £857,259 CCL £132,229 Electricity sales (private wire) £2,386,684 Total income £3,376,237 Cost of gas for CHP £1,713,684 Cost of operation and maintenance for CHP £213,097 CHP replacement costs £80,550 Cost of fuel for auxiliary (Gas) £198,298 Cost of operation and maintenance for auxiliary £20,226 Auxiliary replacement costs - Cost of pumping energy £62,316 Cost of network operation and maintenance £51,297 Cost of private wire operation and maintenance £8,500 Total costs of generation £2,347,968 Net income £1,028,269

Ebbw Vale Phase 1 Gas CHP 25 year financial case Capital costs £12,082,006 Internal rate of return 9% Net present value £6,530,698 Payback 11 years 25 year income £35,123,371

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Phase 1 - EfW / AD / other energy sources

Capital costs

Estimated capital costs for EfW connection for Ebbw Vale Phase 1 Cost of DH network £4,865,842 Cost of connection to existing buildings £74,500 Design and construction contingency £494,034 Total cost of scheme £5,434,376

Financial assessment

Ebbw Vale Phase 1 EfW financial assessment Phase heat demand (MWh) 34,290 District heat network losses (MWh) 4,058 Total amount of waste heat purchased (MWh) 38,348 Peak demand (kW) 11,500 Value of heat sales £857,259 Total income £857,259 Cost of heat £306,785 Servicing and repairs £60,000 Cost of pumping energy £69,027 Cost of network operation and maintenance £51,297 Total costs of generation £487,109 Net income £370,150

Ebbw Vale Phase 1 EfW 25 year financial case Capital costs £5,434,376 Internal rate of return 7% Net present value £1,265,705 Payback 13 years 25 year income £12,643,484

Phase 2 - Gas CHP

Capital costs

Estimated capital costs for CHP energy centre for Ebbw Vale Phase 2 Cost of CHP £6,293,000 Cost of auxiliary & plant equipment £1,953,000 Cost of DH network £8,349,468 Cost of connection to existing buildings £121,000 Private wire costs £1,860,000 Design and construction contingency £1,857,647 Total cost of scheme £20,434,115

Financial assessment

Ebbw Vale Phase 2 Gas CHP financial assessment Phase heat demand (MWh) 52,511 District heat network losses (MWh) 7,120 Total amount of heat generated (MWh) 59,631 Size of CHP (kWth) 10,000 Size of CHP (kWe) 8,990 CHP modulation limit 25% Size of auxiliary (kW) 18,600

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Heat generation CHP (MWh) 50,370 Heat generation auxiliary gas (MWh) 9,261 CHP electrical generation per annum (MWh) 45,281 % of daytime electricity 80% % of night electricity 20% % of export electricity 0% Value of heat sales £1,312,771 CCL £210,838 Electricity sales (private wire) £3,803,604 Total Income £5,327,213 Cost of gas for CHP £2,731,061 Cost of operation and maintenance of CHP £339,607 CHP replacement costs £134,251 Cost of fuel for auxiliary (gas) £272,390 Cost of operation and maintenance of auxiliary £27,784 Auxiliary replacement costs - Cost of pumping energy £96,901 Cost of network operation and maintenance £65,040 Cost of private wire operation and maintenance £13,750 Total costs of generation £3,680,785 Net income £1,646,428

Ebbw Vale Phase 2 Gas CHP 25 year financial case Capital costs £20,434,115 Internal rate of return 9% Net present value £9,367,892 Payback 11 years 25 year income £56,238,303

Phase 2 - EfW / AD / other energy sources

Capital costs

Estimated Capital Costs for EfW connection for Ebbw Vale Phase 2 Cost of DH network £8,349,468 Cost of connection to existing buildings £121,000 Design and construction contingency £847,047 Total cost of scheme £9,317,515

Financial assessment

Ebbw Vale Phase 2 EfW financial assessment Phase heat demand (MWh) 52,511 District heat network losses (MWh) 7,120 Total amount of waste heat purchased (MWh) 59,631 Peak demand (kW) 18,600 Value of heat sales £1,312,771 Total Income £1,312,771 Cost of heat £477,049 Servicing and repairs £60,000 Cost of pumping energy £107,336 Cost of network operation and maintenance £65,040 Total costs of generation £709,426 Net income £603,345

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Ebbw Vale Phase 2 EfW 25 year financial case Capital costs £9,317,515 Internal rate of return 6% Net present value £1,060,616 Payback 14 years 25 year income £20,608,933

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Phase 3 - Gas CHP

Capital costs

Estimated capital costs for CHP energy centre for Ebbw Vale Phase 3 Cost of CHP £7,551,600 Cost of auxiliary & plant equipment £2,929,500 Cost of DH network £10,574,066 Cost of connection to existing buildings £154,250 Private wire costs £2,460,000 Design and construction contingency £2,366,942 Total cost of scheme £26,036,358

Financial assessment

Ebbw Vale Phase 3 Gas CHP financial assessment Phase heat demand (MWh) 79,912 District heat network losses (MWh) 9,417 Total amount of heat generated (MWh) 89,329 Size of CHP (kWth) 12,000 Size of CHP (kWe) 10,788 CHP modulation limit 25% Size of auxiliary (kW) 27,900 Heat generation CHP (MWh) 68,201 Heat generation auxiliary gas (MWh) 21,128 CHP electrical generation per annum (MWh) 61,311 % of daytime electricity 80% % of night electricity 20% % of export electricity 0% Value of heat sales £1,997,807 CCL £285,476 Electricity sales (private wire) £5,150,102 Total Income £7,433,385 Cost of gas for CHP £3,697,873 Cost of operation and maintenance of CHP £459,831 CHP replacement costs £161,101 Cost of fuel for auxiliary (gas) £621,422 Cost of operation and maintenance of auxiliary £63,385 Auxiliary replacement costs - Cost of pumping energy £145,160 Cost of network operation and maintenance £72,473 Cost of private wire operation and maintenance £13,750 Total costs of generation £5,234,995 Net income £2,198,390

Ebbw Vale Phase 3 gas CHP 25 year financial case Capital costs £26,036,358 Internal rate of return 9% Net present value £13,756,713 Payback 11 years 25 year income £75,092,084

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Phase 3 - EfW / AD / other energy sources

Capital costs

Estimated capital costs for EfW Connection for Ebbw Vale Phase 3 Cost of DH network £10,574,066 Cost of connection to existing buildings £154,250 Design and construction contingency £1,072,832 Total cost of scheme £11,801,148

Financial assessment

Ebbw Vale Phase 3 EfW financial assessment Phase heat demand (MWh) 79,912 District heat network losses (MWh) 9,417 Total amount of waste heat purchased (MWh) 89,329 Peak demand (kW) 27,900 Value of heat sales £1,997,807 Total Income £1,997,807 Cost of heat £714,636 Servicing and repairs £60,000 Cost of pumping energy £160,793 Cost of network operation and maintenance £72,473 Total costs of generation £1,007,902 Net income £989,906

Ebbw Vale Phase 3 EfW 25 year financial case Capital costs £11,801,148 Internal rate of return 9% Net present value £6,117,141 Payback 11 years 25 year income £33,812,963

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Tredegar

Capital Costs

Estimated capital costs for CHP energy centre in Tredegar Cost of CHP £460,230 Cost of auxiliary & plant equipment £256,000 Cost of DH network £332,706 Cost of connection to existing buildings £13,000 Private wire costs £50,000 Design and construction contingency £111,193 Total cost of scheme £1,223,130

Financial Assessment

Tredegar financial assessment Phase heat demand (MWh) 3,605 District heat network losses (MWh) 193 Total amount of heat generated (MWh) 3,798 Size of CHP (kWth) 600 Size of CHP (kWe) 529 CHP modulation limit 25% Size of auxiliary (kW) 1600 Heat generation CHP (MWh) 3,344 Heat generation Gas (MWh) 454 CHP electrical generation per annum (MWh) 2,946 % of daytime electricity 75% % of night electricity 25% % of export electricity 0% Value of heat sales £90,130 CCL £14,362 Electricity sales (private wire) £243,036 Total Income £347,528 Cost of gas for CHP £186,037 Cost of operation and maintenance of CHP £35,351 CHP replacement costs £9,818 Cost of fuel for auxiliary (gas) £13,350 Cost of operation and maintenance of auxiliary £1,362 Auxiliary replacement costs £6,827 Cost of pumping energy £6,172 Cost of network operation and maintenance £7,905 Cost of private wire operation and maintenance £1,250 Total costs of generation £268,072 Net income £79,457

Tredegar 25 year financial case Capital costs £1,223,130 Internal rate of return 7% Net present value £215,117 Payback 14 years 25 year income £2,714,063

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Abertillery

Capital Costs

Estimated capital costs for CHP installation in Abertillery Cost of CHP £383,670 Cost of auxiliary & plant equipment £208,000 Cost of DH network £501,406 Cost of connection to existing buildings £12,500 Private wire costs £74,750 Design and construction contingency £118,033 Total cost of scheme £1,298,359

Financial Assessment

Abertillery financial assessment Phase heat demand (MWh) 2,663 District heat network losses (MWh) 262 Total amount of heat generated (MWh) 2,925 Size of CHP (kWth) 500 Size of CHP (kWe) 441 CHP modulation limit 25% Size of auxiliary (kW) 1300 Heat generation CHP (MWh) 2,401 Heat generation Gas (MWh) 524 CHP electrical generation per annum (MWh) 2,115 % of daytime electricity 75% % of night electricity 25% % of export electricity 0% Value of heat sales £66,578 CCL £10,312 Electricity sales (private wire) £174,499 Carbon value £8,481 Total Income £259,869 Cost of gas for CHP £133,573 Cost of operation and maintenance of CHP £25,382 CHP replacement costs £8,185 Cost of fuel for auxiliary (gas) £15,413 Cost of operation and maintenance of auxiliary £1,572 Auxiliary replacement costs £5,547 Cost of pumping energy £4,753 Cost of network operation and maintenance £8,106 Cost of private wire operation and maintenance £1,250 Total costs of generation £203,782 Net income £56,088

Abertillery 25 year financial case Capital costs £1,298,359 Internal rate of return 3% Net present value -£234,698 Payback 18 years 25 year income £2,030,917

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APPENDIX 6 – GAS MAIN LAYOUT

The following image shows the gas main layout for the location of the Ebbw Vale energy centre.

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