Selling the new Sellafield

Business
Insight
Tuesday March 18 2014
Selling
the new
Sellafield
Tomorrow’s
world again
Forum: pages 2-3
The renewable debate
Pages 10-14
Tuesday March 18 2014 | the times
2
Business Insight
Welcome
Do they mean us?
The recent BBC Two documentary Mind the Gap
asserted that London generates more than a fifth of Britain’s
income and – while many of “the regions” struggle after the
recession – the metropolis is pulling away from the rest of
the country.
Of course we need reminding that economic rebalancing
is important for the UK. But much of the problem can be
attributed to perception.
It may sometimes seem as if the rest of the country,
viewed from the South East, is like a dust-blown ghost
townscape with balls of tumbleweed rolling down a
boarded-up high street.
As this issue points out on page after page, the North is
nothing like that. It, too, is resurgent. And impressively so.
Take Sellafield. With its original raison d’être gone, it could
have crawled away and died. Instead, as our first Forum
(right) confirms, it has become the beating heart of West
Cumbria, booming with new projects, thousands of workers,
and a job-rich future born of the great decommissioning
challenge.
In the context of what’s fuelling this optimism, we also look
at renewables generally (see our second Forum, on pages 10
and 11), and other unusual energy sources such as shale and
even anaerobic digestion.
But it’s not just energy that can be renewable. Enterprising
spirit is also in there with a shout. Up Where There Be
Dragons, creative and resourceful people are working hard
to correct that nationwide imbalance every day. Read about
them here ... and welcome to their buoyant world.
Inside
£70bn challenge of change
Sellafield’s exciting future
Page 4
Now let’s hear it for shale
A matter of strong opinion
Page 8
Where the renewables fit in
Talking heads in The Times Forum
Pages 10-11
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Forum
Regeneration
Sellafield:
Still set to
be part of
tomorrow’s
new world
Talking heads are agreed: decommissioning is
a monumental task, but the challenge can power
a new generation of skills, hears Chris Nelson
S
ellafield is one of the most controversial locations in the UK.
To some people, it is an environmental eyesore, an unwelcome
reminder of the early nuclear age
when the race to develop nuclear weapons and nuclear power meant a huge
amount of material was dumped carelessly into storage facilities and lagoons.
To the people of West Cumbria, however, it is the beating heart of the regional
economy, providing tens of thousands
of high-value jobs and supporting many
more. And to others it is an example of
Britain once again leading the world in a
hugely challenging engineering discipline
– nuclear decommissioning, an eminently exportable skill that satisfies demand
across the globe and brings in valuable
tax revenues for the Government.
It can be argued that without Sellafield
there would be no UK nuclear industry,
and the future of nuclear power generation in the UK may yet depend on its
expertise and hard-won experience. But
this comes at a cost: around £1.7 billion is
spent each year to clean up Britain’s nuclear legacy, a figure that no doubt looms
large on the Chancellor’s balance sheet.
In the run-up to the Budget, The Times
Business Insight North travelled to West
Cumbria to obtain an insider’s view of
Sellafield from the site itself, and to bring
together a panel of experts with their
own ideas as to how the Government can
support this vital strategic asset.
The Forum panel gathered in the
training facility, where new recruits learn
the safety procedures which ensure their
survival in what is potentially one of the
world’s most dangerous working environments.
Much is made of Sellafield’s legacy, but
Forum chairman Alasdair Nimmo wanted to know what role the site would have
to play in the UK’s energy future. It was
a question that provided a perfect opportunity for Tony Price, managing director
of Sellafield Ltd, to point out that Sellafield was not just about legacy issues. It
still plays an essential role in reprocessing nuclear fuel for the Magnox and advanced gas-cooled reactors, but it is also
important for building confidence in the
nuclear industry.
“Sellafield is the largest nuclear site in
Europe,” Mr Price said, “one of the most
complex in the world, and has the largest concentration of nuclear skills in one
place, representing a vast resource of
experience and expertise that has to be
optimised for the future. The role of Sellafield Ltd is to build credibility by demonstrating that we can deal safely with the
nuclear legacy.”
It’s Europe’s largest
such facility with a
wealth of expertise
to be optimised
for the future
Acknowledging the huge impact that
Sellafield has in terms of the local economy and communities, Paul Walker, chief
executive of Copeland Borough Council
– which hosts the site – highlighted that
the reputations of Sellafield and West
Cumbria are inextricably linked. “When
Sellafield is in the headlines, then Cumbria is in the headlines,” he said.
“It is also a major player in the nuclear
industry and the centre of plans to develop a centre of nuclear excellence. There is
no other part of the nuclear industry that
has got all the different aspects of the in-
dustry in one place, from new reactors to
decommissioning.”
David Moore, chair of the Sellafield
Stakeholder Group, added his thoughts.
“We always said if you can’t clean up
the past, nuclear does not have a future,”
he said. “The good work going on here
proves that clean-up can be done efficiently. We are also learning how to clean
up the future reactors we will be building
– but it is not cheap.”
As to why decommissioning is so difficult, why it takes so long and why is it
so expensive, Mr Moore acknowledged
that without someone having visited the
site it was difficult to explain to them the
size of the challenge being faced. He suggested that future understanding would
be helped by finding a way to get back
to showing people what happens on-site,
perhaps through more visits and better
educational resources.
Tony Price said that offering value for
money was a key strategic priority for
Sellafield Ltd, along with managing a safe
and secure site and demonstrating progress. “We spend a lot of taxpayers’ money,” he said, “£1.7 billion in the last year,
but what makes this different is the level
of uncertainty in some of the projects.
“In a conventional project, you go from
concept to design to construction, then
to commissioning and operation. With
some of these projects, you cannot define
the full scope until you have almost finished the work – and many of these are
one-offs, some of the most complex and
challenging in the world. It is very difficult to put a cost and schedule against
them.”
So what could be done to help people
understand the monumental task of commissioning? Tony Price didn’t want to
turn Sellafield into a tourist attraction –
security arrangements would not allow it
anyway – but he agreed that the nuclear
industry had to be as transparent as possible. Adrian Thompson, chair of governors
the times | Tuesday March 18 2014
3
Business Insight
Speaking out (from
left): Paul Walker,
Chris Nattress, Adrian
Thompson, Peter
Woolaghan, Gary
McKeating, Mike
Smith, Alasdair Nimmo
(chairman), David
Moore and Tony Price
at West Lakes Academy, appreciated the
difficulties in getting people beyond the
North West coast to understand decommissioning of nuclear facilities. “It has
taken me a long time to understand the
scale and scope of the operation,” he said,
“and even members of the Government
and MPs don’t always fully understand.”
Paul Walker never fails to be amazed
by the level of knowledge among local
people – but he said there was an appetite to learn more, and that was about
Sellafield showing a local face. One aspect of this was the Albion Square project which would see Sellafield moving
1,000 office staff off-site into the centre
of Whitehaven – a significant economic development for the town, and one
which brings the nuclear industry closer
to people.
Members of the Forum panel
Paul Walker, chief
executive, Copeland
Borough Council
Peter Woolaghan,
director, REACT
Engineering
Mike Smith, managing
director, Gen2
Gary McKeating, Nuclear
Management Partners
Tony Price, managing
director, Sellafield Ltd
Adrian Thompson,
chair of governors,
West Lakes Academy
David Moore, chair,
West Cumbria Sites
Stakeholder Group
Chris Nattress, principal,
Lakes College
“Showing a different face is also Copeland working with Sellafield to create a
showpiece at the Beacon Museum in
Whitehaven,” Mr Walker said, “to help
people understand nuclear, from power
generation to reprocessing and then the
future plans, and using that as a place
where people can learn more about energy and nuclear.”
As head of stakeholder engagement
and socio-economics for Nuclear Management Partners, Gary McKeating
spends a lot of his time telling people
about the huge impact Sellafield and the
nuclear industry has on West Cumbria.
“The nuclear industry is one of the most
open and transparent,” he said. “It is also
a leap of faith – communicating the facts
is challenging, but it is about past, present
and future, and the Beacon will go some
way to replacing the role that was played
by the old Sellafield visitor centre.”
Chris Nattress, principal at Lakes College, suggested that Sellafield’s influence
could go far beyond Cumbria. “As an
important organisation in its own right,”
he said, “Sellafield Ltd plays a leading
role across the country to help promote
STEM [science, technology, engineering and mathematics] subjects, by demonstrating the creativity and innovation
that is going on here.”
The discussion moved on to the huge
challenge of sourcing the engineers required within the UK, and bridging the
gap between current engineering resources and the future needs of UK plc to
support decommissioning as well as the
nuclear renaissance. Adrian Thompson
put the problem into perspective by quoting the figure of 100,000 new engineers
which would be needed each year.
Organisations such as Sellafield Ltd
would be competing for those engineers,
and industry had to work in partnership
with schools and colleges, starting at
the youngest age possible, to encourage
students to be interested in STEM subjects and to pursue those subjects right
through their education.
Chris Nattress said the skills shortage was only going to get worse, unless
there was long-term synchronisation of
objectives between the many bodies involved in delivering STEM subjects. “We
have to track that back to children who
are four or five years old,” he said, “and
make engineering something that is exciting, something that they want to do.
That also means the Government providing funding and resources for long-term
planning.”
Mike Smith, managing director of
Gen2, paid tribute to the huge effort
made by Sellafield in recruiting apprentices, putting graduates into schools to
talk about engineering and sponsoring
colleges. “But the reality is that it is not
going to be enough,” he said. “We are facing a skills tsunami. We need to use the
good things happening in West Cumbria
as an example for the rest of the country.”
Peter Woolaghan, a director at specialist engineering company REACT, bemoaned the fact that industry struggles to
make engineering exciting. “If you can’t
make trains, planes and rockets exciting
then there is something sadly wrong,” he
noted. “Skills capability is at the heart of
what makes our businesses successful. We
all need to talk about how we got here –
tell our stories to dissolve a lot of the mystery and inspire our young people.”
Mr Woolaghan also argued that small
innovative-smart companies needed to
get closer to the “problem face”. Sellafield
Ltd is solving world-class problems in the
field of decommissioning and more young
people had to be engaged to apply their
hugely creative problem-solving skills.
“They think about things differently,” he
said, “and the way they will solve these
problems is the foundation for future
skills and expertise we can trade around
the world.
“The UK is excellent at this complex
stuff and the possibilities are phenomenal.
I have guys on the roof of the reactor at
Fukushima who are deploying worldleading technology that was developed at
Cleator Moor right here in Cumbria.”
The panel agreed that the STEM subjects were vital to expanding the UK’s
engineering skills base – but how could
young people be encouraged to see them
as the keys to a rewarding career? Tony
Price first put the spotlight on the future
for Sellafield, which is facing the largest
transition in its history. For the past 50
years it has been primarily a reprocessing
facility, but now it is entering a new era
where it will host a fleet of high-hazard
retrieval plants, waste retrieval plants, and
create new waste storage and waste management facilities.
“We need to make sure that Sellafield
is perceived as the place to come,” he said.
“Change it from being seen as a national
liability to being seen as a national asset
and the backbone of the nuclear industry
in the future.”
Spending more money on science and
maths teaching was only part of the solution, according to Peter Woolaghan. “REACT’s businesses have become successful
by bringing bright young people into the
right environment to allow their creativity
to work,” he said, “and allowing them to
make a difference.
“As a nation, we are the best at science
and engineering and it is about rekindling
something we have forgotten about. Money is important, but without that inspiration and connectivity with the real world,
you will not get people interested in engineering.”
Mike Smith pointed out that it was not
just engineers who were in short supply.
There needed to be more investment by
the Government in teachers for those
STEM subjects.
The Forum panel also wanted to see
the Government doing more to encourage
investment in new nuclear power generation in the UK as the most sustainable energy source for the future. “The Government needs to spell out how important
nuclear power is to the UK,” Tony Price
said, “and the turmoil in other parts of the
world underlines that.”
He went on to say that the future shape
of the nuclear industry was very different from what was being dealt with now
at Sellafield, with comprehensive safety
cases and through-life plans. Emerging
technologies were also hugely exciting.
“I was lucky enough to sit on a working party looking at a fusion reactor,” he
added, “and if you are not excited by that
you won’t get excited by anything. Some
of these infrastructure programmes really
need to sit above politics – they are fundamental to the future of the nation. The
Government should be standing alongside
ourselves and the supply chain in getting
the message across.”
Gary McKeating agreed with this.
“There is an urgency about where we are
now,” he said, “and if we can show that at
Sellafield we are delivering it will help the
reputation of the whole nuclear industry.”
Finally, Alasdair Nimmo asked whether
people really understood the credit that is
owed to Cumbria – and Tony Price spoke
for everyone around the table. “Probably
not,” he said. “Cumbria and Sellafield has
been and still is a world leader in nuclear
technologies. There should be more appreciation of what has gone on here over
the last 60 years.”
Tuesday March 18 2014 | the times
4
Business Insight
Strategy
The £70bn
challenge
of change
The new Sellafield hosts 500 building projects
and 11,000 workers enjoying the prospect of
long-term employment for several generations
in super-safe conditions, reports Chris Nelson
T
he name Sellafield conjures up
an image of a bygone nuclear
age, and grainy black-andwhite pictures of the Queen
opening the world’s first commercial nuclear power plant at what was
then called Calder Hall in 1956.
Power generation stopped a decade
ago, however, and the nuclear reprocessing facilities that were once the UK’s
biggest yen earner are also rapidly approaching the end of their working lives.
Strange then, on the face of it, that Sellafield Ltd’s managing director, Tony Price,
should have launched a new strategy late
last year entitled “Key to Britain’s Energy
Future”.
Not strange according to Mr Price,
though. “Sellafield and the west coast of
Cumbria have always been at the heart
of the UK’s energy industry,” he says,
“and it has as significant a role to play
today as it ever did. The Sellafield site is
the focal point of the industry in the UK,
and the eyes of the world are upon us
every day. It is absolutely imperative that
we get things right in order to build and
maintain public confidence.
“You might expect to think of boarded-up buildings and demolition when
talking about Sellafield, but the truth is
we have one of the largest construction
sites, if not the largest, in the country. We
are managing in the region of 500 projects and the clean-up mission will last
long enough to see even our most recent
apprentices’ grandchildren through to
retirement.”
That clean-up mission – costing, at the
latest estimate, £70 billion – is forecast
to span at least the next 100 years. But
when you start to understand the complexities of the site and the facilities that
need to be decommissioned, the cost and
the schedule become easier to appreciate.
“Some of the legacy plants at Sellafield
are so old that it is impossible to plan
exactly how you’ll clean them up to any
level of detail, until you actually start,”
Mr Price says. “There isn’t a blueprint for
the job or an off-the-shelf solution. Our
legacy plants are unique and the interdependencies of the different buildings
only add to the factor of difficulty.
In many ways
the next five
years will
be the most
important
in the site’s
history... as we
move through
the transition
Sellafield from the air:
‘A chance to be the
world leader again’
“But we are overcoming that challenge.
It’s not easy, but with every solution that
we find there is an opportunity to learn
and develop, and then we can apply those
enhanced capabilities to other challenges
– not just at Sellafield, but all over the
world. As an engineer, that kind of opportunity excites me, and I know it excites
the workforce.
“In many ways the next five years are
the most important in the site’s history,
as we move from a site that has been focused on power generation and then reprocessing, through the transition into a
site where safe storage of nuclear waste is
the raison d’être.
“The nuclear pioneers of the 1940s and
1950s developed these plants, and were
world leaders in their day. My team at
Sellafield Ltd in 2014 has the chance to
be the world leader once again, but this
time in terms of decommissioning and
waste storage.”
The site strategy which Tony Price
launched last year has three key focus areas for the 11,000-plus workforce. Theme
number one – safe, secure site stewardship – is a prerequisite for a nuclear operator. Sellafield is one of the safest sites in
the world, in terms of both conventional
and nuclear safety, and in recent years
statistics show it is becoming safer. But
the potential risk remains.
Site bosses have been maligned in the
past because of the rate of progress made
in decommissioning, so Tony Price’s sec-
ond theme – demonstrable progress – is
clear and understandable.
The final focus area outlined in the
strategy – return on investment – demonstrates that the significance of the
taxpayer-funded £1.7bn annual bill for
Sellafield is not lost on Mr Price or the
rest of his executive team, particularly in
such austere times.
That money, routed via the Nuclear
Decommissioning Authority, makes up
A young would-be engineer meets Tony Price, managing director of Sellafield Ltd
more than half of the annual budget for
the Department of Energy & Climate
Change. “The level of funding we receive
shows that the Government recognises
the scale of the challenge we face and the
importance of getting the job done,” Mr
Price says.
“But with such committed funding
comes, understandably, a level of scrutiny. We must ensure that we spend every
pound and penny of the budget as efficiently as we can, and that we squeeze
every drop of value from it.
“Nuclear decommissioning is expensive, there is no getting away from that,
and it’s particularly expensive when you
try to do it on a site like this one, where
the hazardous plants sit cheek-by-jowl
and are so interlinked – but the fact that
it’s expensive doesn’t mean we can’t provide good value.”
In terms of public spending, the phrase
“good value” doesn’t necessarily mean
getting the job done on the cheap. In
fact, the localism aspect of the small and
medium-sized enterprise (SME) agenda
suggests that regional growth and socioeconomic stimulation from taxpayer
spending is almost as important as finding the lowest quote.
In the past five years, Sellafield Ltd has
spent over £1bn in the local supply chain,
and the local community will benefit further later this year when 1,000 office staff
move from the remote and isolated site
into the centre of Whitehaven. The company’s commercial team has also linked
up with London 2012 organisers, to see
if they can mirror in rural West Cumbria
some of the strategies used to achieve
Olympic-sized benefits across the capital.
There is still much work to do around
public understanding, however. Sellafield
Ltd sees the value in public engagement
– and, while the pre-9/11 days of free access via a tour bus will never return, the
site remains an open book. In terms of
openness and transparency, information
about the site is readily available; the
trouble is that the public is rarely willing
to access it.
An independent stakeholder group
regularly meets publicly, with bosses,
including Tony Price, attending to answer questions and offer explanations to
anyone who comes along. Unfortunately
the attendees are almost exclusively
local councillors and workforce representatives – the man or woman on the
street seldom wanders in, even though
they would be most welcome if they did.
(There is even the offer of free tea and
biscuits.)
Similarly, the 2,000 or more subscribers to the fortnightly newsletter produced by the company’s communications team are mainly from within the
industry. The newsletter carries updates,
good and bad, but unless a snippet is
picked up by a journalist it rarely reaches public consciousness.
The company hopes that will change
this summer when, jointly with Copeland Borough Council, it launches a new
visitor exhibition in the council-owned
Beacon Museum on the picturesque
harbour-side in Whitehaven.
There remain a few i’s to dot and t’s
to cross, but the plan is for the interactive exhibition to chart the past, present and future of nuclear in West Cumbria, warts and all. The exhibition will
take up space on just one floor, with the
museum retaining its independence –
but, in keeping with the “added value”
ethos, Sellafield Ltd’s promised investment in the Beacon was all that prevented the council from closing it last year,
as they battled to manage their own austerity cuts.
The future for the nuclear industry looks bright, with recent Ukrainian
troubles again highlighting the need for
the UK to find its own solutions to the
looming energy crisis. And if Tony Price
and his team can deliver the strategy as
he has laid it out, Sellafield will play a
key role in Britain’s energy future.
the times | Tuesday March 18 2014
5
Business Insight
New deal
Triple confidence vote
in great nuclear future
Westinghouse sees
economic boom ahead
as the foundation is
built on new reactors,
writes Chris Nelson
F
or a global company, Westinghouse has a refreshingly local
approach to getting a job done.
The company’s stated ambitions
to play a leading role in the future development of the UK nuclear industry could lead to the creation of tens
of thousands of jobs, a skilled workforce
and a boom in business for suppliers.
Westinghouse’s commitment to the
UK – and to West Cumbria in particular
– was underlined earlier this year when
a major deal was agreed to move ahead
with plans to build three new nuclear
reactors in the region. The £102 million
deal saw Westinghouse’s parent company, Toshiba, agree in principle to take
a 60 per cent share in the NuGeneration Limited Moorside Project, where a
trio of Westinghouse AP1000® reactors
will be built in partnership with French
multinational GDF SUEZ.
The first unit is expected to be online
in 2024 – and, when fully operational,
the Moorside site will deliver around 7
per cent of the UK’s electricity requirements. This project, alongside Westinghouse’s pioneering work as a partner in the Sellafield decommissioning
programme, will ensure the company’s
presence in Cumbria for many decades
to come.
“Construction of the new reactors will
significantly boost the local, regional and
national economies,” says Dave Unsworth, managing director for Westinghouse in the UK, “with a large portion of
the project open to UK supply chains.”
Already, interest in the Moorside project is significant. On March 11, Westinghouse hosted an industry event attended
by around 200 people from UK supply
chain companies. They came to hear
the Nuclear Industry Association chair,
Lord Hutton, and representatives from
the Toshiba Westinghouse UK team, talk
about opportunities for the UK and the
local supply chain to support the AP1000
new plant build programme.
“Our ‘Buy Where We Build’ strategy
means that around 60 per cent of the
project will be accessible to the UK,” Mr
Unsworth says. “So far, more than 500
suppliers have registered their interest in
working with us.”
Simon Marshall, UK business and
project development director at Westinghouse, reinforces this. “Our approach is
to work in partnership with our suppliers,
emphasising competitiveness, efficiency,
localisation and innovation,” he says.
“We recognise that small and mediumsized businesses [SMEs] have the potential to play a key role in achieving economic value in the nuclear supply chain,
and they need a climate in which they
have the confidence to invest and the
ability to develop the necessary skills to
work to the required quality standards.” Westinghouse will also build a facility
to construct large modules, which could
provide components from the UK and
potentially for export to the rest of Europe. The AP1000 reactor is a modular
design that makes best use of modern
construction techniques, allowing tasks
traditionally performed in sequence to
The AP1000 under
construction at
Sanmen, China
(COURTESY OF SANMEN NUCLEAR POWER COMPANY LTD)
be completed in parallel – an approach
which reduces the time it takes to build,
and also reduces the cost and the risk.
“The project will provide thousands
of UK jobs over the construction period
for the three reactors,” Mr Marshall says,
“including peak on-site employment
of more than 6,000 people, drawing on
the established nuclear skills base in the
North West of England.
“These highly skilled jobs will be in
construction, manufacturing and engineering. The Moorside project could
provide opportunities for apprenticeships and give young people the chance
to develop a career in a growing sector.” The project will also secure jobs at
Helping to deliver hazard reduction
S
ince starting to work at
one of the world’s most
complex nuclear decommissioning sites a little
over a year ago, global
nuclear giant Westinghouse has
proved that a lot can be achieved
in a short space of time.
Westinghouse is playing an
important role in supporting
Sellafield Ltd’s challenging Legacy
Ponds and Silos high-hazard
reduction programme as it strives
towards major milestones to
safely remove radioactive waste
sludge and place it in an interim
store.
Westinghouse is working
under contract to Sellafield Ltd
to “de-risk” facilities built during
the 1950s and which, for decades,
have been accumulating waste
products generated by the nuclear
facility. With a demonstrable
track record in this type of risk
reduction, Westinghouse is harnessing international experience
alongside innovative engineering
and technical solutions to help
support the acceleration of the
decontamination, decommissioning, remediation and waste
management programme.
“Working as a supplier to
Sellafield Ltd, we’re helping them
to deliver hazard and risk reduction on site,” says Dave Unsworth,
managing director of Westinghouse in the UK. “We’ve ramped
up our presence on the Sellafield
site and brought in expertise from
across the globe, in an effort to
help them speed up retrieval of
waste from the legacy pond and
validate potential interim storage
solutions, so it can be safely
removed and stored.”
Direct experience of implementing a system to recover fuel
and associated waste from “pond
to pad” is aiding development
of other bespoke solutions for
possible use at Sellafield Legacy
Ponds and Silos areas.
“Westinghouse is providing
a remote-controlled Spent Fuel
Retrievals System,” Mr Unsworth
says, “which provides a safe way
for operators to work in a highradiation environment, allowing
minimal human intervention.”
Westinghouse has a broad
scope of capabilities which it
believes it can bring to the longterm Sellafield decommissioning
project. “Working in difficult
environments is one of our core
competences,” Dave Unsworth
says, “and we look forward to
opportunities to bring additional
solutions to Sellafield. We believe
we can bring waste management
and processing solutions, effluent
treatment capabilities and specialised equipment design expertise.
“The scale of the challenge at
Sellafield should not be underestimated, and we believe that
the contribution Westinghouse
is making adds to the significant
capabilities already in place.
Working together with Sellafield
Ltd and key local supply chain
companies, we believe we can
deliver the best solutions, faster
and more cost-efficiently to
ensure that, step-by-step, the
challenge can be met.”
Westinghouse’s Springfields nuclear fuel
manufacturing facility, where fuel for the
AP1000 in the UK and Europe will be
made.
“We believe our ‘Buy Where We Build’
supply chain strategy is the best solution
for our business and the communities
where we do business,” Simon Marshall
says. “And by creating highly skilled jobs,
we are also demonstrating world‑leading
best practice for employment, development and learning in the nuclear industry.
“We have business plans that span
many decades and we’re focusing on the
long-term future of our business in West
Cumbria.”
Westinghouse decommissioning
capabilities
„„
Solutions for retrieving, sorting
and segmenting miscellaneous
wastes in remote, radioactive,
underwater conditions.
„„
Specialised, bespoke solutions for
one-of-a-kind problems in radioactive environments.
„„
Fit-for-purpose tooling for manually moving, cutting and retrieving
miscellaneous wastes from legacy
ponds.
„„
Processing and management of
low-level and intermediate-level
radioactive wastes including volume reduction, encapsulation and
packaging technologies.
„„
Treatment of radioactive liquid
effluents.
„„
Specialised inspection technologies for complex geometries in
remote, radioactive, underwater
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Transforming culture and behaviours, and continuous improvement of processes and performance.
Tuesday March 18 2014 | the times
6
Business Insight
Technology
Business growth powers
Bender expansion plans
T
he drive to get the best performance from new facilities,
to maximise availability of existing plant and production
equipment, and to cut energy
costs are three customer priorities powering year-on-year growth and expansion plans for electrical safety specialists
Bender UK.
Bender UK has consistently expanded
its markets for tailored applications of
the technology emerging from its parent
company in Germany, where research
and development teams produce worldbeating products to protect systems
which simply cannot afford unplanned
shutdowns or power failures.
Its residual current monitoring equipment is widely used to safeguard electrical infrastructure and supply systems in
the offshore, renewable energy, power
distribution, rail, marine, processing and
industrial sectors. Bender has also developed a leading expertise in power system
security for specialist sectors such as
healthcare and data processing.
The company, based in Ulverston in
south Cumbria, has expanded its markets
through the provision of power quality
management equipment to cut energy
costs and provide more resilience for
power supplies. Bender UK is also rapidly
gaining market share for the turnkey installation of operating theatres for newbuild and refurbishment projects, along
with the supply and installation of highperformance surgical lighting.
On a recent visit to the Cumbrian
headquarters, chief executive of the
Bender Group in Germany, Dr Dirk
Pieler, discussed expansion plans with
UK managing director Steve Mason and
also talked about the inward investment
which will create new jobs and business
opportunities.
“Bender UK has enjoyed outstanding success,” Dr Pieler says, “and I am
working closely with Steve Mason on
planning to ensure that the company has
the resources to continue to expand, including the expansion of our premises in
Ulverston.
“That will mean more jobs for local
people in Cumbria, but will also include
recruiting in other parts of the UK to
strengthen our service network, so that
we can continue to provide the highest
levels of support which our customers expect from Bender, alongside cutting-edge
electrical safety technology.”
Bender UK is now one of the key operations outside Germany. Dr Pieler has
huge respect for the dedication of the
Cumbrian workforce and believes that
to be one of the reasons why companies
choose to locate in the area. “South Cumbria has its challenges because of the local transport infrastructure,” he says, “but
it also offers quite beautiful surroundings
and an excellent quality of life.
“People who are recruited from this
area are very reluctant to leave it, while
people who come to the area and learn to
love it are also likely to stay. That helps to
create a very loyal and stable workforce,
which is important for a highly technical
company like ours.
“We invest a considerable amount in
training and development of the people
we employ, and it is important to be able
to reap the benefits of that investment
through their longer-term commitment
to the company.”
Dr Pieler also recognises the advantages of Ulverston being in proximity to
BAE Systems in Barrow-in-Furness, and
to companies involved in offshore wind
energy and the nuclear and renewables
sectors on West Cumbria’s Energy Coast.
The central location of Cumbria means
it can also support both the North Sea
oil and gas companies and investment in
medical facilities in the South of England
Making life-saving advances
in hospital operating theatres
T
he refurbishment and upgrading of operating theatres in
NHS and private hospital
facilities is proving a significant
growth area for Bender UK,
which now offers a totally integrated
turnkey service.
Bender can provide proven project
management capability and experience with the supply and installation
of advanced laminar clean air flow
canopies, service pendants and hygienic
touchscreen control panels. The
company is also the main UK supplier
for Steris high-performance LED (lightemitting diode) surgical lighting.
This capability perfectly complements
Bender UK’s expertise in the supply,
installation and commissioning of lifesaving isolated power supplies (IPS) and
uninterruptible power supplies (UPS), to
ensure the safety and security of electrical networks and to protect patients and
staff in healthcare facilities.
Bender UK is also able to demonstrate
to customers the advantages of providing full service support throughout the
life of the equipment or installation, to
ensure maximum return on the investment in terms of availability and safe
performance.
“Clean air flow canopies are now
recognised as a key element in reducing
infection from surgical procedures and
ensuring speedy recovery for patients,”
The advanced ADMECO canopy installed and commissioned by Bender
UK optimises clean air flow to achieve the highest clinical standards
says Bender UK managing director Steve
Mason.
“In a recent installation at a new-build
private facility in the North West, we
worked with the world-leading clean
air specialist ADMECO to overcome
a significant challenge because of the
restricted space, and the installation of
their advanced performance canopy
enabled the operating theatre to
optimise clean air flow to achieve the
highest clinical standards.”
ADMECO canopies are characterised
by high performance and low noise levels
from the integral fans, and the model
chosen incorporated a media bridge
which replaced conventional services
pendants. Bender UK consulted with
the main construction contractor and
with the facility’s owners in the choice of
equipment, arranging for partners to visit
medical facilities in France to see Steris
systems installed and operating, before
the final specification was agreed.
Promising more jobs:
Dr Dirk Pieler, chief
executive of the Bender
Group based in Germany
– two important areas of business for the
company.
Bender is currently introducing new innovative products, including the most advanced insulation monitoring devices and
power quality analysers, and Dr Pieler is
confident that the UK operation will successfully introduce such innovations to existing and new customers – which in turn
will drive further growth.
„„
For more information on Bender
UK capabilities and products, visit
www.bender-uk.com
All systems are ‘go’ even
when they’re switched off
F
or both offshore and
onshore applications,
Bender offers extensive
know-how and solutions for every aspect
of resilient power supplies for
maritime applications – from
ships and submarines in the
civilian and military sectors,
to offshore facilities and crane
and container systems.
Bender UK has long been
an approved supplier to
the BAE Systems shipyard
at Barrow-in-Furness in
Cumbria, and protects
electrical systems on the Royal
Navy’s Astute-class nuclearpowered attack submarines
manufactured there.
The company’s systems are
also specified on the Royal
Navy’s new aircraft carriers, HMS Queen Elizabeth
and HMS Prince of Wales,
currently being assembled
at Rosyth in Fife. Ministry
of Defence officials describe
the 65,000-tonne ships as
“the most complex warships
ever built in the UK”. Bender
products meet the requirements of NATO, as well as
those of many other countries
around the world.
HMS Queen Elizabeth
A key capability offered by
Bender is equipment that can
effectively monitor the insulation performance of systems
even when they are switched
off and using no power.
This capability can play
a decisive role in ensuring
availability of crane systems,
lifeboat winches, fire-fighting
pumps and many other types
of equipment which are
switched on only occasionally
or in an emergency, but which
need to function without
problems whenever they are
required.
Bender offline systems
provide constant monitoring
of equipment and signal insulation faults at an early stage,
to protect lives and equipment
in critical situations.
the times | Tuesday March 18 2014
7
Acting Locally, Thinking GloballyTM
National Nuclear Laboratory RadBall
radiation detection device in action
Picture courtesy of the National Nuclear Laboratory
Growing the Energy Supply Chain
West Cumbria is poised to become an even greater place to do
business by capitalising on a potential £90 billion worth of investment
in the nuclear industry and seizing new opportunities in renewable
technologies. A global reputation in energy, in particular the nuclear
sector, combined with world-class research facilities, a manufacturing
capability second to none and abundant natural resources make the
West Cumbrian investment proposition compelling.
Britain’s Energy Coast is committed to helping the West Cumbria supply
chain to grow and prosper. We provide a comprehensive package of
support to companies already based in the region and those looking to
invest or relocate. From access to funding, expert advice and high quality
property and development sites, including our own Westlakes Science &
Technology Park, through to integration into a local business landscape
with a rich heritage of innovation, we are here to help.
To learn more about our work visit
www.britainsenergycoast.co.uk or call 01946 595285
BUSINESS SUPPORT & PROJECTS
ENERGY INNOVATION
PROPERTY & MANAGED WORKSPACE
Tuesday March 18 2014 | the times
8
Business Insight
Opinion
Shale we just get back
to jobs and prosperity?
For the sake of the
North West’s
economy, energy
security and
environment, let’s
put aside politics
and get behind
Lancashire shale,
writes John Kersey
from wind increasing by 435 per cent in
the shale gas-producing states in the period 2005-11.
In 2013, the British Geological Survey estimated there could be 1,300 trillion cubic feet of shale gas present in
the North of England – double previous estimates. Extracting only a small
portion of this – as well as harnessing
renewable energy technologies such as
wind and solar – would provide greater
energy sustainability and security in the
medium- and long-term.
Lower carbon emissions
A
t a time defined by the South
East, by the City of London
and by Whitehall over-spending, it is easy to hark back to
the days when industry in the
North West of England was flourishing.
Around 200 years ago, the spinning mills
of Lancashire were supplying the majority of the world’s cotton, Northwich in
Cheshire was producing a million tons of
salt per year and the world’s first intercity
rail link was being constructed not in the
South, but between Liverpool and Manchester.
Fuelled by a proud coal industry, our
region epitomised business innovation
and productivity: jobs, creativity and
wealth flowed from the North.
Fast-forward to 2014 and who would
have thought that in the face of high unemployment, stagnant house prices and
limited infrastructure funding, the region
would once again be a future frontier for
industrial growth and prosperity in the
global economy?
In recent years, growth opportunities have been limited. A development
has occurred, however, that could create
thousands of jobs, generate sustainable
economic growth and boost regional and
national revenues for much-needed investment in our public services. And in
order for these benefits to be fully realised, we all need to put our support behind this new resource: natural gas from
shale.
According to British geologists, shale
gas is more plentiful in Lancashire than
in any other part of the UK – but trying
to make sense of the many conflicting
messages can be a difficult task. That is
why we set up the North West Energy
Task Force (NWETF), a coalition of industry and regional job creators, business experts and leading economists.
The NWETF aims to bring a sense of
understanding on how the responsible
development of natural gas from shale
can best benefit our region economically,
while also strengthening national energy
security.
More jobs
A TUC report published this year shows
that the current UK economic recovery
has failed to reach our region. In sharp
contrast to London and the South East,
the likelihood of someone finding a job in
the North West has fallen by 0.7 per cent
since 2010.
A thriving onshore natural gas industry in the North West could therefore
bring significant job opportunities to
local communities, as roles open up for
construction workers, truck drivers, cement manufacturers, water treatment experts and all the jobs which service these
trades..
Numbers vary, but most economic experts believe that natural gas from shale
will create thousands of jobs. The Institute of Directors states that shale gas
production could potentially create up to
74,000 much-needed jobs – a boost to our
national and local labour markets which
cannot be overlooked.
Regional growth
Over the last decade, successful Western
economies such as Germany have been
those that have rebalanced themselves
away from central Government spending and over-reliance on the banking and
services sectors. In order to create a stable
and functioning system, it is important
that we develop a country-wide, competitive private sector capable of reacting to
internal and external economic shocks.
Evidence from abroad suggests that
North West shale exploration could be
vital in achieving this aim, as it will attract high levels of inward investment and
boost the manufacturing sector in our region.
If business rates similar to those applied
to renewable energy schemes were ap-
Exploring new possibilities
The UK
needs to
find a new
and secure
supply of
natural gas
if it wants to
stay on top
John Kersey, local
spokesperson for
the North West
Energy Task Force
plied to shale, then local authorities and
communities would further benefit too.
According to Deloitte, Bowland shale
could generate tax revenues in the range
of £580 million per annum by 2020.
Furthermore, the shale industry itself
has proposed that local communities
hosting sites will receive £100,000 for
each exploration well that is hydraulically fractured – and a further 1 per cent
of all revenues if shale gas is discovered.
Enhanced energy security
As Winston Churchill, then First Lord of
the Admiralty, said in the House of Commons in 1913: “On no one quality, on no
one process, on no one country, on no
one route, and on no one field must we
be dependent. Safety and certainty in oil
lie in variety and variety alone.”
If there is one thing to be said about
energy security, this precept has proved
itself again and again – and it was precisely these concerns about energy security that led Churchill to heavily develop
the Nottinghamshire oil fields during
the Second World War, as these were
vital for fuel supplies.
Almost a third of Britain’s electricity
generation comes from natural gas. In
November 2013, energy minister Michael Fallon said the UK could be importing three-quarters of its natural gas
needs by 2030.
The UK desperately needs to find a
new and secure supply of natural gas
if it wants to remain in the top flight of
economies and not beholden to foreign
governments. In the US, renewables
development has taken place alongside
shale gas production, with generation
Economic and security considerations
are one thing, but what is also unavoidable is that man-made climate change
poses the single biggest long-term humanitarian threat facing us today. It demands an urgent response.
As the 2006 Review Report on the
Economics of Climate Change by Lord
Stern concluded: “Climate change will
affect the basic elements of life for people around the world – access to water,
food production, health, and the environment. Hundreds of millions of people
could suffer hunger, water shortages and
coastal flooding as the world warms.”
The UK alone cannot fight this global
challenge, but we can reduce our contribution to total worldwide emissions.
Natural gas and renewable energy technologies are the best strategy for achieving our carbon reduction commitments
in the most economically viable way.
According to the International Energy Agency, the US shale revolution
has meant it has – accidentally – found
itself as one of the few nations around
the world to have seen its carbon dioxide emissions from electricity generation
fall in recent years. According to the US
Environmental Protection Agency, compared to the average air emissions from
coal-fired generation, natural gas produces half as much of the greenhouse
gas carbon dioxide and less than a third
as much nitrogen oxides.
A 2010 report by the energy consulting firm Pöyry found natural gas is the
only low-risk option facing the UK if
we are to be realistic about meeting our
2020 targets. These comments were recently backed up by Christiana Figueres,
executive secretary of the UN Framework Convention on Climate Change.
Shale gas, she said, “can help countries
move towards green energy”.
Future vision
The environmental, security and economic stakes are too high to allow politics to get in the way of this future vision for a prosperous North West. As a
region, we have the skills and expertise
to make a success of this. So let us put
aside the politics, come together and get
behind the Bowland Basin.
„„
For more information on NWETF,
visit http://nwenergy.org.uk/the-taskforce/
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Tuesday March 18 2014 | the times
10
Business Insight
Forum
New ways
Home team is
switching the
‘green’ light
on renewables
Experts agree that the ‘alternatives’ ball is in the
Government’s court for decisive action to spark
meaningful programmes, Mike Cowley reports
T
he North of England is enjoying
a mini boom in renewable energy and low-carbon projects,
despite the lack of a clear and
coherent energy policy from
the Government – and, oddly enough,
partly because of the unintended consequences of this issue.
According to Darren Walsh – the partner heading the energy team at the Manchester office of DLA Piper, the world’s
largest business law firm – a significant
number of previously stalled schemes
are now under way again.
Of some 25 projects that DLA Piper
Manchester – a centre of excellence for
the renewables and low-carbon sector
– was aware of having been stuck, 15 to
20 of these are reported to have recently
secured equity and are moving forward
to debt funding.
While part of this is due to improved
economic conditions, some of the activity is thought to have been the result
of what various critics see as a series of
flip-flop energy announcements from
the Coalition. Such is the degree of uncertainty surrounding proposed new
legislation that a number of companies
are believed to be seeking to get projects
up and running before changes are made
to the “green” support provision, most
notably in 2017.
That was certainly the view of a number of industry players on the panel at
a specially convened Forum from The
Times on renewable energy and low
carbon in the North, held at the offices
of DLA Piper in central Manchester. It
was the Contracts for Difference (CfD)
legislation initiative, a key plank in the
Government’s Electricity Market Reform programme, which came under fire
in a lively debate chaired by Alasdair
Nimmo, from the The Times Business
Insight North.
Such is the complexity of CfD that
panel member Maf Smith, deputy chief
executive of RenewableUK, the trade
body known as the voice of wind and
marine energy, described it as “Like being on a walk and you see a hill in the
distance then you think you are at the
top – and then there’s another valley to
walk down and go up – and there’s no
way of predicting when you will hit that
last peak until you get there.”
CfD is in fact one of two mechanisms
designed to facilitate the vital investment
needed to replace the UK’s ageing electricity infrastructure with a more diverse
and low-carbon energy mix. What it is
meant to do is reduce the risk faced by
low-carbon generators by paying a variable top-up between the market price and
a fixed-level price, known as the “strike
price”.
As well as reducing the exposure to
volatile fossil fuel prices, CfD protects
customers by ensuring that generators
pay back when the price of electricity
goes above the strike price. CfD will take
the form of a contract between the generator and a new Government-owned
“counterparty”, and will provide the generator with clear contractual rights and
therefore increase investor certainty.
Understand all that? If you don’t, you
are not alone, as all the details have yet
to be announced – which is what has left
the sector both confused and concerned
and has created a climate of uncertainty.
“We are really struggling to get some of
the important details out of the Government,” Maf Smith said. “There is no sign
of the Government sending out a signal,
then staying the course. There are a lot
of short-term decisions. It has become a
case of watching your back in case the
rules change. Politics seem to be stopping
us from moving to the next stage.”
Andrew S Davies, one of two partners
from DLA Piper on the panel, succinctly
summed up the concern for his clients.
“We have a number of clients asking us
where this is all going,” he said, “but we
have no capability to say definitively yet.
This creates a culture of thinking that the
Government doesn’t really know where it
intends to go with this.
“There is a lack of certainty about key
areas of policy. We know that in projects
we advise on, key aspects are fundamentally not understood, such as the need to
close down a contract as quickly as you
can. And there are some bits of it which
we can’t contractualise as you don’t
know where the Government is going
to land. So you end up with delays and
projects do stall – so it’s a vicious cycle.”
However, Mr Davies’s DLA Piper
colleague and fellow panellist Darren
Walsh was more circumspect about CfD,
noting that there is more certainty now
than there has been for a number of
years. “Part of the challenge in recent
years has been the perception of a lack
of a clear and coherent policy from central Government,” he said.
“But we are starting to see movement,
with the Energy Act having been passed,
greater clarity on things like CfD and
the Renewable Energy Support system.
While there is still uncertainty, you can
say things are clearer than they were
before.”
Mr Walsh did however add a rider –
that, while there is light at the end of the
tunnel, the current energy policy “is still
having a perverse effect on investment”.
He went on: “We are seeing an acute
desire by sponsors and developers to get
financial closure as quickly as possible.
This is because they have got certainty
under the current green support regime – which, while not perfect by any
stretch, provides a degree of certainty
they don’t get yet from moving to CfD.
“There are five or six of our developer clients who are very keen to bring
their projects to financial closure before
2017 because it gives them certainty in
the form of investment return. While it
is great to see an element of movement
in the market, it also explains an uplift
in investment and why they want to
bring projects forward before the regime
changes.”
Mark Cumbo, director of renewable
energy at Santander UK, could also see
some benefit in the initiative. “There has
been a positive move forward with CfD
despite some lack of clarity,” he said, “a
move in the right direction.” He added,
however, that “there really needs to be
a genuine long-term low-carbon energy
The panel
Pictured from left...
„„
Mark Atherton, director of environment for Greater
Manchester
„„
Maf Smith, deputy chief executive of RenewableUK
„„
Andrew S Davies, partner with DLA Piper
„„
Mark Cumbo, director, renewable energy at Santander UK
„„
Darren Walsh, partner with DLA Piper and leader of the
Manchester Energy team
„„
Alasdair Nimmo, chairman
„„
Chris Sharkey, regional director, Santander UK
„„
Sam Almozaffar, chief executive, Basalt Global
While
there is still
uncertainty
you can
say things
are clearer
than before
strategy put in place which politicians
stick to.
“Yet evidence suggests that no Government is willing to give the public the
bad news of the scale of the investment
needed in renewables and low carbon
and the negative short-term impact this
will have on energy pricing, albeit delivering much needed long-term security
and stabilisation of pricing. Everything
is too short-term – and, with renewables
having a long gestation period, as an investor this is damaging, you need that
certainty.”
Under the pointed questioning of
Forum chair Alasdair Nimmo, another
problem then came to light – which
Mark Cumbo summed up in one word:
“complexity”.
“It is becoming a full-time job for any
professional involved to keep abreast
of the evolving UK energy policy,” Mr
Cumbo said, “and then you have the
investment community trying to keep
pace as well. There are simply unintended consequences of policies coming together. At the smaller end of the
renewables market, you see developers
downgrading projects to fit in with subsidies.
the times | Tuesday March 18 2014
11
Business Insight
Progressing... in cautious steps
M
ancunians,
it seems, are
warming to
renewables and
low carbon. That
was the message from Mark
Atherton, director of environment for Greater Manchester,
when he took his seat on The
Times Forum panel to discuss
the challenges faced by the
Association of Greater Manchester Authorities (AGMA).
“Local schemes tend not
to be major schemes,” Mr
Atherton said, “they are smaller
in nature but more diverse. We
are promoting a series of heat
networks across Manchester,
supporting energy efficiency
schemes in public buildings,
transferring street lighting to
energy efficient LED [lightemitting diode] – and, through
our engagement with the
public, energy efficiency in
homes.”
Each of these projects, he
admitted, presented its own
challenges – but he didn’t see
planning as a problem, nor,
somewhat surprisingly, was it
down to lack of capital.
“It is a question of lack of
capacity,” he said, “having the
“The current UK energy policy has
actually created an incentive for investors to reduce the level of renewable
electricity generated, as lower production equates to a larger investment return. This is obviously a disappointing
outcome driven by the current policy.
We are also having peaks and troughs
of project activity that are policy-driven
– not project-driven – so that makes it
harder for every aspect of the low-carbon supply chain.
“At the moment, every solar developer is going hell for leather to meet
a subsidy deadline of March 31. Connections will be five times what they
normally are this month, but that will
drop back to zero at the first of April.
So policy at the moment is driving an
unnatural curve.”
The panel also turned its attention to
an issue destined to impact on the future growth of the sector in the North –
the skills gap. This is likely to intensify,
with demands from new nuclear plants
causing a skills-drain effect. This concern was flagged up by Darren Walsh,
who acts for one of the major investors
in Hinkley Point C.
“There will be 10,000 people needed
on-site there at the height of the construction phase,” Mr Walsh said. “So,
assuming that there are estimated to be
around 18,000 people directly engaged
in the wind and tidal renewables sector at present, more than half of the
electrical, mechanical and other engineers utilised on these schemes would
be needed to build and commission one
new nuclear power station in the UK.
We need
to focus on
behavioural
change
throughout
the sector
right people with the right
technical skills to be able to
bring novel schemes to market,
potentially using innovative
finance mechanisms which
might be loans or payback
schemes.
“There is the lack of experience in investing in renewable
energy. So there is a nervousness about rates of return, the
security of return, and other
risks such as the political view
of the electorate in which
elected officials are interested.”
Mark Atherton also tackled
the subject of a skills gap for
the sector raised during the
Forum. “The answer depends
on your perspective,” he said.
“If you speak to local colleges,
they would say there is good
capacity training in renewables
at domestic level such as
installation of fuel-efficient
boilers. They are not seeing
a market sufficient enough
to drive demand for other
courses.
“On a different level, talk
to our specialist energy
companies and they say they
are having difficulty recruiting
graduates – which is not easy
to understand, as the combined
“Our practice looks at renewable energy round the world, and the question
I would raise is how confident do we
feel that we can attract and retain those
skilled individuals to remain in the UK
when you compare perhaps a job in
Manchester with a tax-free lifestyle in
the Emirates?”
Although Mr Walsh went on to tell
the Forum that he had complete confidence in the ongoing success of the
renewable and low-carbon sector in the
North, he did call for a “seismic change”
in thinking within the sector itself. “We
are simply paying lip service to green
credentials and being environmentally
friendly at this moment in time,” said.
He went on to point to an initiative
supported by the Department of Energy & Climate Change for a greater em-
universities in Manchester turn
out 100,000 graduates a year.
“My suggestion here is
that there should be a greater
interlink between energy
companies and graduates and
postgraduates who come out of
our institutions, to resolve the
skills gap at the high-end level
where you find the demand
from innovative technologies.”
Meanwhile, Greater Manchester is facing up to the
problem that 75 per cent of
direct emissions are due to
space and water heating, so
considerable emphasis is going
into work on the fabric of
buildings and the way water is
heated. “Tackling to these two
issues is fundamental for us,” Mr
Atherton said.
That is why he is convinced
the energy efficiency route is
the proven way forward for local
authorities. “We have to try and
balance the amount of time and
effort put into energy generation with energy efficiency,
which is a no-brainer,” he said.
“The question is why energy
efficiency is not taken up more,
because it is far more costeffective than trying to generate
energy in the first place.”
phasis on energy performance linked
to an accreditation scheme, where local authorities can demand from their
suppliers true energy performance statistics.
“Whereas we are very much focused
on the supply side and legislation to
provide new generation capacity,” Mr
Walsh said, “we need to focus on behavioural change throughout the sector including the supply chain. Today
we should be looking at renewables in
the way we started to look at health and
safety in the 1960s.
“There should be a need for all of us
to demonstrate our green credentials.
Getting that behavioural change should
be part of all our organisations, making
sure that we are all aware of our obligations.”
Power pioneer urges more efficiency awareness
A
call for energy efficiency to have
greater recognition within the
renewable energy and low-carbon
sector came from an unsurprising
source during The Times Forum
debate.
It was made by Sam Almozaffar, recognised
by many in the sector as the father of “embedded generation”. His pioneering work at the
University of Manchester some 20 years ago
led to combined heat and power (CHP) plants
– which, when co-existing with a national grid
supply, can improve efficiency from 40 to 90
per cent (see Clarke Energy on page 13).
The Iranian-born physicist entered the
market in 1984 when he founded Combined
Power Systems (CPS), which designed and
manufactured an innovative small-scale
power plant, going on to install 600 of these
in the UK and Ireland in the next decade.
CPS was subsequently sold and is now part
of ENER-G.
Mr Almozaffar went on to develop major
solar schemes in Spain and Italy and has now
returned to head Basalt Global in the UK,
one of a number of investment vehicles in
the sector. During his time working abroad,
he lost none of his forthright views – as The
Times Forum was to discover.
He insisted – and was supported in this
view by other members of the panel – that
energy efficiency is not getting as much
attention as it deserves in the renewables and
low-carbon market. “It should be known as
Renewables and Energy Efficiency, because
they are both important,” he said.
“The reality is that energy efficiency will
contribute more than renewables. The problem
with energy efficiency is that it is not sexy
enough, it is not something the politicians can
switch on and get people excited about.”
Mr Almozaffar also voiced strong views
on subsidies. “Any technology that relies on
subsidies to survive is doomed from the start,”
he said. “Technology has to be made independent of Government policy.”
Neither does he agree with the current
approach to solving fuel poverty – a category
into which 4.5 million UK residents fall – by
price reductions, arguing instead for price hikes
and increased education. “The cheaper you
make the energy, the more it will be used,” he
said. “Educating people about energy efficiency
is the way forward. Simple things like unplugging your television set at night – rather than
leaving it on standby – will make a real difference. Everyone know that, but nobody does it.
“David Cameron reduced electricity costs
by £50 – that is peanuts. Unplugging your TV
will save far more than that. What should be
involved are higher energy prices. In the long
term, that will benefit everybody – the industry
and the consumer.”
Nor does Sam Almozaffar believe that the
sector is being held back by a shortage of
money. “All my life, I have been short of money
for projects,” he said. “Now I have plenty of
money and not enough good projects.”
Tuesday March 18 2014 | the times
12
Business Insight
Energy law
A low-carbon
expertise... in
high demand
Nuclear to biomass: this North West
lawyer is vital to a service for a world
of energy firms, writes Mike Cowley
D
arren Walsh, a leading international energy lawyer at the
world’s largest business law
firm DLA Piper, like his peer
group around the world knows
only too well what it is like to be on call
24 hours a day. It goes with the territory
when you hold down a job where the demands of global clients transcend the traditional niceties of time zones.
With a client base stretching from
Manchester to New Delhi, this entails being on permanent standby to resolve issues connected with developing, funding
and operating low-carbon energy generation technology. A partner in the Finance
and Projects team based in Manchester,
Mr Walsh is just one of 4,200 DLA Piper
lawyers in 30 countries, each offering a
similar level of global service that successfully produces a combined turnover
of around £2.4 billion.
Built through a merger of unprecedented scope in the legal sector, DLA Piper
has grown to become the largest business law firm, providing advice to clients
across a number of international hubs
including Washington, Dubai and Hong
Kong. But the firm, which was founded by
Sir Charles Lupton in Leeds in the 1880s,
retains its Northern roots with offices in
Manchester, Leeds, Liverpool and Sheffield.
While his area of responsibility is the
North West, the very nature of DLA Piper means Darren Walsh can be on call to
help resolve issues anywhere in the world
– hence Punj Lloyd, based in New Delhi,
being on his client list. Despite the international demands of his work, however,
the majority of his time is still spent dealing with clients who have interests across
the North West region.
Brought into the firm in 2010 to look
after the renewable energy sector, Mr
Walsh has overseen a threefold growth in
related business – due in part to having
some 19 years of experience in the domestic and international nuclear and energy
sectors. He decided to enter nuclear – an
industry he knew well, as his father was
a nuclear engineer – because he was offered the opportunity to train with BNFL
(British Nuclear Fuels Ltd) rather than go
down the traditional articles route.
“I wanted to understand the business
issues of being a legal advisor,” Mr Walsh
recalls, “sitting with the client, to give me
a better understanding of client needs.”
We in
Manchester
are very
much the
front door
to the rest
of the
world in
legal terms
His track record in nuclear speaks for itself: previously in-house counsel to BNFL,
head of legal to the British Nuclear Group
and legal director of BNG Project Services.
Since his arrival at DLA Piper – the firm
he had instructed while at BNFL – his
work on low-carbon energy projects has
been all-encompassing, acting for developers, ESCOs (energy service companies),
funders and technology companies. He
has advised on renewable schemes such
as solar PV (photovoltaics), good quality CHP (combined heat and power) and
carbon energy funds, as well as energy
efficiency and long-term energy service
arrangements for companies ranging
from ENER-G in the UK to, as mentioned
above, the Punj Lloyd Group in India.
Darren Walsh’s recognised expertise in
the field of biomass has seen him support
Stobart Biomass, which has just received
planning permission for a 20 megawatt
CHP plant at its distribution centre by
Runcorn Bridge, part of 3MG Mersey
Multimodal Gateway, and he is on hand
to ensure this happens with the minimum
of hitches.
His role is to help bring in equity investment and the debt to service it – which
means he has to ensure everything is in
place to satisfy the lender that this is a
robust deal. Absolute certainty on thirdparty delivery from contractors in areas
such as energy performance is key.
“When developers say they want a
20MW plant that will operate 365 days,”
Mr Walsh says, “using a specified amount
of heat and electricity, my job is to ensure
the agreements we have with contractors
ensure delivery.”
The Manchester Energy team is composed of Mr Walsh and his co-partners,
Ian Wood – who has a market-leading
practice supporting the nuclear sector –
and Andrew S Davies, who is a leader in
his field of energy from waste projects.
The team’s in-depth knowledge of the sector has recently seen them appointed to
act for H2Energy, a Liverpool-based startup company which is producing the next
generation of anaerobic digestion (AD)
plants to convert food waste into a source
of energy.
Instead of building huge AD plants –
such as the one recently commissioned to
handle Manchester’s waste – H2Energy is
providing what are in comparison miniplants on sites where the waste is located,
essentially those belonging to supermarket food suppliers.
Typically, where customers had been
paying between £60 and £100 a tonne to
take their waste to landfill – which was
thus a financial liability – H2Energy has
turned it into an asset by providing the
means to convert the waste into renew-
Darren Walsh can be on call to help resolve issues wherever they might emerge
able energy such as biogas to power their
facility.
Such is the concern generated by overstretched and limited traditional sources of
energy that Liverpool, for one, has drawn
up a masterplan showing where they
expect to see business growth mapped
against the existing distribution network
run by Scottish Power Energy Networks.
Mr Walsh, who sits on Liverpool City
Region’s low-carbon committee, explains
the reason. “The further away you are
from the main distribution network of
the National Grid,” he says, “the weaker
the system is – after all, it is over 60 years
old. Yet out on the periphery is where you
might find new or existing businesses who
have a need for more power.
“And the network operators have a legal
duty to offer connection to anyone who
asks for it. What happens then is it will
be offered – but at a cost. They may say
the infrastructure needs to be reinforced
and that might involve a bill of £500,000
upwards. Now that’s a barrier to locating
any business that renewables can help get
over.”
That is why the renewable energy sector
is increasingly being looked on as a good
business, both by those working in the
sector and those called upon to finance
it. With significant interest by the Green
Investment Bank – and with other banks
such as Santander establishing a significant presence – more and more funding
is being made available, with DLA Piper
assisting to reach financial closure.
The sector has the added advantage of
enhancing the CSR (corporate social responsibility) profile of participants, so redressing image issues. Darren Walsh and
his colleagues are also active in pro bono
work for the Co-operative Enterprise Hub,
which exists to help communities get the
benefit of renewable energy.
In all, they have supported 10 schemes
to date, ranging from a windfarm on the
Hebridean island of Islay to providing
solar panels for a Manchester church. The
church in question is St John’s in Old Trafford, where the vicar, the Reverend John
Hughes, is now reaping lower energy bills
both for the church building itself and the
linked community centre.
Meanwhile, in nearby Bury, Bee Sustainable – a local group – is pushing ahead
with both a hydro scheme and a wind turbine with a little help from DLA Piper.
“Whereas DLA Piper in Manchester is
very much the front door to the rest of the
world in legal terms,” Mr Walsh says, “in
that we have experts in every sector in our
international network on which to call,
when it comes to specific advice in relation to low-carbon and renewable energy
in the North of England we are practising
in this sector, day in, day out.
“We understand the regulatory framework, we understand what the bankers are
looking for, plus all the issues relevant to
developers. This sees us actively involved
in advising and supporting clients develop,
build and operate low-carbon generating
assets.
“Our low-carbon and energy team is
part of an award-winning Projects and Infrastructure Group. Our renowned presence, our dedication to delivering the best
results for our clients and our sector expertise is why we believe our clients continue to instruct us – and why we continue
to support the development of low-carbon
energy projects in the North, nationally
and internationally.”
the times | Tuesday March 18 2014
13
Business Insight
Innovation
A gut feeling that says
you might be a bit fuel
Liverpool’s Clarke
Energy has found
new sophisticated
ways of tapping in
to unusual gases,
says Mike Cowley
A
s the threat of environmental
damage caused by the use of
fossil fuels continues to hang
overhead like the sword of Damocles, the fate of the world
may well rest not only on the ingenuity of
man but also, in part, on the bacteria that
can be found in all our guts.
Munching away inside us are microorganisms known as anaerobes – methanogens and acetogens being the best
known – which thrive in air-free environments. These anaerobes have now been
successfully harnessed and put to work
for us.
Of all the potential answers in the hunt
for renewable sources, biogas created in
anaerobic digestion plants – where billions
of these bugs are used to devour our waste
and convert it into energy – may well
prove to be one of the most effective.
This is, however, just one of a range of
cutting-edge solutions to have played a
significant part in the runaway success of
a family-run, Liverpool-based global company – Clarke Energy – which supplies, installs and maintains the gas engine power
plants at the heart of energy projects in
around a dozen-and-a-half countries.
With a year-on-year turnover increase
since 1999 which has just topped £224 million, the company is currently generating sufficient power in a variety of forms
to supply 10 million homes worldwide,
including 3.4 million in the UK – a track
record that has seen it appointed as an
export champion for UKTI (UK Trade &
Investment) in the North West.
Having cut its corporate teeth by converting gas from the rotting food content
of landfill sites into power some 20 years
ago, when anaerobic digestion first came
into the waste management toolkit, Clarke
Energy today controls more than 70 per
cent of this sector in the UK. Food waste
remains the fuel of choice in the anaerobic sector, although some farmers in the
North of England are now growing crops
specifically to feed into digesters.
One of the most recent flagship anaerobic digestion plants – known in the trade
as “concrete cows”, because they replicate
what happens in the animal’s stomach
– can be found in Manchester Waste’s
giant Davyhulme sewage works. This uses
Clarke Energy-installed engines to generate cost-effective energy from the gases
emanating from millions of tonnes of
household food waste – which not many
years ago would have ended up in landfills.
Clarke Energy has also moved up
several gears to provide increasingly sophisticated ways of tapping into a range
of unconventional gases, such as those
found in coal mines or associated with
crude oil. There have even been specialist applications developed for some of
the most challenging gaseous fuels, including syngas from biomass and gases
originating as a byproduct of steel production.
Here, then, is low-carbon energy at its
best – power generation while avoiding
greenhouse gas emissions. Waste not,
want not is back in vogue.
The conversion of unusual gases is
only one part of the ongoing Clarke
Energy story, however. Another area in
which the company is challenging the
pack is known as embedded generation.
This is where power is generated close to
the site of use, making the most of the
energy within the fuel while also avoiding transmission losses.
Effectively what happens here is that
Clarke Energy links a combined heat and
power (CHP) facility to a customer on an
existing natural gas supply (which enjoys
the lowest carbon emissions of all fossil
fuels), to ensure the main supply works
more efficiently – up to 90 per cent as
opposed to an average of 40 per cent.
By co-existing in this way, the previous
heat loss is captured and converted back
to a usable power source, with the money
factor alone – including the opportunity
to sell any surplus electricity back to the
national grid – making this a no-brainer
decision.
In the UK, most of these CHP plants
are used in parallel with the grid supply, but in African and other third world
countries – where the grid is at best somewhat shaky and the lights can go out several times a day – Clarke Energy provides
them as standalone power sources.
Leading UK hospitals have been quick
to see the benefits of embedded generation, with the Christie in Manchester and
Broadgreen in Liverpool – as well as their
peers in Ormskirk and Preston – now
enjoying the benefits of cheaper and improved power supplies while substantially
reducing carbon emissions.
So the appeal of CHP plants – with
their money-saving and potentially
money-making attributes – has seen
demand come full circle. All of which is
light years from when the company started trading in the mid-1980s, providing
spare parts worldwide to users of marine,
industrial and locomotive diesel engines.
When Helensburgh man, Jim Clarke,
now the chairman, joined the company
in 1989, it was in financial difficulties.
But things didn’t stay that way for long.
Along with taking a controlling interest and changing the company name to
Clarke Energy, he instilled service into
the very DNA of the day-to-day operation.
It was due to this growing reputation
for going the extra mile that Clarke Energy was eventually approached by Jenbacher, an Austrian manufacturer of gaspowered engines, to become its exclusive
UK distributor. This was the start of a
partnership which propelled them both
Working well – with
cheaper and improved
power supplies
The DNA we
started with
– putting
customers
first and
ensuring
quality –
will see us
well placed
to handle
the future
into the forefront of global suppliers,
with Jenbacher providing the engines
and Clarke Energy the technology for
the vital installation and support service.
The fact that Jenbacher was eventually bought by the General Electric (GE)
conglomerate – which was keen to expand the business – did not do the relationship any harm either, with GE being
quick to recognise that Clarke Energy
was the key to making it all happen.
On the back of the Clarke Energy/
Jenbacher axis, the Liverpool company
began to expand overseas, initially by
being awarded more Jenbacher distributorships. First stop was Australia, where
the opportunities offered by an overstretched national grid abounded, then
New Zealand where there was a similar situation, followed soon by Nigeria
where the grid was highly undeveloped
by Western standards.
The next stage of development was
the acquisition of Cogen India in 2003,
then Jenbacher France the following
year. Completing the current global
picture for Clarke Energy are Ireland
(opened in 2005), Tunisia (2008), Algeria (2011), Tanzania (2012) and last
year the acquisition of Orient Energy’s
Bangladesh operations, GE’s Jenbacher
service business and Agaricus Trading
in South Africa.
All of these overseas acquisitions have
been consolidated by having local people
run a 24/7 operation, with the support of
expats ensuring the local ethos is in tune
with that of Clarke Energy. Many of the
major initiatives have been conducted
under the watchful eye of the energy
team at the Manchester office of DLA
Piper, the world’s largest law firm, which
acts as advisor to Clarke Energy.
Jim Clarke’s son Jamie – who joined
the group straight from university to set
up a telecom infrastructure division –
was appointed chief executive in 2010,
the same year the business completed
the buyback of shares owned by 3i,
which had acquired a minority interest
in 1999.
With his Glaswegian accent still
prominent even after many years living
away from his home city, Jamie Clarke is
seen as being cut from the same cloth as
his father. Not one for personal promotion, he prefers to get on with the job in
hand.
“We take a long-term view,” he says.
“The business is in constant transition,
customers are changing, customer demands are changing, the health and
safety requirement is much more complex.
“We remain committed to our overseas expansion ambitions and recently
welcomed ECI as a minority investor –
which has proved to be very constructive
in assisting with our aggressive expansion plans. But the core DNA we started
with – putting the customer first and ensuring quality in everything we do – will
see us well placed to handle the future.”
Tuesday March 18 2014 | the times
14
Advertisement feature
Burgeoning port set for growth
Port of Sunderland is set to establish itself nationally after a buoyant
period of trading and a host of major new development projects.
Growing its reputation as a
gateway to offshore and
renewable energy, Port of
Sunderland is making waves as
an economic driving force for its
city and the wider North East
England region. With business
booming, and a commitment from
leaders in the city to ensure that
the port establishes itself as a
prosperous, progressive and
burgeoning waterfront,
Sunderland appears to be on the
brink of creating something
special.
Located on the North East
coast of England, the municipal
port is looking forward to
building on a successful few
years, having completed a
number of infrastructure
improvement programmes and
invested in a heavy-lift crane, to
attract further custom nationally
and internationally.
Matthew Hunt, director at
Port of Sunderland, believes
that the port is in a strong
position to attract significant
contract wins and inward
investment projects, after a raft
of developments designed to
make the most of the port’s
natural assets have freed up
swathes of land ready to be
utilised.
The strategic acquisition of
areas of the port previously
owned by independent
businesses, demolition of
disused buildings that were
occupying space, resurfacing of
both roads and yards adjacent
to deep water quays, heavy duty
crane pads and ro-ro facilities
that make better use of space at
the port, are just some of the
projects completed that Mr Hunt
believes position Port of
Sunderland well for investors.
Mr Hunt said: “The port has
always had significant potential,
and the projects we have
undertaken have been about
unlocking that, making some
relatively small changes that will
deliver big benefits.
“There are a number of very
visible changes to infrastructure
at the port like the purchase of a
120 tonne capacity harbour
mobile crane – along with some
more subtle changes that people
may barely notice like a new
security gatehouse, but the sum
of the parts is significant. The
things we have done mean that
the port is a blank canvas that is
ready for businesses to come
and put their stamp on.”
The port has also added to its
handling capabilities with the
purchase of a LHM 420 Harbour
Mobile Crane via international
crane manufacturer Liebherr to
add to the Liebherr A944C HD
materials handling crane
purchased in 2013.
Owned by Sunderland City
Council, the port has already
started to see the commercial
benefits of offshore energy, with
a number of businesses starting
to regularly use the port, and
others making long-term
commitments to the port by
setting up operations on site.
In October last year, Port of
Sunderland signed a significant
storage and offshore cable base
contract with E.ON, taking
delivery of two 600 tonne
substations in November and it
recently delivered its second
phase of the deal which saw the
cable-lay vessel, Atlantic Carrier
arrive onto Greenwells Quay.
Mr Hunt added: “The arrival
of E.ON’s substations made for
an exciting couple of days for
Port of Sunderland. We have
been working for a number of
years to build its reputation as a
centre for renewable and
offshore energy and subsea
Port of Sunderland:
immediate access to the open sea
Sunderland’s coastal location has always
played a huge part in its economy.
The city’s port is ideally situated,
with immediate access to open
sea and three kilometres of river
Scotland
and dock berths. Add to that a
track record for 24/7 delivery,
dynamic, commercially minded
England
management and a ‘can-do’
outlook, and you can see why the
Port of Sunderland is flourishing.
E [email protected]
T +44(0)191 553 2100
W makeitsunderland.com
Wales
engineering projects, and it is
fantastic that we are
increasingly seeing that hard
work come to fruition.
“While the Atlantic Carrier
vessel was mobilised at Port of
Sunderland, the team utilised
their LHM 420 heavy lift crane to
lift a 95 tonne, 14.5 metre
carousel onto the back deck of
the vessel. The project was a
very visible and exciting project
and I’m delighted we were able
to assist such a globally
respected company with vessel
mobilisation and cable laying
requirements.”
And it is clear Port of
Sunderland is seeing the
benefits of its strategic
developments and excellent
location.
“We’re very clear about what
our assets are at Port of
Sunderland, and what makes us
special and distinct from our
competitors and we are
absolutely committed to
leveraging these strengths to
ensure that we tap into what we
know could be a significant
opportunity for us at Port of
Sunderland and for the wider
regional supply chain in both the
offshore renewable energy and
subsea engineering sectors.
“We’ve already seen a real
sea-change at the port – more
vessels are passing through the
waters of the Wear than ever
before, we’re starting to work in
a host of new sectors, and we
have a number of exciting
projects in the pipeline that
really do show the progress we
have made.
“The changes are about much
more than just infrastructure –
they’re changing the face of the
port and in time, we believe, will
bring real economic benefits to
the city and the region.”
But the port does not have all
of its eggs in one basket. Among
the port’s current areas of
business are bulk cargoes,
project and unitised cargo
handling, ship repair and marine
engineering, North Sea oil and
gas and offshore renewable
energy and subsea engineering
industry support. And with
immediate access to the open
sea and three kilometres of river
and dock berths, Sunderland
has a number of advantages that
are helping its cause in
attracting a growing client base
in these sectors.
For more information about Sunderland and the Port of
Sunderland visit www.makeitsunderland.com, email
[email protected] or call +44 (0)191 305 1194.
the times | Tuesday March 18 2014
15
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