Draft final report · Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower, has recently confirmed that they will be applying for planning consent for a new nuclear

H2

H2

H2

H2

H2

H2

H

H

Anglesey Energy Island FrameworkPotential Opportunities and Economic Impacts of the Energy Island Framework

Fframwaith Ynys Ynni

Final ReportMay 2010

Energy Island: Potential opportunities and economic impacts

Final report

LIMITATION

URS Corporation Limited (URS) has prepared this Report for the sole use of Isle of Anglesey County Council in accordance with the Agreement under which our services were performed. No other warranty, expressed or implied, is made as to the professional advice included in this Report or any other services provided by us. This Report may not be relied upon by any other party without the prior and express written agreement of URS. Unless otherwise stated in this Report, the assessments made assume that the sites and facilities will continue to be used for their current purpose without significant change. The conclusions and recommendations contained in this Report are based upon information provided by others and upon the assumption that all relevant information has been provided by those parties from whom it has been requested. Information obtained from third parties has not been independently verified by URS, unless otherwise stated in the Report.

COPYRIGHT

© This Report is the copyright of URS Corporation Limited. Any unauthorised reproduction or usage by any person other than the addressee is strictly prohibited.


Final report

CONTENTS

Section Page No

EXECUTIVE SUMMARY................................................................................................................ I

1. INTRODUCTION.............................................................................................................. 1

1.1. Purpose ............................................................................................................................ 1 1.2. Structure........................................................................................................................... 1 1.3. Approach .......................................................................................................................... 1 1.4. Consultation ..................................................................................................................... 2 1.5. Definitions......................................................................................................................... 2

2. VISION AND OBJECTIVES ............................................................................................ 3

2.1. Introduction....................................................................................................................... 3 2.2. Vision................................................................................................................................ 3 2.3. Objectives......................................................................................................................... 3 2.4. Action areas ..................................................................................................................... 3 2.5. Precedents and case studies ........................................................................................... 4 2.6. Conclusions...................................................................................................................... 6

3. OPPORTUNITIES AND CONSTRAINTS........................................................................ 8

3.1. Introduction....................................................................................................................... 8 3.2. Policy drivers .................................................................................................................... 8 3.3. Current profile of Anglesey............................................................................................... 8 3.4. Energy market summary ................................................................................................ 20 3.5. SWOT analysis............................................................................................................... 25 3.6. Conclusions.................................................................................................................... 26

4. ENERGY ISLAND FRAMEWORK ................................................................................ 28

4.1. Introduction..................................................................................................................... 28 4.2. Development scenarios.................................................................................................. 28 4.3. Energy Island: Identification of preferred scenario......................................................... 32 4.4. Spatial diagram .............................................................................................................. 33 4.5. Energy elements and impacts........................................................................................ 39 4.6. Economic impact summary ............................................................................................ 54 4.7. Conclusions.................................................................................................................... 59

5. RECOMMENDATIONS.................................................................................................. 60

6. NEXT STEPS................................................................................................................. 62


Final report

EXECUTIVE SUMMARY

Energy Island: Vision and Objectives

Climate change and energy security present all areas with major challenges over the coming decades. On Anglesey significant job losses, deprivation and out migration mean there is a pressing need to consider a different approach to economic, social and environmental development.

The Energy Island vision is to create a world-renowned centre of excellence for the production, demonstration and servicing of low carbon energy.

• Production – Investing in new low carbon energy production to help secure a stable energy future for Wales;

• Demonstration – Establishing world-class facilities to place Anglesey as a leading location for low carbon energy innovation and demonstration;

• Servicing – Ensuring that local companies and people benefit and take advantage of opportunities from new energy investments.

Precedents from the UK and Europe provide strong evidence that this is an achievable and ambitious direction for the sustainable economic development of the Island.

Energy Island: Opportunities and constraints

The recent downturn has adversely affected economies across Wales and the UK. Local circumstances have also eroded Anglesey’s economic and employment base. In this context the opportunities offered by low carbon energy development are of critical importance to the wider economic development and diversification of North West Wales and the regeneration of its local communities.

The local and global contexts present a complex series of opportunities and challenges for Energy Island. Most recently the National Energy policy statement - Low Carbon Revolution, has identified the goals and targets for low carbon activity in Wales. The key opportunities for Energy Island are:

• Energy Exporting: Wales has an ambition to become a major energy exporter, producing twice the level of energy demand by 2025. Energy Island can play a major role here through the development of offshore wind and nuclear power.

• Tidal power: National policy supports low carbon demonstration including tidal resources. Here the Skerries marine current project can set the pace and tone for tidal energy.

Page i


Final report

• Energy efficiency and micro-generation: ARBED a strategic investment programme to improve energy performance is a focus for activity in the short term with strong support for energy efficiency measures and installation of micro-generation and community scale renewables.

• Nuclear Power: Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower, has recently confirmed that they will be applying for planning consent for a new nuclear reactor at Wylfa in 2012. The new build represents a significant opportunity to realise new high quality jobs and presents opportunities for local companies to become part of the wider supply chain.

• Offshore Wind: Recent investments in the offshore wind market provide good evidence of the potential for job creation across the UK. Clipper Wind Power, Mitsubishi, GE and other manufacturers have announced investments totalling approximately £350 million. The presence of Round 2 and 3 offshore development areas in close proximity to Anglesey offer significant potential for the Island to grow its supply chain in this context.

• Job creation/Supply chain development: The critical opportunity is the potential to deliver economic development and regeneration through the development of the low carbon economy. This means capturing jobs, engaging and linking individuals and communities to jobs through education and training and placing Wales as a leading location for energy research.

• Skills and Knowledge: Energy Island is already addressing this issue with work by local and national partners including Coleg Menai through their Energy and Fabrication and The National Skills Academy for Nuclear. The Low Carbon Research Institute and Bangor University are also key research and development assets.

• Exploiting assets: Anglesey has a range of supporting assets that can be utilised for Energy Island these include development sites such as Parc Cybi and Anglesey Aluminium alongside strategic infrastructure at RAF Valley/Anglesey Airport and Holyhead Port.

Energy Island: The Framework

In order to realise Energy Island there is a need to focus on a limited number of opportunities that can deliver the right mix of ambition, impact and profile. These can play a significant role in a more resilient, diverse and prosperous economic future for Anglesey and North West Wales. The key elements of the Energy Island Framework are:

Page ii


Final report

• Short term: Large and small scale biomass installations and supporting energy crops, energy efficiency measures, and micro generation. Initial discussion and negotiation to maximise opportunities from Offshore wind Irish Sea Round 3 Zone.

• Medium to long term: New build at Wylfa up to 3.2 GW, Implementation of tidal project at Skerries, Offshore wind base at Holyhead Port and the replanting of existing onshore wind farms.

• Long term: Tidal power expansion and development of the hydrogen economy.

Energy Island has major potential to realise economic, social and environmental gains for Anglesey and the North West Wales economy. There is the potential to create a peak of 4500 construction jobs (2017) in Anglesey and North West Wales including jobs in the supply chain. The Framework could also deliver a further 2500 operational and maintenance jobs on the Island and wider sub-region by 2025.

These new jobs and associated income have the potential help to make a contribution of £2.34 billion to Anglesey and the sub-regional economy in the period to 2025. On average Energy Island investments add up to an additional 8.6% of Anglesey’s GVA per annum over the period 2010 to 2025.

Energy Island: Recommendations

The evidence shows that the potential of Energy Island is significant and represents the best opportunity for Anglesey to diversify and strengthen its economy:

Production

• Nuclear new build represents the central opportunity within Energy Island with significant benefits in employment and GVA terms for both Anglesey and the wider sub-region. Continued close working with Horizon, Areva and Westinghouse is required to maximise the local benefits and supply chain opportunities.

• Re-training and skilling the potential workforce for the new build and wider energy market should be supported to maximise the benefits for the local area in the immediate and longer-term future.

• Consultation with local communities will also be critical to the ongoing success of the new build and wider Energy Island proposals. This work needs to demonstrate the benefits of the framework to local people.

• Development of Holyhead Port. Whilst there is potential here there are also constraints that need to be addressed. Ongoing discussion with Centrica, WAG, Stena, the Port Authority and potential investors are critical to understanding the

Page iii


Final report

Page iv

scale and nature of the opportunity and the steps that need to be taken to realise this.

• Enhancing energy infrastructure: National and local ambitions to export energy requires significant investment in the existing transmission network. Discussion and clarity over the planning and delivery of new and improved connections should be continued.

Demonstration

Demonstration projects offer the opportunity to put Energy Island “on the map” as a premier location for energy research and development.

• Tidal energy: Pursuing tidal energy would give Anglesey an early mover advantage and help create the profile needed to help attract investment in research, development and manufacturing. The Skerries project is an excellent opportunity to develop a distinctive element of the framework.

• Nuclear decommissioning at Wylfa A and nuclear skills training through NSAN also offers potential to showcase the safe decommissioning of the current reactor and offer hands on training to help access new jobs created in the new nuclear build.

• Smart Grids in rural and urban areas is an area that is of increasing interest to Government and the private sector and again offers a first/early mover advantage if the opportunity can be progressed.

Servicing

There will be significant levels of investment over the next fifteen years it is essential that these opportunities are used to grow, attract and retain businesses and jobs.

• Consultation and supply chain events. Further work to engage and maintain these relationships with local SMEs should be undertaken with Horizon, local business development agencies and the public sector.

• Land and premises Providing sufficient and suitable development sites and premises for companies to relocate to will be an important factor in realising the supply chain ambitions of Energy Island.

• Skills development and associated training is one of the key areas where the public sector can play a major role. Investment in relevant training for the nuclear and wider energy and construction sectors is already being rolled out.


Final report

1. INTRODUCTION

1.1. Purpose

1.1.1. The purpose of this document is to set out the Energy Island Framework and its potential economic impacts. This work builds on the previous baseline work including a detailed profile of Anglesey and North West Wales along with the energy market analysis and resulting energy and development scenarios.

1.2. Structure

1.2.1. The document first sets out the wider vision and objectives for the Energy Island Framework (section 2). This section includes a review of case studies to demonstrate some of the precedents that Energy Island can learn and build on.

1.2.2. This is followed by a summary of the baseline work to identify the key opportunities and constraints for the Framework and the different development scenarios (section 3).

1.2.3. The main focus of the document is to set out the Energy Island Framework that has been developed using the baseline analysis, consultation and testing phases of the study (section 4). This provides an overview of the activities included in the framework and detail on the individual projects and their associated impacts. The section concludes with a series of broad recommendations.

1.2.4. Finally the report touches on the critical issues of communication of the Energy Island Framework. This is particularly important in gaining wider support from the community, public and private sectors for Energy Island.

1.3. Approach

1.3.1. The approach to the study consisted of five key stages set out below:

Page 1


Final report

1.4. Consultation

1.4.1. The project has involved extensive consultation with the steering group, Energy Island Stakeholder group and a range of other stakeholders. This has included a wider range of interests further details are provided in appendix a. This has been invaluable in ensuring the research is grounded, realistic and based on a range of evidence including both published sources and informed opinion.

1.4.2. A range of different approaches have been used including face to face and telephone one to one interviews, workshops and presentations. Throughout the process a steering group made up of the commissioning partners (Isle of Anglesey County Council, Welsh Assembly Government and Magnox North) has guided the project.

1.5. Definitions

1.5.1. A number of references to “local” are made within the economic impact section these relate to the Isle of Anglesey. Sub-regional is used in relation to the wider North West Wales economy this is defined as Anglesey, Gwynedd and Conwy.

1.5.2. The economic impact work also uses the terms direct and indirect in relation to jobs. These terms refer to net additional jobs i.e. total jobs after accounting for factors such as displacement, leakage and multiplier effects.

1.5.3. Direct jobs refer to the employment impact of the specific Energy Island activity; indirect employment refers to the supply chain employment.

1.5.4. Short, medium and long term timescales relate to the following: short term: up to 5 years, medium term 5 to 10 years and long term greater than10 years.

Page 2


Final report

2. VISION AND OBJECTIVES

2.1. Introduction

2.1.1. The following section sets out the wider vision, objectives and action areas for Energy Island. These set the context for the development of the more detailed activities to help achieve the Energy Island vision.

2.2. Vision

2.2.1. The vision for the Energy Island is:

“To create a world renowned centre of excellence for the production, demonstration and servicing of low carbon energy.”

2.2.2. By achieving the vision Anglesey and North West Wales will be in a position where the range of economic activity is more diverse and has shifted toward higher value added activities.

2.3. Objectives

2.3.1. The framework has three objectives relating to the production, demonstration and servicing of low carbon energy opportunities as follows:

2.3.2. Objective 1: Production – New low carbon energy production on the Island.

2.3.3. Objective 2: Demonstration – Establishing world-class facilities to promote Anglesey as a leading location for low carbon energy innovation and demonstration.

2.3.4. Objective 3: Servicing – Local companies taking advantage of opportunities from new energy investment, decommissioning and operation.

2.4. Action areas

2.4.1. The Energy Island Framework includes six areas for action:

2.4.2. Skills – Developing a labour force with the skills required to take maximum advantage of the energy production, demonstration and servicing opportunities.

2.4.3. Infrastructure – Planning and supporting the development of strategic and community level infrastructure to facilitate the Energy Island Framework and create lasting community benefits.

2.4.4. Policy – Facilitating suitable policy development, taking advantage of opportunities and responding to challenges.

Page 3


Final report

2.4.5. Supply chain– Maximising the supply chain opportunities that can be captured locally.

2.4.6. Behaviour – Ensuring that programmes and activities are in place to encourage behavioural change.

2.4.7. Community engagement and consultation – Ensuring that people are at the heart of activity and understand the benefits of Energy Island.

2.5. Precedents and case studies

2.5.1. The Energy Island Framework and objectives have been informed by both analysis of local and sub-regional opportunities and experience from elsewhere. In the early stages of the work a number of case studies were produced to highlight learning points and success factors which could inform the development of the framework.

2.5.2. Further detail is provided within the baseline document with the main messages and learning points for Energy Island identified below:

Nissan – Sunderland UK

2.5.3. One of the key drivers for Nissan’s decision to build a car manufacturing plant in Sunderland was the presence of a skilled labour force in the wider area. The company have continued to invest heavily in training their staff and this is a key reason for the high levels of plant productivity. Nissan have also worked closely with local companies to source components and their presence has seen additional foreign investment and further job growth.

2.5.4. Learning point: This example demonstrates the supply chain and workforce development impacts that a significant investment project can achieve As the UK

Energy Coast - Cumbria, UK

2.5.5. Building on nuclear power, decommissioning and renewables to develop a framework for the wider regeneration and economic development of West Cumbria based on the drive toward a low carbon economy. The decommissioning of Sellafield and presence of the Nuclear Decommissioning Authority has helped establish West Cumbria as the UK hub for decommissioning and there have been a significant number of related inward investments on the back of this activity. Allied with good potential in a number of renewables the Energy Coast strategy sets a useful precedent for Energy Island.

2.5.6. Learning point: Energy Coast has a series of parallels with Energy Island and this presents a range of opportunities for joint working and resourcing and sharing lessons learnt.

Page 4


Final report

Middelgrunden - Denmark

2.5.7. Denmark is the market leader in terms of the European wind power market with major private sector firms including Vestas and over 20% of electricity produced from wind power. The Middelgrunden wind farm demonstrates wider community ownership of energy production through a 50% share in the 20 turbine offshore wind farm.

2.5.8. Learning point: There are already good models of community ownership of renewable energy developments. These could be applied and used within the Energy Island context.

Gotland – Sweden

2.5.9. Gotland is an Island economy with a significant agricultural sector. The island is well known to Swedish tourists but has limited overseas visitors. Tourism is a key sector within the local economy. Gotland has the lowest GDP of any Swedish sub-region. The Island is aiming to produce 100% of its energy needs from renewable sources by 2025 and presents an interesting model for how this might be achieved.

2.5.10. Learning point: Gotland sees low carbon energy as a central part of its strategy to build a more resilient economy. There are other parallels with Anglesey in that tourism plays an important role and that the economy as a whole is relatively fragile. The island is further along the path to a low carbon economy and therefore offers an excellent learning resource for Energy Island.

Emscher Park – Ruhr, Germany

2.5.11. Demonstrating a major shift in the nature and scale of employment from heavy industry to a more service led economy in challenging circumstances. Critical success factors here included the structure and co-operation of sub-regional government and local partners. Here the sub-regional government created the framework to help guide investment at the local level. This helped build investor confidence and demonstrate to local projects that they were contributing to a wider economic development effort.

2.5.12. Learning Point: It is critical to have the support of all layers of Government if the Energy Island Framework is to be successful and encourage investment from global and local partners.

Bremerhaven Port – Germany

2.5.13. Formerly a region of high-unemployment, the German port of Bremerhaven has experienced a remarkable economic upturn, transforming into a major offshore

Page 5


Final report

wind power technology centre. This was driven by local government realising the key strengths of the port and wider area and developing a strategy to bring major investment in the offshore wind industry to Bremerhaven. The success of the approach is evidenced by the port securing 50% of the €500 million investment in improving capacity for manufacture of offshore wind turbines and components along the German North Sea coast region.

2.5.14. Learning Point: The ability of local government to achieve transformational economic change through a clear strategy building on local strengths.

Olkiluoto – Finland

2.5.15. There are currently two projects where the Areva EPR reactor is being built and this offers an opportunity to understand the impacts, processes and critical factors with current nuclear new build. At Okiluoto in Finland. The experience from Finland to date highlights a number of key areas that need to be monitored closely during construction. At a general level the time and cost overruns demonstrate the levels of risk involved. Specifically there have been issues with the quality of work on both groundworks and welding. This highlights the importance of having suitably skilled labour and close monitoring of the construction process.

2.5.16. Learning points: A critical need to ensure that a supply of appropriately skilled labour is available for reactor construction. A need to avoid the problems and delays which have been experienced at Okilluoto by keeping abreast of nuclear construction projects elsewhere and ensuring procedures are in place to monitor all construction work.

2.6. Conclusions

2.6.1. Climate change and energy security present all areas with major challenges over the coming decades. On Anglesey significant job losses, deprivation and out migration mean there is a pressing need to consider a different approach to economic, social and environmental development.

2.6.2. The Energy Island vision is to create a world-renowned centre of excellence for the production, demonstration and servicing of low carbon energy.

• Production – Investing in new low carbon energy production to help secure a stable energy future for Wales;

• Demonstration – Establishing world-class facilities to place Anglesey as a leading location for low carbon energy innovation and demonstration;

Page 6


Final report

• Servicing – Ensuring that local companies and people benefit and take advantage of opportunities from new energy investments.

2.6.3. Precedents from the UK and Europe provide strong evidence that this is an achievable and ambitious direction for the sustainable economic development of the Island.

2.6.4. The following section goes on to outline the central opportunities and activities within Energy Island based on an analysis of the energy market and the specific opportunities and constraints on the Island.

Page 7


Final report

3. OPPORTUNITIES AND CONSTRAINTS

3.1. Introduction

3.1.1. The following section provides a summary of the baseline work including a profile of the key policy drivers, existing conditions, the energy market analysis and a summary SWOT. This provides the basis for the energy and development scenarios and ultimately the Energy Island Framework. Further detail is included in the accompanying baseline report.

3.2. Policy drivers

3.2.1. Most recently the National Energy policy statement - Low Carbon Revolution, has identified the goals and targets for low carbon activity in Wales. This provides useful direction and support for Energy Island activities. Key opportunities here include:

• An ambition for Wales to become a major energy exporter, producing twice the level of energy demand by 2025.

• Support for low carbon demonstration including tidal resources.

• ARBED a strategic investment programme to improve energy performance is a focus for activity in the short term with strong support for energy efficiency measures, particularly in the existing housing stock and installation of micro-generation and community scale renewables.

• The critical opportunity across these policies is the potential to deliver economic development and regeneration through the development of the low carbon economy. This means capturing jobs, engaging and linking individuals and communities to jobs through education and training and placing Wales as a leading location for energy research.

3.3. Current profile of Anglesey

3.3.1. This section of the report presents a summary of the spatial, demographic, economic, and social profile of the island. It identifies the spatial pattern of environmental assets, existing energy assets and planned energy development. It also presents a review of key demographic, social and economic indicators to set a baseline against which to judge the impact of the Energy Island in the future.

Page 8


Final report

Spatial Profile

3.3.2. Urban areas/Settlements

3.3.3. The Island is predominantly rural, with agricultural land dominating the central and northern parts of the Island. The majority of settlements on the Island are located along the coastline, with relatively few towns and villages in the centre of the island.

3.3.4. The three main settlements on the Island have developed along the strategic transport corridor between Bangor on the mainland and Holyhead in the north west of the Island. Holyhead is the most populated town, with approximately 11,000 residents. Followed by Llangefni (4,500), and Menai Bridge (4,000), in the south of the Island.

3.3.5. The south of the Island is the most populated area with over 46% (31,700) of the Island’s residents. The west of the Island, including Holyhead, accounted for 31% (21,400) of the population, while the north of the Island was the least populated with only 23% (15,900) of the island’s population.

3.3.6. Transport

3.3.7. Transport infrastructure on the Island is relatively limited with the key strategic road the A55 from Bangor to Holyhead. The Island is connected to mainland Wales by the Menai Suspension Bridge and the Britannia Bridge.

3.3.8. External connectivity is facilitated by a direct rail link from Holyhead to London and air route from Anglesey Airport with Cardiff. Holyhead Port also offers routes to Ireland and is a key passenger ferry and freight hub.

3.3.9. Environmental Designations

3.3.10. The Island has a unique and varied natural environment, with a wealth of natural habitats and ecological diversity. As a result one third of the Island is protected by a range of environmental land designations. There are 60 SSSI’s on the island covering a total area of 80km2, 12 SPAs, 10 SACs, 4 NNRs, 3 LNRs, 1 Ramsar and 1 AONB.

3.3.11. The most significant designation in terms of extent on the Island is the Anglesey Area of Outstanding Natural Beauty (AONB) that covers almost the entire coastline of the Island.

3.3.12. Flooding

3.3.13. Flood risk on the island is limited to coastal areas, in particular areas around Holy Island, including the settlements of Holyhead, and Valley. However there are a

Page 9


Final report

Page 10

number of waterways and marshlands, which pose flood risk to inland areas, including Afon Cefni that flows from Cefni reservoir through Llangefni to Malltraeth Marsh and to Malltraeth Bay.

3.3.14. Development Sites and Allocations

3.3.15. Figure 1 below presents the location of large potential development sites of single ownership; LP and UDP Employment Land Allocations; and UDP Housing Land Allocations.

3.3.16. This indicates that the majority of major housing and employment land sites are located within the existing main towns of Holyhead, Llangefni and along the Menai Strait, with further clusters of potential development sites along the strategic A55 transport corridor.

3.3.17. Employment sites

3.3.18. The majority of existing employment site allocations are limited to Holyhead and the A55 corridor. In Holyhead there are a number of sites close to the port, which have been designated in the Local Plan for development under allocations S7, S10 and S11. There are also existing employment sites at Parc Cybi and Penrhos retail park.

3.3.19. Other major existing allocations include Bryn Cefni Business Park in Llangefni, Mona Industrial Estate in Gwalchmai, and Gaerwen industrial estate. There are also allocations relating to Amlwch port in the north of the island.

3.3.20. Housing Sites

3.3.21. The Anglesey Local Plan identifies over 57 housing allocations covering 55ha, with the potential to provide approximately 899 new housing units.

3.3.22. These allocations are relatively evenly distributed across the Island, and focused on existing settlements. The focus for housing development is the main towns of Holyhead and smaller coastal towns.


Final report

Page 11

Figure 1: Potential Development Sites


Final report

3.3.23. Major Developments

3.3.24. Recent development proposals for major projects on the island have been driven by the need to increase the business base and employment of the island. Significant infrastructure developments are also planned, to upgrade existing transport and distribution networks. Figure 2 overleaf presents proposed development projects on the island.

Llangefni

3.3.25. Major developments proposed for Llangefni include the expansion of the Coleg Menai campus with the construction of a new Energy and Fabrication centre at its Penyrorsedd site.

Holyhead

3.3.26. There is a mixture of new developments proposed for Holyhead including leisure, retail, employment and housing.

3.3.27. One of the most significant sites on the Island is the Parc Cybi development. The site covers approximately 51.4ha, is designated as a major strategic business investment site and benefits from recently completed road infrastructure and its close proximity to Holyhead Port. Plans highlight the potential for up to 1 million square feet of space, generating up to 2,000 jobs during operation. The site is seen as a key opportunity to develop a zero carbon business park. In addition there are plans for up to 140 new homes.

Bangor

3.3.28. Off the Island in Bangor the major driver for development appears to be the presence of the University, with two major mixed use developments planned which propose to include student accommodation alongside employment uses including retail, leisure, and business parks.

.

Page 12


Final report

Figure 2: Project Audit (non-energy generation investment)

Page 13


Final report

Page 14


Final report

3.3.29. Energy Generation

Figure 3 shows the spatial distribution of existing and proposed energy generation facilities on the island.

Nuclear 3.3.30. The most significant energy generation facility on the Island is the Wylfa Nuclear

Power Station, located in the north of the island. The Station has a generation capacity of 980 MW equivalent to more than 40% of the electricity needs for the whole of Wales. The station is connected to the mainline grid via a 400Kv transmission line, which runs from the Station south through Bangor before joining the mainland National Grid.

On Shore Wind 3.3.31. The Island is home to three onshore wind farms, the largest is the Llanbabo Wind

Farm, consisting of 34 turbines providing a total capacity of 20.4MW. Rhyd Y Groes Wind farm is the second largest, with a total output capacity of 7.2 MW, while Trysglwyn Wind Farm can produce a total output of 5.6 MW.

Offshore Wind 3.3.32. There are currently 3 major offshore wind farms between Anglesey and

Liverpool. North Hoyle (60MW), Burbo Bank (90MW), and Rhyl Flats (90MW). In 2008, planning permission was granted for the Gwynt Y Mor wind farm, this will be located 10 miles from Llandudno and generate 750MW.

Micro-scale 3.3.33. The Island has a number of micro-scale energy generation projects. Examples

include the award winning Ysgol-y-Graig Primary School which uses solar and wind power to generate half the school’s energy needs (22,000kWh solar/6000kWh wind).

Tidal 3.3.34. One significant project proposed is the SeaGen project, located at Skerries Island

off the north coast. The project is being developed by Npower and Marine Current Turbines, and could produce up to 10.5 MW of energy by 2011.

Biomass 3.3.35. There are currently no Biomass energy facilities on the Island. However AAM

have proposed a 299MW biomass power plant at their site in Holyhead.

Energy from Waste 3.3.36. The Penhesgyn Landfill Gas Plant, a 1MW facility, Is the first energy from waste

facility developed on Anglesey.

Page 15


Final report

Page 16

Figure 3: Energy Generation


Final report

Page 17


Final report

Demographic/Economic/Social profile

Population 3.3.37. In 2008 the population of the Isle of Anglesey was approximately 69,000 people,

equivalent to 2.3% of the Welsh population. Of this approximately 33,600 were male (49%) and 35,400 were female (51%). Anglesey South is the most populated region with 46% of the Island’s population. Anglesey West accounted for 31%, and the north only 23% of the population.

3.3.38. Between 1999 and 2008 the population of Anglesey grew by 1.5%, significantly lower than regional and national growth rates. The demographic profile of the population is changing significantly with in migration of elderly people and out migration of the most economically active working age population.

Employment 3.3.39. In 2009, 75% of the working age population of Anglesey were economically

active, compared to 76% in Wales, and 79% in GB. Of the economically active only 69% were in employment, which is low compared to employment rates in NWW, Wales and GB. In November 2009 4.1% of the working age population of Anglesey, were claiming Job Seekers Allowance (JSA).

3.3.40. 74% of Anglesey working residents are employed on the Island, while 26% of residents travelled to work off the Island. 2,484 people working on the Island live outside Anglesey.

Skills and Education 3.3.41. The skills profile of the working age residents of Anglesey is only slightly lower

than that of the regional population; however this is significantly lower compared to the national average. In 2008, 43% (17,300) of the working age population of Anglesey held a GNVQ Level 3 or above compared to 46% across Wales.

Occupational Profile 3.3.42. The locality has a higher level of employment in occupations such as skilled

trades (14%) and personal service occupations (11%) compared to Welsh and GB averages. Anglesey has similar levels of employment in administrative (10%), and elementary (12%) occupations compared to regional and national averages.

Earnings 3.3.43. The gross weekly pay in Anglesey was £411 in 2009, equivalent to £21,346 per

annum. This is higher than the NWW average but lower than both the Welsh and UK average figures.

Business Stock 3.3.44. In 2008 there were approximately 2,276 firms located on Anglesey, employing

approximately 18,936 people, equivalent to 69% of the Island’s employed labour.

Page 18


Final report

Of these firms the majority are located in the south of the Island, with 53% of all businesses on Anglesey.

Core Employment Sectors 3.3.45. As with the regional and national sector profile, the core employment sectors are

the distribution, hotels and restaurants (25%) and public admin, education and health (28%) sectors. Anglesey also has relatively high levels of employment in the energy and water sector (3%) and manufacturing sector (15%) compared with sub-regional, regional and national averages.

Manufacturing Sector 3.3.46. In 2008, there were approximately 2,816 people employed in 126 manufacturing

firms across Anglesey. The majority of manufacturing employment is in low or medium/low technology sectors, which account for 78% of manufacturing employment in Anglesey.

3.3.47. Employment in manufacturing has been falling in Anglesey since 2003, in 2007 employment increased by 9% to 3,040, however this remains lower than the long-term average of 3,100 since 1998.

Energy Sector 3.3.48. In 2008, 576 people in Anglesey where employed in the Energy sector,

equivalent to 3% of the employment base on the island. All of this employment was focused on 2 firms located in the North of the Island. It is anticipated that the majority of this employment was provided by Wylfa Power Station. In 2006, employment in the energy sector increased by 44%, to 600 employees, as the number of energy sector firms in Anglesey increased from 4 to 6.

Environmental Service Sector 3.3.49. In 2008, there where 15 environmental service firms in Anglesey employing

approximately 193 people, equivalent to 1% of the Island’s labour force. The majority of this employment (78%) was focused in the south of the Island. In 2006 the sector declined before recovering in 2007 with rapid growth of 191%. The sector has demonstrated long-term growth on the island, with the number of firms increasing from 8 in 2003 to 25 in 2008, and employment increasing by 22%.

Construction Sector 3.3.50. In 2008, there were approximately 296 construction firms in Anglesey employing

1,225 people, equivalent to 6% of the Island’s labour force. The majority of construction employment in Anglesey is focused in the south of the Island that included 156 firms. In Anglesey the sector has grown by approximately 9% over 10-years, compared to only 3% growth in NWW and 2% in Wales.

Page 19


Final report

3.4. Energy market summary

3.4.1. The differing supply chains, current capacity and specific sector expertise within the business base and workforce are critical determinants of an areas ability to capture employment, income and further induced impacts resulting from investment. The Energy market analysis has used a range of information sources to understand the broad energy generation and demonstration opportunities and their associated impacts. These are summarised below.

Nuclear New build

3.4.2. Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower, has recently confirmed that they will be applying for planning consent for the new nuclear power station at Wylfa in 2012. The Welsh Assembly government has also said it would engage with the project to ensure maximum local and regional benefit from the building and operating of the new power station.

3.4.3. Evidence from outside of the UK and estimates from consultation suggest that the job impacts for the new build during construction could peak at between 3,500 and 5000 jobs. The construction period assuming three reactors is estimated at nine years. Capital costs during this period range from £6-8billion.

3.4.4. Operationally, there are four tiers to the nuclear sector supply chain ranging from the site management and licensing companies (Tier 1) through to Tier 4 companies that will supply ancillary services. Local businesses are unlikely to win T2 and T3 contracts given the size, capacity and technical requirements of the contracts at this level and the nature of the local business base. However these contracts will provide employment opportunities for local people.

3.4.5. Local businesses will have the greatest opportunity to win contracts at T4, including general building supplies, steelworks and fixings, crane hire, electrical supplies, security, catering, bed and breakfast and car rental. There will also be further work placed by main contractors with local suppliers and sub contractors.

3.4.6. In terms of operation and maintenance Horizon estimates employment creation of between 800-1000 direct jobs this number will increase significantly during power outages. On top of this will be significant opportunities in the wider supply chain. The plant will be operational for sixty years and as such will create job opportunities for three generations. Over 80% of the current workforce at Wylfa A lives on Anglesey and this would suggest a significant proportion of the operational staff for the new build would also choose to live on the island. This would have social and economic benefits over the long term.

3.4.7. At the current time there is still uncertainty as to the exact timing, scale and scope of the project and the potential benefits. This will become clear as the

Page 20


Final report

process develops particularly following identification of the reactor type and further work on the EIA for the new build as it progresses to planning. Critical factors here will also be the ability to achieve the necessary consents and secure investment.

Nuclear Decommissioning

3.4.8. The decommissioning of the existing Wylfa power station will mean a fall in the level of employment in the short to medium term in the period around 2013-14 and again in 2016. Whilst this will have a negative economic impact there is potential to re-train and redeploy labour into new opportunities created by the nuclear new build and other developments within the Energy Island Framework.

3.4.9. As with current activity there will be opportunities within the decommissioning supply chain for local companies and current work to raise awareness of the opportunities here should help to maximise benefits for Anglesey and the wider North West Wales economy.

Offshore Wind

3.4.10. In the short-term turbine manufacture will remain with established manufacturers (e.g. Vestas, Siemens) in their current locations. As turbines increase in size, manufacturers will need to locate close to port facilities in order to facilitate transportation of turbines and the delivery of components. The main opportunity for the UK in this area could be to attract smaller manufacturers with next-generation offshore-specific turbines. There are also potential opportunities to attract other component manufacturers. This presents a good opportunity as well as possible challenges for Anglesey given the Round 3 designation and issues around land availability.

3.4.11. BERR suggest that the number of UK turbine manufacturers is the key determinant of jobs in other areas of the supply chain. With one UK manufacturer a further 3 jobs per MW will be created in the supply chain, two manufacturers create a further 5 jobs, and 3 manufacturers create a further 8 jobs. Attracting a turbine manufacturer to Anglesey would have a range of knock on benefits.

3.4.12. Installation of turbines also offers some potential with the main opportunities around ports suitable for construction, the supply of vessels for turbine and foundation installation, and the civil engineering and construction skills base.

3.4.13. Operation and maintenance is the most likely opportunity to realise jobs that will be located in close proximity to offshore wind developments. There is already activity at Holyhead Port with a local boatbuilding company supplying vessels for offshore platform maintenance.

Page 21


Final report

Tidal Power

3.4.14. The tidal stream project planned for the Skerries will consist of seven 1.5MW SeaGen turbines giving an overall capacity of 10.5MW that would be the largest tidal turbine deployment in the world. Previous independent scoping studies have identified the Skerries as an ideal location for a tidal stream project, due to its favourable tidal conditions and natural shelter. The other benefits of this location were identified as being:

• Good facilities at Holyhead Port;

• Proximity to the National Grid for power connection;

• Good transport links to facilitate construction and maintenance.

3.4.15. Development of the site will start with a full assessment and detailed surveys of the environment and tidal resources, followed by preparation of an outline scheme incorporating the studies' outcomes. The company is progressing with applying for offshore consents but the timing for the construction and commissioning phases will also depend of the ability of SeaGen Wales to raise the necessary finance. Deployment before 2012 is unlikely.

3.4.16. Total investment in the tidal stream array is expected to be around £35 million – this works out at about £3.3 million per MW installed. This is in line with various estimates for the capital cost of tidal stream technologies that vary from £2 to 4 million per MW. These costs are around twice those for offshore wind.

3.4.17. The supply chain for manufacturing the main turbine units is already established and the various elements are being sourced from around Europe examples here include rotor components (UK); Castings (Spain); Cross beam structure (Denmark/Estonia), Piles (Scotland) and gearboxes from the Czech Republic.

3.4.18. The best opportunities for Anglesey and North West Wales will be associated with the final assembly, testing, installation and O&M i.e. similar to the opportunities in the offshore wind sector.

Biomass

3.4.19. Sources of biomass feedstocks are currently limited. Anglesey’s woodland strategy states that only small amounts of logs are being supplied by Anglesey based companies and the island’s forestry resource is limited. However, these resources could be increased and research is being carried out on the potential for Short Rotation Coppice (SRC).

3.4.20. There is potential for more processing facilities, for example Egni in Llangefni have plans to build a pellet plant (see section 4). One of the actions in Anglesey’s

Page 22


Final report

woodlands strategy is to ‘encourage the establishment of a timber biomass industry’.

3.4.21. The transport and distribution of biomass could be a key area for employment on Anglesey. The Bio energy Action Plan for Wales estimates that just over half of the biomass needed for electricity generation will be imported. Therefore Holyhead Port could become an important location for importing biomass.

3.4.22. Most biomass plant and equipment is currently imported e.g. from Austria and Scandinavia so the main potential for Anglesey will be on the installation and operation/maintenance of the plants/equipment. If planned projects go ahead there could be local job creation in operation and maintenance.

3.4.23. The largest of these projects, the Anglesey Aluminium plant, estimates operation and maintenance costs of £25 million per annum. However the use of significant inputs of imported fuels on larger scale operations would have a significant negative impact in terms of overall CO2 emissions.

Energy efficiency & micro generation

3.4.24. The energy efficiency and micro-generation supply chains cover manufacturing, installation and servicing activities for a wide range of products. The energy efficiency market includes boilers, heating controls, electrical appliances, glazing, roof, floor and loft insulation, and cavity and solid wall insulation. The micro-generation market covers photovoltaic systems, small wind, micro wind, solar hot water, and biomass.

3.4.25. The Code for Sustainable Homes is a major driver in terms of new build and could stimulate a market for onsite measures of £2.3 billion per year by 2016. The main technologies and their market size (UK) are estimated to be:

• Photovoltaics- £833 million per year by 2016

• Medium and large biomass CHP- £716 million per year by 2016

• Low CHP micro CHP (fuel cells)- £426 million per year by 2016

• Small wind (5 - 20kW)- £204 million per year by 2016

• Micro wind- £78 million per year by 2016

3.4.26. There may be manufacturing opportunities as a result of the Code for Sustainable Homes. The Renewables Advisory Board suggest that the main opportunities could be for small scale biomass CHP, fuel cell micro CHP, small and micro wind, solar hot water, and UK specific PV products e.g. roof integrated

Page 23


Final report

Page 24

slates. Wales also has existing experience in photovoltaics that could make this market a particular focus for the future.

3.4.27. Taking account of market stimuli such as the Renewable Heat incentive and Feed in tariffs the numbers employed in the installation and servicing of micro-generation could increase by four times the current market size by 2015.

3.4.28. The majority of employment growth in the energy efficiency market will be in installation and servicing, although modest growth is predicted in the manufacturing of boilers, heating controls and household appliances. Much of the demand for installation for insulation products is over the period to 2014.

3.4.29. In order to capitalise on these market opportunities there is a need to ensure that there is training in place to enable local firms and labour to becoming accredited installers and service agents for micro generation technologies.

Energy from waste

3.4.30. The opportunities here are relatively limited based on research and discussion at the current time. The main source of potential is Ecoparc Môn’s plans for a 22,500 tonne per annum commercial food waste recycling plant and an AD plant to digest the organic waste and produce methane for heat and/or electricity. This has recently received planning approval and it is estimated that the complete project will bring at least 40 new jobs to the area. There are no published figures on the power or heat generation capacity of the plant but an AD plant of this size would typically generate around 2.25 to 3.4 million m³ of biogas equating to between 0.6 and 1 MWe.

Hydrogen economy and alternative transport and fuels

3.4.31. There are other areas that Energy Island could exploit and demonstrate over the longer term these include alternative fuels and the hydrogen economy. Both carry a significant level of risk as both are in the early stages. However there could be a first or early mover advantage for Energy Island and research and development activity could also help to raise the profile of the area and attract investment.

3.4.32. Currently there are a number of Incentives for ultra low carbon cars and charging points have recently been announced. Anglesey could demonstrate the uptake of electric vehicles with charging points placed at strategic locations. There are also opportunities to Investigate the potential for the sustainable production of biofuels from local sources e.g. R&D and demonstration into bio-fuels from marine algae.

3.4.33. A summary of the SWOT analysis which brings together the above analysis is presented in the overleaf.


Final report

Page 25

3.5. SWOT analysis

Strengths Weaknesses

Abundant surrounding natural assets and high environmental quality

Infrastructure: deep-sea port and local electricity generation

Skilled nuclear labour force

Training potential – Coleg Menai, Bangor, NSAN

Responsiveness of WAG/ACC to ‘green’ economy (grants)

Existing relationships and dialogue

Key nuclear new build site

Policies and incentives to stimulate ‘green’ economy

Time lag between Wylfa A and Wylfa New Build operations

Lack of office/commercial buildings

Transmission/distribution network constraints

Limited workforce catchment/Ageing sector workforce

Holyhead Port not listed in Round 3 offshore area list

Limited EGS/technical supply chain despite growth

Complex interface between IACC/WAG/DECC

Perception as too remote

Opportunities Threats

Biomass as short-term job source with gas grid implications

Big Tidal and Offshore wind opportunity

Multi-functional landscape - tourism, recreation and energy

AAM site redevelopment (exploit rail/jetty/electricity supply)

Parc Cybi as Zero Carbon development

Wylfa and Tier 4 supply chain development

Tourism boost through links with worker accommodation

Skills development work – Coleg Menai, Nuclear Skills academy

Holyhead as Round 3 Port lobbying, Port prospectus for Holyhead

EIF Brand = Nexus of attractive place/high quality

THE BIG IDEA - Smart Grid? Demonstration centre?

Delays to Wylfa construction affects pool of skilled nuclear jobs

Lack of land/financial support for energy crops

Degradation of the environment

Lack of local skills and resources

Domination of supply chain from outside of Anglesey/N Wales

Lack of focus from DECC

Loss of public support

Political uncertainty over support for nuclear option

No Big Idea


Final report

3.6. Conclusions

3.6.1. The recent downturn has adversely affected economies across Wales and the UK. Local circumstances have also eroded Anglesey’s economic and employment base. In this context the opportunities offered by low carbon energy development are of critical importance to the wider economic development and diversification of North West Wales and the regeneration of its local communities.

3.6.2. The local and global contexts present a complex series of opportunities and challenges for Energy Island. Most recently the National Energy policy statement - Low Carbon Revolution, has identified the goals and targets for low carbon activity in Wales. The key opportunities for Energy Island are:

• Energy Exporting: Wales has an ambition to become a major energy exporter, producing twice the level of energy demand by 2025. Energy Island can play a major role here through the development of offshore wind and nuclear power.

• Tidal power: National policy supports low carbon demonstration including tidal resources. Here the Skerries marine current project can set the pace and tone for tidal energy.

• Energy efficiency and micro-generation: ARBED a strategic investment programme to improve energy performance is a focus for activity in the short term with strong support for energy efficiency measures and installation of micro-generation and community scale renewables.

• Nuclear Power: Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower, has recently confirmed that they will be applying for planning consent for a new nuclear reactor at Wylfa in 2012. The new build represents a significant opportunity to realise new high quality jobs and presents opportunities for local companies to become part of the wider supply chain.

• Offshore Wind: Recent investments in the offshore wind market provide good evidence of the potential for job creation across the UK. Clipper Wind Power, Mitsubishi, GE and other manufacturers have announced investments totalling approximately £350 million. The presence of Round 2 and 3 offshore development areas in close proximity to Anglesey offer significant potential for the Island to grow its supply chain in this context.

• Job creation/Supply chain development: The critical opportunity is the potential to deliver economic development and regeneration through the development of the low carbon economy. This means capturing jobs,

Page 26


Final report

Page 27

engaging and linking individuals and communities to jobs through education and training and placing Wales as a leading location for energy research.

• Skills and Knowledge: Energy Island is already addressing this issue with work by local and national partners including Coleg Menai through their Energy and Fabrication and The National Skills Academy for Nuclear. The Low Carbon Research Institute and Bangor University are also key research and development assets.

• Exploiting assets: Anglesey has a range of supporting assets that can be utilised for Energy Island these include development sites such as Parc Cybi and Anglesey Aluminium alongside strategic infrastructure at RAF Valley/Anglesey Airport and Holyhead Port.

3.6.3. The following section builds on the analysis above to identify the process used and elements of the final Energy Island Framework.


Final report

4. ENERGY ISLAND FRAMEWORK

4.1. Introduction

4.1.1. The Energy Island Framework builds from the baseline work and the related energy and development scenarios. The development scenarios built on different opportunities identified within the baseline analysis and are summarised in the following section.

4.1.2. Following discussion and agreement with the steering and stakeholder groups it was decided that all three scenarios would include the Nuclear New build option.

4.2. Development scenarios

4.2.1. Scenario 1: Land and seascape

4.2.2. The land and seascape scenario sought to build on Anglesey’s inherent assets on and off shore. The emphasis here was on sympathetic development, which would help to enhance existing tourism, agricultural, and marine activity. Many of the opportunities within the scenario were focused on the short term.

4.2.3. The baseline work identified significant potential for the use and growing of biomass crops, micro-generation and energy efficiency measures in the short term. These opportunities would be driven by measures including the Renewable Heat Incentive and Feed in Tariffs. At the same time the significant numbers of off gas grid properties would also make efficiency measures and micro-generation attractive from a cost saving perspective for individual households.

Scenario 1: Land and seascape

Page 28


Final report

4.2.4. Scenario 2: Green Technology Island

4.2.5. The focus for the green technology island scenario was around the demonstration of new energy production and approaches to energy management.

4.2.6. The scenario presents some good opportunities to raise the profile of Anglesey and North West Wales and place Energy Island at the forefront of energy technology development. These include the development of the tidal stream, demonstration opportunities around nuclear decommissioning and energy efficiency in the built environment.

4.2.7. The scenario included the successful implementation and expansion of the Skerries tidal energy project, the potential development of smart energy grids with an emphasis on piloting approaches in rural areas and demonstration of zero carbon developments, for example Parc Cybi. The scenario also looks to research into longer-term opportunities relating to the hydrogen economy/energy storage and the development of electric vehicles.

4.2.8. Many of the opportunities here occur over the medium to long term and present higher risks relative to the Land and seascape scenario. This is due to many of the technologies being in the research and development stage.

4.2.9. The scenario also includes an expansion of onshore wind energy alongside the replanting of the existing installed capacity. Ultimately this would be dependent on national policy support through TAN8 and considerations of the issues associated with the radar system at RAF Valley.

Scenario 2: Green Technology Island

Page 29


Final report

4.2.10. Scenario 3: Island Powerhouse

4.2.11. The Island Powerhouse scenario promotes investment in relation to major energy production. This includes capitalising on the development and operation of the Irish Sea Offshore Wind Round 3 area, the potential nuclear new build at Wylfa and the possibility of a large-scale biomass plant on the AAM site.

4.2.12. The scenario would include significant development at Holyhead Port to take advantage of these opportunities during the construction phase and offer longer-term employment through the servicing of the offshore wind area.

4.2.13. Whilst the economic and social benefits here are significant there is a need to consider the wider impacts of development particularly in terms of required infrastructure (energy and otherwise) and the impacts of comparatively long construction phases.

4.2.14. There are strong links with the potential for some of the demonstrator elements from scenario 2 with the use of offshore wind power to develop the hydrogen and energy storage potential of the Island.

4.2.15. Whilst the impact and delivery of these investments is focused on the longer term there is significant work that needs to be done over the next few years in order to realise the economic benefits. This includes ongoing discussion with key players in the Round 3 context including Centrica, Holyhead Port/Stena and potential partners including the Welsh Assembly Government.

Scenario 3: Island powerhouse

Page 30


Final report

4.2.16. Having identified the three development scenarios, these were then tested in the workshop and discussions with the Energy Island stakeholders group. Each of the three development scenarios was discussed and analysed in relation to the following aspects:

4.2.17.

Scenario assessment

Strategic

Does the scenario address the objectives of Energy Island? How? What’s missing?

Economic

Does the scenario bring Anglesey and North West Wales closer to achieving its economic goals? How? What’s missing?

Financial

What does the scenario require in terms of financial resources to make its elements viable?

Commercial

What are the existing commercial interests in the scenario elements proposed? How can the scenario be developed to attract inward investment?

Governance/implementation

What can the public sector do to facilitate each scenario?

4.2.18. The responses and answers from the workshop groups were recorded and brought together in a plenary session with the Energy Island stakeholder group. This was used to identify a focus and the preferred elements of the Energy Island Framework.

4.2.19. The following section provides an overview of the Energy Island Framework, a broad spatial development plan and further detail on the individual energy production and demonstration elements.

4.2.20. Within each of the energy elements an assessment of the economic impacts, risks and constraints is identified. This work is then brought together to identify the total economic impact over time, along with a combined action plan to identify responsibilities and help ensure the delivery of the framework.

Page 31


Final report

4.3. Energy Island: Identification of preferred scenario

4.3.1. The Energy Island Framework brings together a range of different energy opportunities covering both production and demonstration. These combined provide a unique and distinctive approach to economic and spatial development which can play a significant role in a more resilient economic future for Anglesey and North West Wales.

4.3.2. The Energy Island Framework features elements of all three development scenarios. The workshop discussion groups both independently identified that each of the three could be seen as developmental steps with the Land and seascape scenario presenting opportunities in the shorter term, the Island Powerhouse delivering benefits over the medium to longer term and the Green technology island scenario offering long term benefits through the demonstration of new approaches to energy production and efficiency.

4.3.3. There was also consensus that the Energy Island Framework needed to avoid having too many projects/investments given both limits to delivery capacity and the need to have a focus. The key elements over time were identified as:

• Short term: Large and small scale biomass installations and supporting energy crops, extended generation at Wylfa, energy efficiency measures and micro generation.

• Medium to long term: Decommissioning and New build at Wylfa up to 3.2 GW, Offshore wind support base at Holyhead Port and replanting of existing onshore wind farms.


4.3.4. In addition to the direct energy production and demonstration projects there are a number of critical actions that need to be taken if these opportunities are to be realised. These relate to the six action areas of the framework and include:

• Reinforcement of the existing transmission network to account for nuclear new build and potential energy generation from the Irish Sea Round 3 zone (Infrastructure).

• Development of facilities and land assembly at Holyhead Port to act as a potential assembly base for the Offshore Round 2 and 3 areas (Supply chain and Infrastructure).

• Further work to understand the likely land use planning and infrastructure implications of the Energy Island Framework (Policy and Infrastructure).

Page 32


Final report

Page 33

• Provision of training and skills development reflecting the skills demanded in the energy and construction sectors and opportunities within sector supply chains (Skills and Supply chain).

• Work with local businesses and main contractors to identify opportunities for local companies to be involved in supply chain activities (Supply chain).

• Ongoing consultation and communication with stakeholders to achieve buy in to the Energy Island Framework, raise awareness of the benefits and opportunities for local communities and help influence a move toward more sustainable behaviours. (Community consultation and Behaviour)

4.3.5. Further detail on the activities to develop Energy Island is provided in a separate action plan.

4.4. Spatial diagram

4.4.1. The following diagrams outline the broad spatial pattern of development associated with the Energy Island Framework as it builds up over time. This shows the broad location of development at:

• Baseline (2010),

• Short term (2010-2015),

• Medium term (2015-2020), and

• Long term 2020 onwards assuming that all energy elements are realised.

4.4.2. The purpose here is to provide an overview of the location of Energy Island opportunities and associated developments rather than give detailed information in relation to land allocations and site-specific detail.

4.4.3. The focus for the work to date has been on understanding the energy market opportunities that can be exploited and an estimation of their economic impacts.


Final report

Page 34

Baseline (2010): Energy Island Framework


Final report

Page 35

Short term (2010-2015): Energy Island Framework


Final report

Page 36

Medium term (2015-2020): Energy Island Framework


Final report

Page 37

Long term (2020+): Energy Island Framework


Final report

Page 38

Energy Island Framework: Spatial diagram key


Final report

Page 39

4.5. Energy elements and impacts

4.5.1. The production and demonstration elements within the Energy Island Framework are outlined in the table below. Additional detail is provided in the following sections and baseline report. All activities will have related supply chain opportunities although these vary significantly in scale and scope.

4.5.2. As noted in the table there are potential demonstrator opportunities in relation to the hydrogen economy and low carbon vehicles that could be explored. However it is difficult to make assumptions as to what the potential employment impact may be given the long-term nature of these opportunities. To this end they are not included in the economic impact assessment.

Energy Island Framework – Production and demonstration elements

Energy type Description

Wind power Offshore wind: Growth scenario

Onshore Wind: Base case

(production and demonstration)

Tidal power Base case

(demonstration)

Biomass Growth scenario: Large and small scale development


Energy efficiency and micro generation

Growth scenario


Nuclear Decommissioning and maximised new build scenario (production and demonstration)

Hydrogen economy/electric vehicle

Investigation of longer term potential and early stage demonstration

(demonstration)

4.5.3. The following sections provide further detail on the different production and demonstration elements identifying broad timings, locations, potential impacts and the required actions to realise these opportunities.


Final report

Page 40

WIND POWER

Description

4.5.4. The wind power element of the Energy Island Framework follows the growth scenario for offshore wind. This assumes that Holyhead Port will play a role in the construction and assembly of components for the Irish Sea Round 3 area. The value of construction port activity for the Irish Sea market is estimated to range from £9m in 2009 to £19m in 2019 (c. 90 to 190 jobs). Operations and maintenance potential is estimated to be around 525 jobs for the Irish Sea Zone.

4.5.5. The scenario also assumes that there will be a role for the port and associated companies in the operation and management phase of the Round 2 (Gwynt Y Mor) and Round 3 areas. This will build on the existing operations of the Holyhead Barge Company who are already involved in servicing activity.

4.5.6. The scenario assumes only limited activity in terms of large-scale onshore wind farms. Existing locations in the north of the Island will be replanted potentially with larger turbines (estimates 2015). The scenario assumes a continuing demand and flow of applications for smaller scale turbine installations from residential and smaller scale commercial operations.

4.5.7. For any of the energy segments it is the presence of manufacturing activity that has the potential to help achieve significant productivity and employment gains. The Energy Island Framework does not include any jobs relating to manufacturing activity in the context of wind power. Whilst there could be some potential for manufacturing the current constraints (see impacts below) and presence of the main opportunities on the east coast of the UK suggest that turbine and component manufacturers are likely to locate elsewhere if considering inward investment.

4.5.8. Recent announcements in the industry provide further evidence of both the potential for job creation as well as the strong competition for investment. Clipper Wind Power has recently signed a deal to build a £25million turbine blade manufacturing plant in Walker Riverside in Newcastle. The investment if forecast to create 500 direct jobs and claims up to 2500 jobs in the supply chain.

4.5.9. Mitsubishi and GE have also been in discussion with central government to locate both R&D and manufacturing facilities in the UK. Mitsubishi have announced an investment of up to £100m in an offshore wind turbine R&D facility that will create 200 jobs. The investment will focus on prototype assembly for the company's second-generation turbine, the development of offshore wind technologies at a new UK-based Wind Centre for Advanced Technology, and the development of new large wind turbine blades made from composite materials.


Final report

Page 41

4.5.10. Mitsubishi’s ship building division is also investigating entering the offshore wind turbine installation, operation and maintenance vessel market. This is yet another indicator of the significant potential that the UK offshore wind market holds.

4.5.11. GE is planning to build a £100 million turbine manufacturing plant in the UK but have not yet announced its location. This is likely to be related to the recently announced Government port development fund. Again this demonstrates the importance of having wider public backing and investment in specific port locations in order to realise private sector investment. Siemens is also investing in the UK with plans to create around 700 jobs in a new offshore wind manufacturing plant.

4.5.12. Closer to Anglesey, Mabey Bridge have also announced a £38 million investment in a factory to build turbine towers in Chepstow. This is predicted to create approximately 250 direct jobs.

4.5.13. The scale of these recent investments demonstrates the significant potential and private sector interest in the offshore market.

Impact

4.5.14. In the short term the net additional jobs generated by offshore wind are likely to remain relatively limited both in construction and operational phases. Competition from other ports including Mostyn which has a track record in both construction and operational phases, alongside Holyhead Port’s omission form DECCs list of suitable Round 3 ports are all constraining factors at the current time. Similarly the lack of reference to the port’s potential in this context within the recent Welsh Ports review means significant lobbying and development work is needed to raise the potential and profile of the port.

4.5.15. Offshore construction at Gwynt Y Mor and the Round 3 area is estimated at around 50 jobs on Anglesey by 2020. The employment resulting from onshore wind development is significantly smaller on the construction side with an average level of employment of ten jobs for most years. The exception here is 2015 where the figure rises to approximately 50 jobs resulting from the replanting of the three existing large-scale installations.

4.5.16. The main identified opportunity in the context of wind power is in the operation and maintenance phase for Round 2 and 3 offshore wind areas. The framework assumes that opportunities here could help create 200 jobs (direct, indirect and induced) on Anglesey by 2020.


Final report

Page 42

4.5.17. The projected employment figures for offshore and onshore wind are as follows:

Projected net additional employment impact – offshore wind -

Source: URS Note sub-regional figures include local direct/indirect and induced employment

Projected net additional employment impact – onshore wind

Source: URS

Risks/Constraints

4.5.18. The key risks and constraints associated with both off and onshore wind include:

4.5.19. Offshore wind

• A significant oversupply of land at ports suitable to service Round 3 areas and strong competition for investment from the East Coast of the UK notably in the North East which has seen recent investment from Clipper and Mitsubishi in manufacturing and research and development operations.

• Lack of suitable land for assembly in single ownership at Holyhead Port – typically at least eight hectares of space are needed for laying down components, up to 300 metres of heavy load quayside and access for installation vehicles of up to 45m wide.

0

50

100

150

200

250

300

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Construction - LocalConstruction - Sub-regionalOperational - LocalOperational Sub-regional

0

10

20

30

40

50

60

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Construction - LocalConstruction sub-regionalOperational -LocalOperational - sub-regional


Final report

Page 43

• Timing of Round 3 development and decisions regarding how the Zone will be developed. Consents phase staring now and will not be complete until at least 2014, with then intention to be on site by 2016.

• Lack of activity in the short term to understand and secure inward investment opportunities.

• Lack of government support to promote Holyhead Port as a location for offshore wind assembly.

• Limited existing private sector activity in relation to offshore construction, operation and maintenance; and

• Current lack of suitable skills in travel to work and wider area to support sector development and encourage investment.

4.5.20. Onshore wind

• The revision of TAN8 may change and influence the renewable elements of the Energy Island Framework but in the absence of information the scenario assumes Anglesey to continue to fall outside of the areas of search for onshore wind.

• Another potentially constraining factor on the development of onshore wind is the potential interference of larger turbines with radar systems at RAF Valley.

• Local opposition to further development and replanting of existing wind farms.

• Current lack of suitable skills in travel to work and wider area to support sector development and encourage investment; and

• Constraints in relation to radar systems at RAF valley.

4.5.21. Given the constraints, competing locations and the emphasis of Round 3 areas on the east coast securing supply chain benefits from offshore wind will present significant challenges to those involved particularly in terms of attracting investment in offshore manufacturing and assembly operations.

4.5.22. At the current time the Energy Island Framework includes no element of economic impact in relation to direct manufacturing of turbines or components. This is the area that has the most potential for job creation particularly in relation to supply chain opportunities.


Final report

Page 44

TIDAL POWER

Description

4.5.23. The Energy Island Framework assumes the successful installation of the SeaGen tidal farm in the Skerries and expansion of the initial scheme. Holyhead Port would be used as a construction and servicing base for the initial project and expansion phases.

4.5.24. The project represents one of the best opportunities for energy demonstration within Energy Island. The tidal technology is relatively early stage and the work to date helps to place the Island at the forefront of development here.

4.5.25. In addition the Renewable Energy Route Map for Wales states that WAG “will develop a Wales marine energy action plan which will consider all the tidal and wave proposals. It will also look at the economic and international opportunities for Wales from being at the forefront of marine energy developments over the next 30 years including the civil engineering and construction skills aspects.”

Impact

4.5.26. The economic impact from tidal is likely to be small based on the 10.5MW tidal stream farm especially as the majority of the SeaGen supply chain is already established.

4.5.27. Expansion of the scheme could potentially lead to up to 350MW of tidal stream energy by 2025. This could provide approximately 50 operation and maintenance jobs. Construction port jobs are estimated at approximately 25 at the peak of the construction phase.

Projected net additional employment impact – tidal power

Source: URS

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Construction - LocalConstruction - Sub-regionalOperational - LocalOperational - Sub-regional


Final report

Page 45

Risks/Constraints

• The tidal stream technology still at a relatively early stage of development.

• Significant capital investment and time required to realise the opportunity.

• Competition from other tidal stream resource areas in the UK especially Scotland where the opportunities and resource is more significant.

• Investment needed to move from the existing small scale devices to large tidal stream farms; and

• Limited work to understand wider tidal resource e.g. lagoons, other tidal stream potential.

BIOMASS

Description

4.5.28. The Biomass element of Energy Island includes a range of small scale domestic and public sector installations alongside a number of larger commercial operations.

4.5.29. Small scale - The Energy Island Framework assumes significant growth in biomass heat and electricity driven by policy, associated targets and incentives including the Bio-energy action plan, Code for Sustainable Homes and WAGs Toward Zero Carbon developments. Given this the scenario also assumes larger biomass installations including district heating on development sites (e.g. Parc Cybi) and for social housing.

For both small and large scale installations the development of local woodfuel supplies from forestry, woodland & waste sources and energy crops offers modest job creation potential and an opportunity to diversify existing land based industries.

4.5.30. Large scale - The scenario includes a number of large biomass electricity and CHP plants including the current AAM proposal, potential investment to deliver biomass project at Parc Cybi and the Eco-pellets proposal. This scale of project will require substantial tonnages of biomass and this is likely to include imported biomass.

Impact

4.5.31. There is reasonable job creation potential if the strategy for biomass is based on local energy crops e.g. Short Rotation Coppice (SRC) and wood fuel. This is estimated at up to 70 supply chain jobs by 2020 if biomass contributes 3 to 5% of


Final report

Page 46

heat demand on the Island. Employment associated with the management and production of biomass is estimated at 4 to 12 jobs per 1000ha of SRC and approximately 2 jobs per 1000ha for forestry residues. The larger scale AAM plant (299MW) is estimated to support 100 operational jobs and 600 during the construction phase this accounts for the majority share of employment from Biomass over the period to 2025.

4.5.32. There could be significantly greater job creation potential if a boiler manufacturer could be encouraged to locate locally. However this is not included in the scenario given that the supply chain is already well established and as such the likelihood relatively limited.

4.5.33. Biomass energy could be a major contributor to social housing and public building sustainability targets. Community projects also likely to benefit from growth in the local supply chain. Job creation potential will also help to deliver indirect social benefits but these will be more limited if the strategy is based on imported fuels.

4.5.34. Biomass provides significant CO2 reduction benefits over gas and oil. Life-cycle emission savings over gas estimated to be 65 to 95% depending on the fuel, size and loading on the plant. The sustainability of imported biomass for large-scale operations is likely to have a major detrimental impact in this context.

4.5.35. The projects and associated assumptions predict the following employment impacts:

Projected net additional employment impact – Biomass

Source: URS

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Local - construction Sub-regional - construction

Local - operational Sub-regional - operational


Final report

Page 47

Risks/constraints

4.5.36. The key constraints and risks in relation to the biomass elements of Energy Island are:

• Lack of awareness and experience of biomass.

• Limited local supplies of woodfuel and other biomass.

• Lack of subsidies for growing biomass crops.

• Demand for biomass resource outstrips supply leading to higher prices

• Domination of the supply chain by companies outside Wales.

• Lack of skills and resources to exploit the market opportunities

• Uncertainty about the viability and sustainability of the major biomass plants.

• Ability of the distribution network to cope with large-scale energy generation.

ENERGY EFFICIENCY AND MICRO GENERATION

Description

4.5.37. The Energy Island Framework assumes above average growth in the energy efficiency and micro-generation market over the period to 2025. There are significant incentives and benefits to encourage the take up of energy efficiency and micro generation technologies. These include Feed in Tariffs and Renewable Heat Incentive, Carbon Emissions Reduction Target (CERT), Warm Front and Energy Performance Certificates as well as the ARBED initiative.

4.5.38. The large percentage of homes not on the gas grid and using electricity for heating means there is also an economic driver to reduce fuel costs through the introduction of more cost effective energy sources.

4.5.39. Within this scenario element it is assumed that local firms are responsible for a significant proportion of installations and ongoing maintenance. This will ultimately lead to firms developing specific areas of expertise for example for off grid and hard-to-treat homes.

Impact

4.5.40. Job numbers are likely to be relatively limited with the main potential in the installation of photovoltaics, micro combined heat and power, biomass and small/micro wind. Insulation of hard-to-treat homes could also create new jobs especially if local firms can develop expertise that can be exported to other parts


Final report

Page 48

of Wales and the NW. There could also be significant social benefits (health improvements and reduced spend on energy) for households experiencing fuel poverty especially those off the gas grid and in hard-to-treat homes

Projected net additional employment impact – micro generation and energy efficiency

Source: URS

Risks/constraints

• Lack of take up of energy efficiency and micro-generation by households, public sector and businesses.

• Integration of distributed generation into the electricity distribution network.

• Installers from outside Anglesey and NW Wales supply most of the increased demand.

• Poor quality installations, operation and maintenance of systems.

0

10

20

30

40

50

60

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Operational - LocalOperational - Sub-regional


Final report

Page 49

NUCLEAR DECOMISSIONING

Description

4.5.41. Originally Wylfa A was to continue energy production until December 2010. However more recently (end 2009/start 2010) the NDA has indicated that it is now likely that the generating lifetime of the station will extend to 2013.

4.5.42. The decommissioning of a nuclear power station is a complex and lengthy process. The NDA Lifetime Plan describes all the activities to the end of Final Site Close-Out, scheduled for 2125. In the Lifetime Plan, the NDA define five lifecycle milestones to the decommissioning process:

1. Generation to 2010 (now potentially 2012).

2. Defueling – 2011-2012 (now potentially 2013-2015). After the cessation of electricity generation planned for December 2010, all fuel will be removed from the reactors and the irradiated fuel storage cells and then despatched for reprocessing. Initial Care & Maintenance Preparations (C&M Preps) work will also be started in parallel with the defueling operations phase.

3. Care & Maintenance Preparations – 2012-2025 (now potentially 2014-2027). During C&M Preps, dismantling, demolition and waste management work will be undertaken to remove most radioactive and non-radioactive plant and buildings.

4. Care & Maintenance – 2025 to 2116 (now potentially 2027-2118). Following the active period of C&M Preps, Wylfa will enter C&M. The C&M phase provides for site surveillance and security, radiological and environmental monitoring, and programmed inspection and maintenance of the fabric of the remaining buildings.

5. Final Site Clearance – 2116 to 2125 (now potentially 2118-2127). A purpose-built waste processing plant will be required for this period. The site will be cleared of the reactors and all remaining buildings; the ground will be remediated and landscaped to fit in with the local surroundings. The site will then be released from its Nuclear Site Licence and made available for alternative use by 2125.

Impact

4.5.43. The primary economic impact of decommissioning will be the loss of jobs following firstly the cessation of electricity generation and then at the start of the de-fuelling process. Based on the information within the baseline work this will be in 2014 and 2016.


Final report

Page 50

4.5.44. As identified within the baseline work there is a range of work being undertaken to re-train and allow redeployment of staff to minimise the negative impacts at these key points.

4.5.45. The baseline work identifies the following approximate distribution of employment at Wylfa A in relation to decommissioning. Further detailed figures have since become available but due to their sensitive nature are not published here. The data below gives an indicative distribution and idea of the relative change in employment over time.

Estimated direct jobs: Nuclear decommissioning Wylfa A

Source: URS

Risks/constraints

• Ensuring decommissioning timescales are aligned with new build programme.

• Reduction in resources available for re-training of existing staff.

• Knock on impacts on local population through job losses.

• Loss of skilled staff in an industry that already suffers skill shortages.

0

100

200

300

400

500

600

700

800

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025


Final report

Page 51

NUCLEAR – WYLFA NEW BUILD

Description

4.5.46. The nuclear new build element of the Energy Island Framework assumes a multiple reactor option generating up to 3.2GW produced by either two Areva EPRs or three Westinghouse AP1000 reactors. Current estimates suggest new build could start on site in 2013, with a 9-year build programme. Energy generation is predicted by 2020.

4.5.47. With the generic design assessment process for reactor designs still ongoing many of the detailed parameters of the project are yet to be determined. However, the indicative cost of the Wylfa New build is estimated to be worth £8bn (capital costs), with significant ongoing expenditure through operation and maintenance.

4.5.48. The Westinghouse and EPR stations have different construction processes, which have implications in terms of the size of the construction workforce. The final reactor choice for Wylfa will follow the regulators assessment of design (GDA) and Horizon’s discussions with potential vendors.

4.5.49. The indicative timescale for the new build would be: planning application early 2012; planning permission granted in early 2013; construction begins in 2013 with the first reactor commencing generation in 2020.

Impact

4.5.50. There are a range of uncertainties in relation to the new nuclear build that make accurate prediction of the impacts difficult. Construction employment will differ significantly depending on the reactor type used in the new build. Westinghouse reactors are likely to require a smaller construction workforce given the modular design and off site assembly.

4.5.51. Assumptions on the construction workforce for the Areva reactor identify a peak construction workforce of 5,250. The comparable figure for the Westinghouse reactor is 4500. Operational employment (direct jobs) for both reactor types is assumed to be approximately 750 based on estimates from research by Cogent.

4.5.52. The construction processes for the two reactor designs are different and workforce numbers will vary. For example construction of the AP1000 involves modular construction techniques, with fabrication works taking place off site and therefore requires lower workforce numbers than the EPR.

4.5.53. Discussions with Horizon suggest that there could be 5,000 people employed in the construction process, depending on the choice of reactor technology and the number of reactors under construction. The construction employment of 5,000 is considered to be a high estimate. For comparison estimates we have used


Final report

Page 52

research by Cogent that identifies employment demand for a single pressurised water reactor (PWR) at a peak of around 2200.

4.5.54. During operation, it is anticipated that the new power station would be operational for 60 years and is expected to generate around 750 permanent operational, training, and maintenance roles, increasing to 900 including support staff. In addition during periods of outage maintenance workforce numbers cans be expected to increase by up to 1000 or 1,300 for a 10-year outage.

4.5.55. The following charts show the distribution and timing of construction employment for the two types of reactors. The charts show that the Areva reactor is likely to have a larger construction workforce in comparison to the Westinghouse.

Projected net additional construction employment-Nuclear new build (Areva option)

Source: URS

Projected net additional construction employment-Nuclear new build (Westinghouse option)

Source: URS

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Sub-regional (direct/indirect/induced)Local (direct/indirect/induced)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Final report

Page 53

4.5.56. In the operational phase (assumed to be 2020 onwards) net additional employment (in Anglesey and North West Wales) builds up from around 300 jobs to approximately 880 in 2025. These figures include supply chain and induced effects. Employment figures are based on a range of evidence including work by Cogent, discussions with stakeholders and experience from other reactors.

Projected net additional operational employment-Nuclear new build year on year

Source: URS

Risks/Constraints

• Economics of nuclear new build are uncertain – existing projects involving the Areva EPR have experienced time and cost over runs.

• Ability to secure relevant consents for nuclear new build process.

• Ability to secure the supply chain opportunities for local benefit.

• Ability of local workforce to capitalise on opportunities.

0

100

200

300

400

500

600

700

800

900

1000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Final report

Page 54

4.6. Economic impact summary

4.6.1. The following charts show the combined impacts of the Energy Island projects in terms of both construction and operational employment. These are presented as both year on year figures and cumulatively. The cumulative picture helps to understand the rise and fall in terms of employment demand and the timing of some of the knock on impacts in terms of housing and wider infrastructure demand.

4.6.2. The figures presented show net additional employment at the local (Anglesey) and sub-regional (North West Wales) levels. These figures account for effects including leakage, displacement and multipliers (to estimate supply chain and induced income effects).A number of assumptions are made in relation to these effects and these are outlined in a separate report. These assumptions have been based on existing precedents, discussion with relevant stakeholders and published guidance on additionality.

4.6.3. The key point from the analysis is the extent to which the nuclear new build dominates the figures for construction, and to a lesser extent, operational employment. At the peak of construction employment in 2017 the nuclear new build accounts for nearly 95% (4275) of the construction and associated employment impacts of Energy Island at that time.

4.6.4. In terms of operational jobs these peak at the end of the timescale in 2025 at approximately 2500. Here the new nuclear build and decommissioning activity accounts for approximately two thirds of employment on Anglesey from Energy Island activities. The remaining third is made up of jobs mainly associated with the offshore wind and biomass activities (this assumes the inclusion of the AAM proposals).

4.6.5. Construction employment

4.6.6. The peak of construction employment demand is predicted in 2016 and 2017 mainly as a result of the nuclear new build. The build up to this point is fairly rapid over the period 2014-16 and this would coincide with the first major reduction in operational staff due to decommissioning at Wylfa A. This could be advantageous if retraining can be effectively targeted at parts of the existing Wylfa workforce as well as new entrants to the job market.

4.6.7. The following chart shows the combined construction impact and associated multiplier effects at the local and sub-regional levels. These assume the Areva reactor is used in the new build programme.


Final report

Page 55

Energy Island: Combined construction employment impact (year on year) (Areva reactor)

Source: URS

4.6.8. The key points to note are the major increases in construction jobs and associated effects in 2015 and 2016 as work on the second reactor starts and the workforce builds to a peak in 2017. There are three points where construction employment drops significantly, 2018, 2020 and 2022.

4.6.9. The main difference in the construction workforce phasing with the Westinghouse option is the slightly shorter timeframe over which impacts occur. This assumes the completion of the new nuclear build in 2020 and a more rapid fall in construction employment in 2018-19 compared to the use of the Areva reactor. In addition the construction workforce associated with Energy Island projects builds up more gradually in this context over the 2012 to 2015 period.

4.6.10. Operational employment

4.6.11. The operational employment generated by Energy Island is dominated by the Nuclear energy projects (new build and decommissioning) which account for approximately two thirds of all operational employment and related job impacts on Anglesey in 2025.

4.6.12. Peak employment impacts (direct, indirect and induced) peak toward the end of the timeframe with around 1600 jobs on Anglesey and an additional 800 in the wider sub-regional economy.

4.6.13. Cumulative figures shows that there are two main points where there are falls in employment in 2014 and 2016. These relate to the impact of decommissioning at Wylfa A and consequent job losses. The analysis shows that whilst there will be alternative construction jobs available for those being made redundant to move into, there is unlikely to be sufficient additional demand for operational labour from other Energy Island activities.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Final report

Page 56

4.6.14. Bringing together the construction and employment impacts (direct, indirect and induced) of Energy Island shows a significant impact over the period to 2025. The peak effect on Anglesey occurs in 2017 where the nuclear new build construction programme is at its height. Over the longer term 2020-2025 the analysis identifies an additional 1600 jobs on the Island as a result of Energy Island activities and associated impacts.

Energy Island - Combined job impact (construction and operation) year on year

Source: URS

4.6.15. Gross Value Added (GVA)

4.6.16. Anglesey has the lowest GVA per head figure of any of the NUTS3 sub-regions for which figures are produced. In 2007 GVA per head stood at £10,998 per head, giving a total GVA in 2007 of £757 million. This figure equates to 55% of the average UK figure. This highlights two of the major challenges for Anglesey and the wider sub-region namely the small overall size of the economy and the limited level of higher value added activity within it.

4.6.17. Energy Island can play a major part in helping to increase the overall level of economic and higher value added activity on the Island and in the wider sub-regional economy. This will help to increase the GVA figure and close the gap with other sub-regions.

4.6.18. The GVA analysis uses the employment figures for construction and operational employment along with assumptions on wages in the construction, energy sectors and local economy as a whole to estimate the overall additional income generated by the net additional jobs from Energy Island.

4.6.19. In the calculation of income based GVA wages are assumed at 65% of total GVA with the remaining 35% accounted for by businesses gross operating surplus (approximately 28% of income based GVA) plus business rates (2%) and the

0

1000

2000

3000

4000

5000

6000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Sub-regional (direct/indirect/induced)

Local (direct/indirect/induced)


Final report

Page 57

income of sole traders and self employed (5%). These figures are based on existing metrics from the northeast and Cumbria sub-region. In this way a broad estimation of the non-wage components of income based GVA can be calculated.

4.6.20. Using this approach suggests that the sub-region will be able to capture £2.34 billion of GVA from direct construction and operational employment and related supply chain opportunities over the period from 2009 to 2025.

GVA impact of Energy Island activities 2009-2025

Source: URS

4.6.21. This would mean a peak contribution in 2017 of £108 million to Anglesey’s GVA. By extrapolating the current trend in GVA for Anglesey the peak contribution to GVA would equate to just over 10% of total GVA in 2017. Over the period form 2010 to 2025 the average potential contribution of Energy Island (direct, indirect and induced effects) to GVA is 8.6% per annum.

4.6.22. At the sub-regional level the impact on GVA peaks in 2017 at 3.4% of sub-regional GVA assuming that the trend in GVA growth follows the historical pattern. This is a significant effect and could help to make a major contribution to closing the gap in GVA between the Island and the UK average figure. Given that the wider UK average will also change over time it is difficult to be precise as to the extent to which Energy Island will help to reduce this disparity.

4.6.23. One of the key points to note from the analysis is the share of employment and GVA generated by Energy Island which is accounted for by nuclear decommissioning and new build activity. Taking into account peak levels of construction and operational employment for each energy element over the period to 2025 over three quarters of employment and GVA on Anglesey is accounted for by nuclear activity.

0

50

100

150

200

250

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

£mill

ion

Sub-region

Anglesey


Final report

Page 58

4.6.24. Energy Island: Peak employment, GVA and share by activity 2010-20251

Activity Peak Employment

% Share

GVA (£million)

% Share

Nuclear 2908 78% 132.7 79%

Biomass 384 10.3% 16.3 9.7%

Tidal 73 2% 3.2 1.9%

Wind 323 8.7% 13.9 8.3%

Microgen/Energy Efficiency 42 1.1% 1.9 1.1%

4.6.25. Anglesey and North West Wales’ ability to capture a greater share of the benefits can be increased through the measures outlined above. Critical here will be the ability of the local education and training infrastructure to provide an appropriately skilled supply of labour alongside success in attracting supply chain companies to set up permanent bases in the sub-region.

1 It should be noted that employment fluctuates in both construction and operation over the period. The table demonstrates relative values at the peak of operational and construction employment for each activity.


Final report

Page 59

4.7. Conclusions

4.7.1. The process of developing the Energy Island Framework has highlighted a need to focus on a limited number of opportunities that can deliver the right mix of ambition, impact and profile. These can play a significant role in a more resilient, diverse and prosperous economic future for Anglesey and North West Wales. The key elements of the Energy Island Framework are:

• Short term: Large and small scale biomass installations and supporting energy crops, energy efficiency measures, and micro generation. Initial discussion and negotiation to maximise opportunities from Offshore wind Irish Sea Round 3 Zone.

• Medium to long term: New build at Wylfa up to 3.2 GW, Implementation of tidal project at Skerries, Offshore wind base at Holyhead Port and the replanting of existing onshore wind farms.


4.7.2. Energy Island has major potential to realise economic, social and environmental gains for Anglesey and the North West Wales economy. There is the potential to create a peak of 4500 construction jobs (2017) in Anglesey and North West Wales including jobs in the supply chain. The Framework could also deliver a further 2500 operational and maintenance jobs on the Island and wider sub-region by 2025.

4.7.3. These new jobs and associated income have the potential help to make a contribution of £2.34 billion to Anglesey and the sub-regional economy in the period to 2025. On average Energy Island investments add up to an additional 8.6% of Anglesey’s GVA per annum over the period 2010 to 2025.


Final report

Page 60

5. RECOMMENDATIONS

5.1.1. The evidence shows that the potential of Energy Island is significant and represents the best opportunity for Anglesey to diversify and strengthen its economy. The following section makes recommendations to help achieve the Energy Island vision:

Production

• Nuclear new build represents the central opportunity within Energy Island with significant benefits in employment and GVA terms for both Anglesey and the wider sub-region. Continued close working with Horizon, Areva and Westinghouse is required to maximise the local benefits and supply chain opportunities.

• Re-training and skilling the potential workforce for the new build and wider energy market should be supported to maximise the benefits for the local area in the immediate and longer-term future.

• Consultation with local communities will also be critical to the ongoing success of the new build and wider Energy Island proposals. This work needs to demonstrate the benefits of the framework to local people.

• Development of Holyhead Port. Whilst there is potential here there are also constraints that need to be addressed. Ongoing discussion with Centrica, WAG, Stena, the Port Authority and potential investors are critical to understanding the scale and nature of the opportunity and the steps that need to be taken to realise this.

• Enhancing energy infrastructure: National and local ambitions to export energy requires significant investment in the existing transmission network. Discussion and clarity over the planning and delivery of new and improved connections should be continued.

Demonstration

5.1.2. Demonstration projects offer the opportunity to put Energy Island “on the map” as a premier location for energy research and development.

• Tidal energy: Pursuing tidal energy would give Anglesey an early mover advantage and help create the profile needed to help attract investment in research, development and manufacturing. The Skerries project is an excellent opportunity to develop a distinctive element of the framework.

• Nuclear decommissioning at Wylfa A and nuclear skills training through NSAN also offers potential to showcase the safe decommissioning of the


Final report

Page 61

current reactor and offer hands on training to help access new jobs created in the new nuclear build.

• Smart Grids in rural and urban areas is an area that is of increasing interest to Government and the private sector and again offers a first/early mover advantage if the opportunity can be progressed.

Servicing

5.1.3. There will be significant levels of investment over the next fifteen years it is essential that these opportunities are used to grow, attract and retain businesses and jobs.

• Consultation and supply chain events: Further work to engage and maintain these relationships with local SMEs should be undertaken with Horizon, local business development agencies and the public sector.

• Land and premises: Providing sufficient and suitable development sites and premises for companies to relocate to will be an important factor in realising the supply chain ambitions of Energy Island.

• Skills development and associated training is one of the key areas where the public sector can play a major role. Investment in relevant training for the nuclear and wider energy and construction sectors is already being rolled out.


Final report

Page 62

6. NEXT STEPS

6.1.1. Ensuring that the Energy Island name and related activities are understood and embedded in people’s minds is critical to its success. The first steps in communicating this are to understand the different audiences and the messages for each. These would include:

• Local population – What are the benefits? How will it affect day-to-day life?

• Existing businesses – Agriculture, Tourism, Construction, Manufacturing – What’s in it for existing business? How do they access new opportunities?

• Potential investors – Energy Companies and supply chains – Why should they invest? What are the benefits?

• Local and national government - What is the argument for public investment? How does this stack up against alternatives?

6.1.2. Effective communication as to the purpose, reasons and impacts of Energy Island is critical to ensuring support for large-scale developments and investment in energy technologies by all parts of society. Similarly the take up of Energy Island training opportunities will depend on people of all ages understanding the nature of the jobs available and long-term benefits they can realise.

6.1.3. Alongside the investment in major energy production and demonstration, Energy Island needs to help bring about a cultural shift in people’s attitudes and behaviours to energy and resource use. This needs clear and consistent messages to be communicated over the long term. In the immediate future this calls for an Energy Island communication and marketing strategy.

6.1.4. In addition to the communication and promotion of Energy Island there is a need to progress the different investments and activities within the Framework. Energy Island cannot be delivered by one organisation alone. The complexity of the different activities, long timeframes and capacity required to deliver means a co-ordinated approach across private, public and voluntary sectors.

6.1.5. In order to make things happen there needs to be a central Energy Island team that can co-ordinate the different investments and activities. At the same time the team and wider Energy Island stakeholders need to take responsibility and sign up to deliver specific activities.


Final report

Page 63

Glossary


Final report AAM - Anglesey Aluminium Metal Ltd

AD – Anaerobic Digestion

AONB – Area of Outstanding Natural Beauty

ASHE – Annual Survey of Hours and Earnings

BREEAM – Buildings Research Establishment Environmental Assessment Method

C&M – Care and Maintenance

CERT - Carbon Emissions Reduction Target

CHP – Combined Heat and Power

CO2 – Carbon dioxide

CSH – Code for Sustainable Homes

DBERR - Department for Business, Enterprise, and Regulatory Reform

DCELLS - Department for Children, Education, Lifelong Learning and Skills

DECC – Department of Energy and Climate Change

DIUS - Department for Innovation Universities and Skills

EIA – Environmental Impact Assessment

EPR – European Pressurised water reactor

ES – Environmental statement

FDI – Foreign Direct Investment

FE – Further Education

FTE – Full time equivalent

GB – Great Britain

GNVQ – General National Vocational Qualification

GVA – Gross Value Added

GWh – Gigawatt hour

HE – Higher Education

HEFCW - Higher Education Funding Council for Wales

IACC – Isle of Anglesey County Council

JSA – Job Seekers Allowance

KWh – Kilowatt hour

LDP – Local Development Plan


Final report LPA – Local Planning Authority

MIPPS - Ministerial Interim Planning Policy Statement

MOLF – Marine offloading facility

MSW – Municipal Solid Waste

MW – Megawatt

MWe – Megawatt electrical

MxN – Magnox North

NDA – Nuclear Decommissioning Authority

NMUK - The Nissan Motor Manufacturing (UK) Ltd, ,

NNR – National Nature Reserve

NSAN - National Skills Academy Nuclear

NVQ – National Vocational Qualification

NWW – North West Wales

ODT/HA – Oven dried tonnes/hectare

O&M – Operation and Maintenance

OFGEM – Office of Gas and Electricity markets

PV - Photovoltaic

R&D – Research and Development

RAB – Renewables Advisory Board

REF – Research Excellence Framework

RES – Renewable Energy Strategy

ROC – Renewable Obligation Certificate

SAC – Special areas of Conservation

SAM – Scheduled Ancient Monuments

SLC – Site licence company

SME – Small and medium sized enterprises

SPA – Special Protection Area

SPG – Supplementary Planning Guidance

SRC – Short Rotation Coppice

SSA – Strategic search area


Final report SSC – Sector Skills Council

SSSI - Sites of Special Scientific Interest

STEM – Science, Technology Engineering, Maths

SWOT – Strengths, Weaknesses, Opportunities, Threats

TAN – Technical Advice Note

TWh – Terrawatt hour

UCLan – University of Central Lancashire

UDP – Unitary Development Plan

ULCV – Ultra Low carbon vehicle

WAG – Welsh Assembly Government

WDP – Workforce Development Plan

WEBS - Wood Energy Business Scheme


Final report

Appendix A – Stakeholders


Final Report

Name Organisation

Brian King Anglesey Aluminium Metals Limited

Dennis Evans Anglesey Economic Regeneration Partnership

Jane Blakey ATA

David Joyner Bangor University/Low Carbon Research Institute

Maria Scarlett Centrica

Ross Ovens Centrica

Dafydd Evans Coleg Menai

Tim Jones Countryside Council for Wales

Mark Higson Department of Energy & Climate Change

Emyr Jones Environment Agency

Meryl Read Environment Agency

Glynn Jones ESYS Consulting

Dafydd Hughes Flexible Support for Business

Sioned Williams Gwynedd Council

Iwan Trefor Jones Gwynedd Council

Alan Smith Horizon - RWE npower

Pete Forest Horizon - RWE npower

Arthur Owen Isle of Anglesey County Council

Jim Woodcock Isle of Anglesey County Council

Meirion Edwards Isle of Anglesey County Council

Sasha Davies Isle of Anglesey County Council

Dylan Williams Isle of Anglesey County Council

Jan Milburn Magnox North

John Idris Jones Magnox North

Martin Wright Marine Current Turbines

Gerallt Ll Jones Menter Môn

Jane Davies Menter Môn


Final Report

Name Organisation

Gwyn Roberts Môn Menai

Steve Knight-Gregson National Grid

Tim Knight National Skills Academy for Nuclear

Sara Johnston Nuclear Decommissioning Authority

Kefin Wakefield Pembrokeshire County Council

Andy Billcliff RWE npower

Bill Langley RWE npower

Ceri McGrath RWE npower

Alan Collinson Scottish Power Energy Networks

Geoff Murphy Scottish Power Energy Networks

Steve Aughton Siemens Energy

Captain Wyn Parry STENA, Holyhead Port

John Adshead Welsh Assembly Government

John Humphreys Welsh Assembly Government

Jan Jones Welsh Assembly Government

Cheryl Whitaker Welsh Assembly Government

Brian Rees Jones Welsh Assembly Government

Ron Loveland Welsh Assembly Government

Draft final report · Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower, has recently confirmed that they will be applying for planning consent for a new nuclear

Documents