In January 2002, Lafarge Cement UK announced the closure of its Eastgate cement works in Weardale, a rural area of County Durham in the north of England. The closure would mean the loss of 147 jobs and the potential loss of an estimated £ 7 million to the local economy. Though small in absolute terms, these job losses would be extremely significant in a rural and relatively isolated area like Weardale.

A Task Force formed to develop a strategy for the regeneration of the dale engaged PB to consider how renewable energy could be used to assist the sustainable redevelopment of the site and the surrounding dale.

Assessing Energy Resources

Our first task was to identify the renewable energy resources on the site and the feasibility of exploiting them. We were quickly able to identify that the Eastgate site (Figure 1) has the potential for the exploitation of all the land-based renewable energy sources in a combination unique in the UK. These include:

• Wind at the exposed limestone quarry high above the former main works
• Hydroelectric from the River Wear, which runs through the site
• Biomass from woodland in the surrounding area
• Geothermal heat from heat pumps and the hot Weardale granite that lies below the site (a resource which is unique in the UK)
• Solar direct from the sun.

Figure 1 – the former Eastgate cement works and quarry, viewed from the north

Table 1: Electricity and Heat Potential of Renewables at Eastgate Cement Works

Of these resources, the underground geothermal heat was the most unusual and the hardest to access. The existence of “hot rocks” in the area has been known for decades, but the technology to make use of their heat it is not yet commercially available, although work in Australia on the creation of underground heat exchange zones and in Germany on the use of coaxial wells is showing some promise.

In Weardale, the mining history of the area provided a possible solution. A nearby fluorspar mine that has been closed since the early 1990s was studied extensively in the past and hot water rising into the mine from deep underground had been found. Working with local hydrogeology experts from the University of Newcastle upon Tyne, we were able to confirm the possibility of tapping into this water to extract the underground heat.

A summary of the power and heat generation potential of all the resources is given in Table 1.

To put this into perspective, the total quantity of electricity is sufficient to supply more than 4000 homes, more than in the whole of Weardale. The heat supply could accommodate up to 200,000 m2 (2.1 million square feet) of building space, although development plans for the site indicate that 65,000 m2 (700,000 square feet) is more realistic, an amount that would use about 6 GWh of heat per year. The existence of a former large industrial consumer (the cement works) means there is strong grid connection that will allow the export of electricity. Thus the technical potential was there to make a significant contribution to local energy sustainability.

Use of the available renewable heat and power could reduce carbon dioxide emissions by 2,600 tonnes per year by displacing the use of fossil fuels. On an emissions-per-household basis, this would enable Weardale to meet its full share of the UK greenhouse gas emissions targets for 2010, which call for a reduction compared to 1990 levels equivalent to about 1 tonne of CO2 per household.

Figure 2 – location of renewable energy projects on the Eastgate site, including electrical and heat networks

Regeneration Potential

Initial economic analysis of the possible energy projects showed a range of outcomes, from good commercial viability for wind power through to low (and probably non-commercial) returns for hydroelectric and underground heat. Rather than limiting our view to strictly commercial projects, however, we went back to what the Task Force was really looking for—not energy production, but sustainable redevelopment. A development that exploited the unique range of resources and the rural setting would have the greatest promise for attracting tourism, business and other uses. These in turn would provide much greater economic opportunities to the area than energy production alone. The question was how to maximise the regeneration potential of the renewable energy resources.

This concept we devised has a number of key features:

• Power and heat generation, as described above, supplying:
  - Electricity to the site, the dale and beyond
  - Heat to developments on a reclaimed site.
• A visitor centre based around energy technology demonstration and awareness. This would link to other tourism and leisure developments on the site and in the surrounding Area of Outstanding Natural Beauty (AONB). AONBs are designated at a national level for their landscape value, and are protected against inappropriate development.
• Education and training in, for example, energy efficiency techniques or domestic renewable energy systems—skills that will be increasingly required in light of UK government policy calling for increased energy efficiency and community renewables.
• Technology dissemination by providing practical advice, supply and installation of small renewable energy systems. This would fit well with regional objectives, e.g., the Biomass Action Plan for the North East region of England, which aims to promote the development of a sustainable biomass industry and supply chain in the region.
• Provision of small business units with high capacity information technology (IT) connections, giving local entrepreneurs in energy-related areas 21st century opportunities.

All these activities would give rise to related economic developments in other supporting activities both on the site and in the surrounding area.

Innovative Development Structure

The challenge was how to integrate the energy projects, allowing for cross-subsidy while maintaining a positive net income to ensure long-term viability. To achieve this, we recommended a single holding company acting as the overall developer, that we have named EnergyWorks Eastgate (EWE). This company would contract individual developers to build and operate each project but retain the rights to sell the energy produced, as shown in Figure 3. Developers would be paid a fee (shown as “C” in Figure 3) to cover their costs of building and operating the individual project, plus a reasonable profit margin. EWE would cross-subsidise marginal projects from the pooled revenue “R” from the sale of electricity and heat, and make a profit that could be used for continuing regeneration activities. Our initial financial analysis of the projects indicates that this should be possible.

Figure 3 – the EnergyWorks Eastgate operating structure

We recommended the development of “project packs” to enhance the attractiveness of the projects to developers. These would provide energy resource data, outline designs, permits and consents, and remove many of the upfront risks that developers typically face. Preparing these packs will require some initial investment from public funds but, by encouraging developer interest, we expect to be able to conduct competitive auctions for the right to build and operate each project. This will maximise the benefit to EWE and, by increasing certainty for developers, greatly assist in making the development a reality.

We have presented the project to potential developers through both formal seminars and informal discussions. Their positive feedback has provided important confirmation of our initial concept.

Lessons Learned

• Working with the client’s overall regeneration objective in mind forced us to look beyond obvious project structures and develop an innovative approach.
• A step-by-step approach, testing the feasibility of each element before moving forward, has allowed us to build confidence and momentum behind an ambitious concept that might otherwise have been seen as unrealistic. Concept testing with potential industry partners has been an important element of this.

Conclusions

The analysis of the site energy resources and the development of a structure to exploit them all have resulted in an exciting overall plan for the site. We believe the concept of a single holding company and the “auctioning” of development rights has the potential for reapplication to other regeneration projects.

In parallel with our work, planning consultants have been progressing concepts for a mixed-use redevelopment of the area currently occupied by the cement works buildings (few of which would be used by our energy proposals). Integrating our proposals with theirs has been crucial—the heat generating projects clearly require customers for the heat, and visitor and business activities related to energy will help form a critical mass of development. The planning consultants have been excited by our approach and ideas and are keen to exploit the “sustainability” aspects of the project.

Our client, the Task Force, has fully endorsed the “renewable energy village” approach to the site, as have local residents through a consultation exercise in which 66 percent supported the proposals. The project is now moving forward into the implementation phase and we are continuing our work to technically define the energy projects and provide on-going technical and commercial expertise. A drilling programme was planned for mid-2004 to fully identify the geothermal resource, and we were engaged to manage this work on behalf of the Task Force.