In March this year the Evening News reported that Generation Park Norwich (GPN) had run out of money, leaving its backers (Norwich (NPH) LLP) with debts of £3M. The ‘green’ credentials of UEA, the leading advocate of the scheme, had been further undermined by the complete failure of their own biomass project, at a cost of £10M, and were first reported in the Norwich Radical in August 2015.
Norwich City Council (NCC) seemed to be back to square one after spending 12 years and £700k of public funds trying to come up with a viable use for the Utilities Site, to the east of the city centre. To quote Clive Lewis, the Norwich South MP, the whole scheme seemed to be ‘dead in the water’ before it had even got off the drawing board.
Yet now, like a phoenix from the incinerator’s ashes, it has miraculously risen again; ‘mysterious’ new backers have emerged, and things are back on track for the planning application to finally be heard in July or August. How is it that proposals which have been dogged by controversy, bankruptcy and delay refuse to die? Are there reasons why Generation Park Norwich (GPN) is just too big to fail?
The answer to this question goes back to 2003 when GPN, or ‘The Star of the East’ as it was then known, was just a twinkle in the eye of ambitious UEA professors Trevor Davies and Kevin Tovey.
The unreality of their early visions for the scheme can be seen in this picture from the Guardian, which shows what the report likened to a ‘giant slug’ but was, in fact, intended to be a vast greenhouse to match the Eden project in Cornwall.
Their presentation to the Regional Development Agency also featured an 80-metre glass tower (to rival the Angel of the North), with a six-bladed wind turbine perched on top, designed to make Norwich a ’world-landmark’ site, as shown in the slide below:
At the time Prof. John Schellnhuber, research director of the UEA School of Environmental Sciences enthused that, “The Star project is classy, sexy and funky. It has a forward-looking science fiction appeal to it which I hope will help get environmental issues out of this dull, stuffy corner….”
In spite of the fantasy element, these early proposals found an appreciative audience at Norwich City Council (NCC) and the East of England Development Agency (EEDA), who were at a loss as to what to do with the Utilities Site, which had been abandoned since the 1970s and was riven with problems of contamination, flooding, access, and split ownership. Trevor Davies’ ‘visionary’ scheme seemed to be the answer to their prayers.
“The Star project is classy, sexy and funky. It has a forward-looking science fiction appeal to it”
NCC were so taken with it that they decided to incorporate its major aspect, i.e. a biomass power station, straight into the 2004 Local Plan as a policy objective, without further evaluation.It was only in 2006, two years later, that they commissioned consulting engineers Buro Happold (BH) to conduct an ‘Initial Options Assessment’ (IOA) of the proposals.
This review was intended to be an independent examination of all the options for the site — but in fact did not address the central question of whether a biomass power station should be built there. As the consultants pointed out, there was little point in doing so as it was already a settled policy objective, and besides, UEA were already working on it themselves with their partner company CRed. As the report says:
“The principle of a biomass scheme on the Deal Ground & Utilities site is supported by existing policy and work is currently being undertaken by CRed & the University of East Anglia (UEA) to further establish the feasibility of this project so it was considered that the IOA should not prejudice this proposal at this stage…………It has been represented exactly as it was presented to the masterplan team by CRed and UEA.”
(Buro Happold Initial Options Assessment 1.7 p. 5)
But CRed and the UEA were themselves the leading advocates of the scheme with a commercial stake in the development. How could they be relied upon to produce an independent assessment?
One of the key aspects of the biomass scheme was its potential to provide Combined Heat and Power (CHP) by piping the water used to cool the incinerator’s turbines to local homes. Buro Happold warned of the potentially prohibitive costs of laying pipework to thousands of homes in the vicinity, and cautioned that these costs should be balanced against any ‘claims for exemplary sustainability status’:
“……the cost of this [CHP] adds significantly to the site infrastructure costs, which impacts negatively on viability. Exclusion would help to improve viability but at the expense of a significant part of the project’s claim to ‘exemplary’ sustainability status.
(Buro Happold Initial Options Assessment Next Steps p. 11)
Their doubts proved to be well-founded. As we shall see, when the planning application was finally submitted in 2015, the promised district heating network was not included. E.ON (who were to have provided it) had by then withdrawn funding, having lost £2M in the process. Yet it was the prospect of such a network that had ensured no other renewable energy options had been considered since 2004.
Aerial view of the Utilities Site, Norwich
In the ‘Next Steps’ section of their report Buro Happold also called for an independent review of the financial basis of the scheme and in particular its dependence on subsidy revenues. They identified the volatility of these as a major risk for a project of this type:
“The Biomass option should be subjected to further study both by the Biomass project team and independent external assessors. Further study should focus on:
- The business case for the plant needs to be examined in detail, particularly the level and security of revenues and the degree to which these would be affected by changes in electricity purchasers, overall energy prices and fuel sources.”
(Buro Happold Initial Options Assessment 1.16 p.10)
The data supplied by CRed, UEA and EEDA were clearly not thought to be adequate or independent in this context. Yet no evidence exists that any such external financial review ever took place. Instead, the information supplied by UEA came to be relied upon as established fact, perhaps because it emanated from an academic institution. In reality, all the agencies involved had no interest in exposing the scheme to the kind of external scrutiny that might have revealed the inherent risks in the business model. They had already spent too much time and money getting it this far, and had too much to lose from stopping now.
no evidence exists that any such external financial review ever took place
In 2010 NCC’s planning team produced a review document, summarising progress so far and what still remained to be done. However, whilst it identified that further work was needed on environmental impacts like flood risk, it nowhere addressed the issue of financial viability, simply stating that it was an ‘exemplar sustainable development scheme’. Another opportunity to address the scheme’s inherent risks had been missed.
NCC, EEDA and other agencies continued to pump public money and resources totalling upwards of £700,000 into the project, but in 2012, the Government scrapped EEDA on the basis that it was ‘not providing value for money’ following a number of failed investments (including a disastrous property deal in Jaywick (‘Benefits by the Sea’) and amid rumours of internal malpractice.
Meanwhile, what was now the Generation Park juggernaut rolled on. ‘Public consultations’ were launched in January 2015, promising all sorts of spin-off community benefits; the cheap heating network for local residents, affordable housing, pedestrian bridges and cycle paths etc. But none of this was in the detailed plans submitted in August 2015, only the biomass power station, two vital access bridges and student accommodation for UEA. The promised community benefits remained in the architect’s drawings, carrots to get the local agencies on board and then relegated to ‘phase 2’ in the planning application.
GPN Site plan
However, once the plans were out and open to public scrutiny for the first time, things quickly began to unravel. Claims to carbon neutrality were shown to be false, taking no account of the CO2 costs of processing or transportation; air emissions were shown to be ‘not insignificant’, undermining the claims that the plant would be ‘clean and green’; and, as previously mentioned, the revelations of UEA’s failure to commission their own biomass project threw into serious doubt their fitness to lead such a development. Local residents and businesses started to object and to protest, local press and politicians began to ask questions and the date of the planning hearing was pushed back and back.
Things came to a head in January 2016 when investor confidence evaporated following a statement by Amber Rudd, the Energy Secretary, which appeared to move Government renewable energy support away from biomass to other types of renewable sources. This was exactly the risk that the Buro Happold report had highlighted but which had been repeatedly ignored.
Things came to a head in January 2016 when investor confidence evaporated following a statement by Amber Rudd, the Energy Secretary
Two months later the developers, now in imminent danger of going bust, took out Company Voluntary Arrangements (CVAs) in order to avoid insolvency. Under these CVAs they agreed to pay creditors only a third of the £3M they were owed. The creditors had little choice but to agree – it was accept a third or get nothing. Here is an extract from the CVA for Norwich Powerhouse LLP, showing the sums owed to its creditors:-
In fact, the developers’ debts were closer to £4M because CVAs for sister companies NPH (Norwich) LLP and the pelleting company Pelco (Distribution) LLP were entered into on the same day, totalling an additional £981k and including £542k owed to the London-based architects Grimshaw, and £170k to consulting engineers Axis. Looking at some of the numbers involved you can imagine the devastating effects unpaid debts of this size could have on a small business. But from the developer’s point of view, entering into CVAs meant they only had to pay a fraction of the debts they owed.
But from the developer’s point of view, entering into CVAs meant they only had to pay a fraction of the debts they owed.
When, a month later in April 2016, NCC gave them a deadline to submit the outstanding planning reports that had been requested or face rejection of the proposals, ‘mysterious’ new backers suddenly emerged with enough money to commission these. Given that NPH say they had spent months trying to find new investors prior to entering into the CVAs, it seems remarkable that, having written off two-thirds of their debts, they then found new backers within a week willing to keep the scheme alive. One wonders who these new backers could possibly be. Is it a coincidence that on 3 May 2016 a new company was formed — New Norwich Power (N2P) Limited — whose directors have strong links to UEA and the renewable energy sector?
So GPN lives again, and could come to planning committee as early as July or August. The odds are that it will be passed. To call a halt now would be to admit that a decade of planning and £Ms spent was all for nothing. It would also mean that serious questions would be asked as to why NCC allowed such a scheme to be written into the Local Plan without proper financial assessment, why subsequent opportunities for independent review were ignored, and why alternative options for the site have effectively been excluded from consideration since 2004.
What happens next?
Assuming planning permission is granted, there are a number of possible scenarios:
- The developers may immediately sell the scheme to foreign operating company BWSC, who are already lined up to run the plant. If this happens, Norwich NPH will walk away with £Ms in profit, none of which has to be paid back to creditors, but it will depend on BWSC’s institutional investors like PensionDanmark thinking that it is worth spending the £370M required to actually build the plant. It will all come down to whether they can secure renewable energy subsidies through the Government’s ‘contract for difference’ process. Given the recent reset of this policy away from biomass, in the short term at least this appears unlikely. If GPN ever does get built, Norwich will be saddled with an outdated, dirty and inefficient biomass incinerator for decades to come, and one that produces more CO2 than coal.
- Another possibility is that, having obtained planning permission, the scheme remains in limbo for the next five years while the owners wait for a change in the wind on Government energy subsidies. Cheaper, cleaner and more practical solutions for the site e.g. social housing, solar farms etc will have to be put on hold yet again.
- Perhaps the worst case scenario is that the scheme is begun but left unfinished when the money runs out. This is a not uncommon occurrence with biomass schemes and will present NCC and its council tax payers with some unwelcome choices; leave a half-built white elephant on the eastern edge of the city or try to find the money to complete a flawed project?
- The final possibility is the ‘waste incinerator by the back door’ scenario, i.e. the scheme is completed but found to be unviable using its planned fuel source (straw). In that context there will be considerable pressure on NCC to allow more economic but more polluting fuel types to be burnt at the plant, including wood or even RDF (household waste). It happens all the time with schemes of this kind, for example the smaller straw-burning biomass incinerator at Snetterton in Norfolk, which has just obtained a permit variation to burn wood.
Far from reaching its denouement, another chapter in the GPN saga may be just beginning …
Featured image: thestar