Powering ahead: Tees energy firm re-charged for the future

Sembcorp

Trade: Mark Lane finds out what Sembcorp UK has to offer to energy-intensive customers and potential investors at Wilton International and hears how the industrial powerhouse has reinvented itself to respond to the UK’s ever-changing energy needs

The UK energy market is a complicated beast. Highly politicised as well as being at the mercy of powerful global market dynamics, it’s a sector of the economy which has had to adapt to massive global disruption in recent years. Low carbon and renewable forms of generation are gradually displacing coal
and other forms of fossil fuel production across the world. Additionally, the UK has specific issues challenging its 2050 ‘net-zero’ carbon emissions targets, with the next generation of nuclear plants behind schedule and still years away from playing their part in the nation’s energy ‘mix’.

With its huge concentration of chemical and other process industry, Teesside is of vital importance to the economy of the North East in terms of jobs and investment and the millions earned as a result of the exports of its main manufacturing companies are equally important to the continued prosperity of the UK.

One commodity that Teesside’s processing companies need is energy – lots of it! Nowhere is this more apparent than on the 2,000 acre Wilton International site near Redcar, once home to ICI’s chemical and petrochemical operations.

Contact was curious therefore to catch up with perhaps the most pivotal player at Wilton. In a wide-ranging interview with Nomi Ahmad (pictured below, left), head of Sembcorp’s UK energy operations, we found out about the Singapore-based company’s UK expansion plans, why the region needs to pull together and investment opportunities and why companies like Sembcorp, operating in volatile markets, need more than ever the maximum possible certainty and stability from central government.

 

Nomi brings more than 25 years of rich and varied experience to his role for Sembcorp. His career spans power development, engineering procurement and construction, project finance, mergers and acquisitions and asset management across Asia, the Middle East, and the Americas. Chosen to lead the UK expansion, he has been in post since early 2018 during which time massive strides have been taken towards integration in all the UK energy sectors.

The scale of Sembcorp’s activities and physical assets at Wilton is impressive – not just plants, but also miles of cabling and pipelines generating and distributing reliable, low carbon supplies of power and steam. Sembcorp also supplies water and a variety of other utilities and services to on-site customers including petrochemicals giant SABIC, Lotte UK Chemical and the biofuels firm Ensus.

Having acquired the business 16 years ago, Sembcorp has since invested more than £300m at Wilton and now guarantees customers ultra-reliability by generating from a flexible array of power producing assets including gas (the cleanest of the fossil fuels) biomass and waste to energy facilities.

The £65m Sembcorp Biomass Power Station pioneered large scale biomass power production in this country when it began operations in 2007. The plant utilises around 300,000 tonnes of sustainably sourced wood as its fuel in order to generate 35MW of green power for the site’s companies.

More recently, Sembcorp partnered with the waste management firm Suez and I-Environment (a subsidiary of the Japanese investment firm ITOCHU Corporation) in developing a £250m plant to utilise 440,000 tonnes a year of Merseyside’s non-recyclable household waste as a fuel, diverting it from landfill in order to generate the equivalent of the power used in 63,000 homes. Along with multi-million pound investments in two gas turbines, a steam turbine and package boilers, Sembcorp offers site investors access to reliable supplies of competitively priced, low carbon power delivered via the largest privately owned distribution network in the UK.

Nomi explains: “Having access to power and utilities on tap is one of the major reasons why industrial companies would want to site themselves at Wilton and we have a compelling proposition for inward investors. Centralised on-site generation and other utilities can cut the capital expenditure and gross energy costs of an industrial business by 15-20 per cent.”

Nomi adds that with the UK energy market is in the throes of significant change, Sembcorp has broadened
its portfolio to capitalise on the opportunities resulting from increased price volatility at the same time as exploring its own investment ideas which – potentially – could bring a substantial number of new jobs and investment into the area.

Sembcorp’s plans to develop a large-scale power station are deemed as potentially vitally important to the UK’s energy security and infrastructure as well as its ability to supply the low carbon needs of energy-intensive industries looking to set up operations in the Tees Valley. With a capacity of up to 1,700 MW – the equivalent of the power needed to supply 1.5 million homes and businesses – the station plan was approved by Greg Clark, Secretary of State for Business, Energy and Industrial Strategy (BEIS) in April this year.

Earmarked for the site of the now demolished former 1875MW Teesside Power Station which ran from 1993-2013, the proposed £500m facility would have the added advantage of being carbon capture ready and capable of feeding surplus electricity into the national grid to meet a substantial tranche of the country’s energy needs.

Sembcorp is currently looking at the business case for the project in the light of the rapidly changing UK energy and regulatory environment and will take a final decision in the months ahead, with the development consent giving the company until April 2024 to begin construction.

If it goes ahead, the plant could see 60-80 permanent new jobs created at Wilton site and a further 150 in the supply chain. It would also support up to 1,000 jobs in the engineering construction sector during an anticipated three-year build out.

The process would incorporate the assembly of two gas turbines trains in two separate phases. A decision is yet to be made on a possible technology provider.

Says Nomi: “A number of sites have been identified in the UK as carbon capture and storage (CCS) sites. Wilton and the South Tees area have several compelling features that make carbon capture attractive, however, given the high cost, CCS will require some level of subsidy from the Government to be commercialised.

“If Teesside is chosen as a site, we believe that Wilton could be a strong contender for locating the anchor power plant and CCS project as we own the land with no need for any compulsory purchase, we have the grid and gas connections, the associated site infrastructure and a development consent order already in place, and this could shorten the development of the station by 12 to 18 months.

“We are tracking this area carefully, but we firmly believe this project coming to Teesside is a win-win for all concerned. Having this carbon-capture facility on Teesside would instantly make the area more attractive for inward investors who – with the added advantage of the carbon capture capability – would be able to say they were consuming green energy.”

Another major UK development for Sembcorp in the past 18 months has been the £216m acquisition of UK Power Reserve.

The purchase has given Sembcorp entry into an entirely new market – flexible distributed energy – via its largest generator and catapulted the company from being simply a provider of centralised utilities on Teesside into a truly integrated energy business with operations at around 40 locations throughout the UK.

It has given Sembcorp a foothold in the UK’s fastest growing power market and additional capacity of more than 800MW that has taken the company’s total contracted UK capacity to more than 1,000MW, including one of the biggest battery storage portfolios in Europe.

Moving forward, Sembcorp is looking to work closely with the Tees Valley Mayor Ben Houchen and local development agencies in a joined up approach aimed at capitalising on huge inward investment opportunities for the area. One of these is South Tees Development Corporation (STDC).

To this end, Sembcorp and STDC signed a Memorandum of Understanding (MoU) last year to maximise investment opportunities at two of the key industrial sites in the Tees Valley – Wilton and the adjacent 4,500-acre STDC area.

Since its launch last year, the STDC area, which includes the former SSI Steelworks site and approximately three miles of river frontage, has received more than 100 enquiries from investors around the world.

The MoU will see Sembcorp and STDC jointly promote investment, directing businesses to the most appropriate site for their requirements.

Nomi described the agreement as “a significant step forward in the regeneration of this area”.

Elaborating, he says: “Both parties are keen to attract inward investment into the area and so why not work together on that process? We are not competing – we can extend our network to service international customers, whether that be here or in the STDC area.

“We will never turn away inward investment from Wilton but, equally, if they want to go to the redeveloped SSI site, we can supply them with utilities and services there. Having the MoU removes the potential for infighting between the two areas.”

So what kind of investment might the joint Wilton/STDC approach appeal to? There are many possibilities, suggests Nomi, including – for those requiring power only – mineral processing, data centres, tyre reprocessing, oil refining, metal recycling and industrial gas.

For those requiring both power and heat, the site could serve many sectors including rare earth oxide processing (Peak Resources have already identified Wilton for a development), minerals processing (the massive Sirius Minerals development linking the polyhalite mine near Whitby to its export facility on the Tees is already underway), plastics, metal and waste recycling, advanced manufacturing, speciality paper and petrochemicals.

We end our interview with a broader look at the UK energy market and what it is like to be a key player in the sector during such a volatile period.

Nomi’s overriding message is one of the need for stability and consistency from national governments with regards to overall energy strategy. He is confident that Sembcorp’s UK operations are diversified enough to withstand market shocks, although he also acknowledges that, “at the end of the day, the future of our business is dependent on the future of our customers’ businesses”.

With many of these businesses being international players, with the potential to make their investments anywhere around the world, the issue of Brexit is never far away. Like many, Nomi would simply like to see resolution on Brexit either way, and a black and white answer as to whether we are in or out as opposed to the never-ending political posturing over the issue we have witnessed over the past two years.

He is also a great believer in partnership and collaboration. Having worked internationally, his experience has offered him an outsider’s perspective on Teesside in terms of what it has to offer regarding energy and utility supplies alongside the logistics infrastructure, a great workforce and a wide range of grant support.

Nomi concludes: “There has to be a very concerted effort between business and government to really partner to say how you can add the maximum number of ‘ticks’ to make this place attractive for somebody to invest in, because we are ultimately competing with the likes of Germany, Holland and so on. How can we ensure the right story is being told? This is a key question for the prospects of Teesside, and indeed our Sembcorp business, in the years ahead.”

Sembcorp’s UK operations belong to the Utilities arm of the Sembcorp Industries, a leading energy, water, marine and urban development group operating across multiple markets worldwide.

Sembcorp has chosen to locate its newly formed UK business at Wilton International where it has been established since 2003.

Aside from Sembcorp’s supply of resilient, secure and low cost energy, the site’s fundamental strengths to investors are clear to see.

Its established industrial infrastructure is ready to deliver the utilities, feedstocks, industrial gases and products needed by investing businesses.

Comprehensive, multi-modal freight transport solutions are directly accessible on Teesside bringing logistics efficiency, flexibility and security.

Its top-tier ‘COMAH’ status provides the health, safety and security standards demanded by major process industry companies.

Sembcorp’s ‘plug and play’ land and property solutions mean a range of large-scale, fully serviced development plots are available, with flexible tenancies and pre- consented planning.

Last but not least, Wilton’s location within the Teesside industrial cluster provides access to a large, technically skilled workforce, expertise and supply chain opportunities.