The FDI angle:

• The former Aberthaw coal power station in South Wales is being transformed into a new green energy hub.
• Why it matters: As the energy transition progresses across the globe, local authorities have had to become more proactive in how they create new jobs for displaced workers. The Aberthaw redevelopment project in Wales shows how place-based industrial strategy is being used to open new opportunities in the industries of the future.

The closure of Aberthaw B coal power plant in south Wales on March 31, 2020 marked an end to a landmark of the fossil fuel-based local economy. After being built in 1971 alongside the smaller Aberthaw A power station, it burnt coal sourced from nearby opencast mines and supplied power to the UK’s national electricity grid and industrial heartlands. 

But between the UK’s plan to phase out coal and a 2016 ruling by the European Court of Justice that Aberthaw B had emitted illegal levels of pollution, the plant’s days were always numbered. Germany’s RWE, which owned the 1500-megawatt coal plant in the Vale of Glamorgan, announced in August 2019 that it would close after “market conditions” made it necessary.

The shuttered power station is now planned to be a green energy hub. In March 2023, 10 local authorities agreed to acquire the site from RWE for £8m. They plan to invest £36.4m of public money to clear and redevelop the 489-acre site into a green energy hub, for which they have entered into an agreement with private sector players such as UK energy group SSE.

“This is a contemporary form of place-based industrial strategy,” says Kellie Beirne, the director of the Cardiff Capital Region (CCR). The vision is for the public sector to be a “long-term, patient investor and custodian”, she adds, by connecting local investment priorities and being more “deterministic” in how the region can leverage opportunities like offshore wind in the Celtic Sea.

This acquisition by 10 local authorities across the CCR was possible thanks to a £1.2bn devolution deal agreed in 2016 between the Welsh regional government and UK central government. Over a 20-year period, the deal allocated £734m for metro developments and a remaining £495m for a wider investment fund. The ambitious public sector acquisition underlines the importance of developing clean energy infrastructure to attract investment and protect local jobs in the energy transition.

ABERTHAW POWER STATION REDEVELOPMENT

• Location: Vale of Glamorgan, Wales, UK
• Sector: Energy
• Public acquisition/redevelopment cost: £8m/£36.4m
• Former owners: Germany's RWE
• Site size: 489 acres
• Development stage:  Site purchased by local authorities and SSE announced as private sector partner 

Blank canvas

A “big focal point” of the Aberthaw site’s regeneration is about how to “develop what was a redundant power station into a broader growth proposition for the region”, says Neil Kirkby, managing director of enterprise for SSE Energy Solutions, the business arm of the UK energy giant which is partnering with CCR Energy, the local development company set up for the remediation and regeneration of Aberthaw power station. 

To create suitable conditions for companies to invest in south Wales, inward investment support, training and reskilling, and renewable energy generation are viewed as key to helping support local businesses and creating job opportunities for residents in nearby deprived areas.

Huw Thomas, the leader of Cardiff City Council, tells fDi that the Aberthaw site is “a blank canvas”, where local authorities are inviting the private sector to explore a variety of future energy uses including green hydrogen, onshore wind and small nuclear modular reactors.

“It all ties in more broadly to the wider vision of making South Wales and the south-west [of England] a green energy super hub for the UK,” says Mr Thomas, who highlights ongoing work to identify the best solution for generating green tidal power in the Severn Estuary.

Aberthaw’s regeneration plan comes at a critical time for Welsh industry. At Port Talbot, located 25 miles west from Aberthaw, up to 2800 jobs are set to be lost at the UK’s largest steelworks run by Indian conglomerate Tata Group. This is part of plans to close its last two blast furnaces for steelmaking and shift to greener electric arc furnaces that require fewer workers.

“If we can get various energy generation schemes off the ground, in Aberthaw or elsewhere in the Severn estuary, they can all make a long term contribution to the competitiveness of steelmaking and other high-energy-usage industries in South Wales,” says Mr Thomas. 

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