Ambitious plans to attract a significant data centre and renewable energy investment, intended to support the funding of the £400 million Global Centre of Rail Excellence (GCRE) project, have encountered delays. The overall initiative, first proposed by the Welsh Government seven years ago, is designated for a vast 700-hectare site in Onllwyn within the Dulais Valley, an area comparable in size to Gibraltar.
Funding Challenges and Private Investment Efforts
GCRE Ltd, the Welsh Government wholly-owned company spearheading the project, has been actively seeking to raise £330 million in private funding. This capital is crucial for establishing what is envisioned as the world's first integrated testing facility for both trains and rail infrastructure equipment. To date, the project has secured and is nearing the expenditure of £50 million from the Welsh Government and £20 million from the former Conservative UK Government. These funds have been allocated for site preparation, including the construction of an essential electricity substation.
Project Specifications and Economic Potential
The proposed testing facility would feature two electrified, seven-kilometre looped testing tracks capable of operating 24/7 throughout the year. Additional components include train storage and maintenance facilities, a control centre, a 100-bedroom hotel, and dedicated spaces for training and research and development. A subsequent phase, not included in the current £400 million fundraising, could involve the development of a rail-related technology park, potentially financed through private means.
An economic assessment conducted by professional services firm PwC indicates substantial potential benefits. Over a ten-year period, excluding the planned technology park, GCRE could generate 1,100 permanent jobs, contribute £300 million in gross value added to the local economy, and achieve a lifetime impact of £1.2 billion. The project is forecasted to deliver a 15-fold economic return for every £1 invested.
Revised Timeline for Energy and Data Centre Partnership
In an effort to address the funding shortfall, GCRE initiated a search for an energy and data centre partner (EDCP) last year through an invitation-to-tender process. The original goal was to appoint a preferred developer before the Senedd election in May. However, the initial timeframe for expressions of interest proved too restrictive for interested parties to formulate comprehensive proposals.
Consequently, a new invitation to tender has been launched via Sell2Wales, with a deadline set for March 10. GCRE Ltd anticipates shortlisting three bidders by summer, with detailed dialogue to follow. A preferred investor, assuming a successful agreement can be reached, is expected to be confirmed by the end of the year.
Market Interest and Site Advantages
Simon Jones, Chief Executive of GCRE Ltd, remarked, "The last few weeks have been very encouraging, as we have seen the significant interest there is from the commercial market in the GCRE site as a location for high-quality renewable energy and data centre infrastructure." He emphasised the necessity of extending the partner search to allow bidders adequate time to develop their proposals.
The site's appeal is bolstered by its substantial size, robust power grid connections—including both 132kV and 400kV power lines—and advancing high-quality fibre connectivity. These attributes make it particularly attractive for renewable energy assets and data centre infrastructure development. Any land deal, likely with a developer who would then engage data centre and renewable energy operators, is projected to generate tens of millions of pounds to support the rail testing facility.
Political Support and Future Considerations
The current Labour administration has expressed continued support for the project and a willingness to provide additional funding if necessary to close any remaining gap. However, the final decision on proceeding will rest with the next Cardiff Bay administration following the election.
Furthermore, securing the required funding may necessitate a change in the company status of GCRE Ltd to ensure it is not classified as part of the Welsh Government's accounting framework by the UK Treasury. This reclassification, potentially to a community interest company, would prevent private investment from being treated as part of the Welsh Government's block grant, which would otherwise require equivalent reserves to be held.
The rail centre has already garnered expressions of interest from over 200 firms eager to utilise its facilities, including Network Rail, Transport for Wales, and leading train manufacturers such as Hitachi and Construcciones y Auxiliar de Ferrocarriles (CAF), which operates a manufacturing plant in Newport.
