Agenda item

Agenda item

Large Scale Renewable Energy Generation - Solar Farm Purchase (Part A)

Report of the Deputy Chief Executive and City Treasurer attached


The Executive considered a repot of the Deputy Chief Executive and City Treasurer, which provided an update on the progress of negotiation and Due Diligence for the purchase of a Large-Scale Renewable Energy Generation Project to help ensure the Council could achieve the CO2 savings as set out in the Council’s Climate Change Action Plan 2020-2025.


In January 2022 Executive granted delegation for the Deputy Chief Executive and City Treasurer, in consultation with the Leader, Executive Member for Finance and the Executive Member for Environment to negotiate for the purchase of a solar asset / PPA and any associated corporate documentation to establish a Special Purpose Vehicle if required. The report also highlighted the need to seek further capital approvals to increase the Council’s borrowing limit, via full council approval, if a binding offer were to be made to purchase a large-scale generation asset.


It was explained that the volatility in the energy markets linked to the war in Ukraine, combined with uncertain government energy policy over the summer and autumn of 2022 including a likely Government ban on new solar farm developments (since abandoned) plus the financial volatility arising from the UK Government’s short-lived financial policies of September 2022 had all contributed to a volatile market over the past 12 months.  During this period, the Council had tracked the market for suitable sites and explored potential options when they had become available.  These events had also very much shifted the balance in favour of asset  purchase as it offered a number of key advantages:


In November 2022, officers identified a suitable large scale solar PV facility available for purchase and submitted an initial non-binding offer to the developer. This offer had been accepted by the developer and the Council had been invited to submit a final offer.  The developer required all bidders to clearly state that their internal approvals required were in place for their Final Offer. For the Council, this included Executive approval and for the capital budget increase and borrowing requirement, full Council approval. These approvals would be conditional on the outcomes of the due diligence and negotiations.  If the Council’s final offer was accepted, the Council would be granted exclusivity to complete full detailed due diligence following which a further report would be submitted to Executive


The Deputy Chief Executive and City Treasurer commented that the acquisition of a large-scale solar generation asset would give the early guarantee of long-term access to direct supply of renewable electricity generation, immediate overall CO2 reduction and significant financial certainty of future electricity prices to be paid by the Council.


Based on the projected energy demand assumptions, progress to both achieving the interim target of 50% reduction in carbon emissions by 2025 and to our long-term science-based target to be Zero Carbon by 2038 at the latest had been mapped.  The modelling showed that, if the proposed solar farm was to come online as expected by the developer in early 2024 and generate the projected levels of electricity, the Council would meet its target to halve its CO2 emissions by 2025. The renewable electricity produced should also considerably accelerate the Council’s progress to meeting its 2038 targets in the following years, particularly between 2025 and 2030.  After 2025, the effect of the solar farm would become less pronounced, as government-projected decarbonisation of the National Grid reached a consistently high level, although progress on National Grid decarbonisation was a variable outside of the Council’s control.  Without a source of renewable energy, achievement of the Council’s Zero Carbon 2038 objective would be largely dependent upon National Grid Decarbonisation.


In the event that this or another suitable solar farm purchase of c.50MW was not secured, the impact would need to be mitigated via seeking to purchase renewable electricity through other means such as via a PPA,.  With energy markets currently in a state of high uncertainty PPA costs would have risen sharply and did not offer the same long term price hedge and security of supply offered by the large-scale generation option.




The Executive note the report and that further details and recommendations are set out in Part B to this report.

Supporting documents: