Report of the Deputy Chief Executive and City Treasurer attached

The Executive considered a report of the Deputy Chief Executive and City Treasurer, which sought support for a proposal to secure a delegation from Executive for the Council to enter commercial negotiations to progress the purchase of a suitable solution with options being a solar asset and / or a Power Purchase Agreement (PPA).

In October 2021, Executive approved a recommendation for the Deputy Chief Executive and City Treasurer to establish a delivery team to develop the options, with a view to returning to the Executive with a proposal to progress the work.  This included updating the findings of the feasibility study to reflect current prices and market availability, to carry out future energy demand analysis and to further explore financing options.

There were several potential sites currently available to purchase.  At this stage there was sufficient information to model two different scenarios, both located in the south of the country as there were no potential schemes identified within the Council boundary or local surrounding areas:-

·         Option 1 – 45.3 MW scheme (south of England). would provide sufficient CO2e savings above the Council’s demand in the early years and would meet the 2025 target.  However, from 2035 onwards, the Council’s forecast Scope 2 emissions exceeded the available CO2e savings from the asset. It would offer 95% of the 2038 target.

·         Option 2 – 58MW across two sites (southern England) offered additional capacity for CO2e savings above the Council’s demand in the early years. The 2038 target would be met in full. Whilst production meant the supply and demand become closer in the later years, the assets always produced more electricity than the forecast demanded and surplus could be supplied to third parties locally (e.g. schools) or traded directly.

Other options would be considered as discussions moved forward with Developers.

Based on the Council’s projected future energy demand, Local Partnership’s assessment of the Council’s needs was a solar generation asset of between 45MW and 60MW at current market rates costs of c. £30m to £39m. This would be sufficient to meet the Council’s current target to reduce emissions by 7,000 tonnes CO2 by 2025 and to contribute to its overall target to be Zero Carbon by 2038.

The feasibility study and business case development work to date demonstrated that the direct purchase of the solar generation asset delivered a stronger Net Present Value (NPV) than a PPA, although all options demonstrated a positive return versus do nothing. Both an asset purchase and a PPA should also deliver revenue savings.  As negotiations moved forward and actual costs became known, a full financial model would be constructed and the NPV calculations updated accordingly.

Decisions

The Executive:-

(1)      Note the options in Section 4 of the report.

(2)      Note that should the direct purchase of a solar asset be pursued this will be funded via borrowing and require Council approval.

(3)      Agree to grant delegation for the Deputy Chief Executive and City Treasurer, in consultation with the Leader 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, to meet the Council’s 2020-25 CO2 emissions reduction target and contribute positively to our longer term zero carbon 2038 target through:-

·                The development/purchase of a suitable large-scale solar PV facility; or

·                a suitable direct PPA of renewable energy.