Sustainable Energy Opportunities and Constraints in Local Authorities

Local authorities and Sustainable Energy Opportunities, Constraints and ways forward Finance Mark Bramah, Managing Consultant, Municipia COIN STREET NEIGHBOURHOOD CENTRE, LONDON 14 SEPTEMBER 2018

1. 1.Background Background The context within which local authorities operate is governed by wider strategic imperatives and by national and local policy e.g. Climate Change and the transition to a low carbon economy. Austerity and the impact on local public services. Industrial Strategy and the Clean Growth Strategy. Devolution agenda metro mayors. In general terms local authorities are revenue poor but have access to cheap borrowing and still have a substantial asset base.

2. 2. Opportunities Opportunities The opportunities for local authorities can broadly be grouped into two main areas: 1. More effective use of assets and resources: Income generation - Commercial and investment opportunity; Reducing costs - Energy reduction and efficiency measures; New capacity Developing new infrastructure and services; and Shared resources skills, knowledge, investment. 2. Economic development and green growth: Facilitating business growth and investment in the local economy e.g. skills and training; Regeneration of local areas; Investment in sustainable housing and transport.

2. Opportunities cont. 2. Opportunities cont. In this context the role of local authorities can be described as: Local energy ownership Re-municipalisation Devolution Community ownership Community engagement and governance

3. Constraints Some of the constraints which impact on the ability of local authorities to exploit the opportunities available are: Limited economies of scale for local authorities working on their own; Limited in-house capacity and skills to develop operational activities; Significant finance needs that may exceed local capacity; Network constraints limited grid capacity and the cost of connections; Policy uncertainty Brexit and constant changes in central government policy over e.g. FiTs and support for low carbon energy projects restricts the ability to act; The appetite for risk is low and of necessity democratic governance slows up decision making; Lack of seed corn funding to build effective business cases and to deliver projects

4. Ways Forward 4. Ways Forward In terms of ways forward for local authorities to exploit the undoubted opportunities available through sustainable energy, there has to be a recognition that this is not an optional extra , a good thing to do to build green credentials and making gestures towards tackling climate change; but part of the fundamental purpose of municipal government in meeting social, economic and environmental well being of their areas. It requires sustained leadership over a long period with clear objectives and a non-partisan approach.

4. Ways Forward 4. Ways Forward There are real and tangible examples of local authorities leading the way in identifying opportunities to create social value and developing commercial models by intervening directly in the energy market. Case Studies Robin Hood Energy & South West Low Carbon Hub

5. Case Studies Energy Supply Robin Hood Energy Ltd (Nottingham City Council) Most new energy supply companies take at least 5-years to reach break-even. Robin Hood s accounts have been independently audited to verify a trading surplus of 202,000 for 2017/18. Turnover of 70.3m in the year to 31 March 2018, up from 25.9m during the prior 12 months. Over 115,000 customers and has recently been independently valued at around 30million well in excess of the Council s original investment. Using surplus to voluntarily enter arrangements to offer the Warm Home Discount. Protecting tariff rates for prepayment customers. Going Green Robin Hood Energy will be switching all of their electricity to be supplied from renewable sources certified as being provided by UK based Wind and Solar projects.

5. Case Studies cont South West Low Carbon Fund A group of local authorities in the South West are collaborating to create a 100m fund to invest in energy projects. The South West Low Carbon Fund aims to improve energy efficiency of local building stock, but also invest in distributed generation, storage, demand-side response and EV infrastructure. As well as cutting carbon emissions, the aim is to create jobs and enable local authorities to earn a return from the savings enabled by funding investments savings that in most cases will be guaranteed via energy performance contracts (EPCs). By packaging up viable projects across the South West, they hope to also attract private debt funding, which usually requires aggregated, bankable projects to deploy capital at scale. Plymouth City Council has led the development of the South West Low Carbon Fund through an EU-funded project, FINERPOL. It will work with Bristol, Devon and Exeter City Councils and Local Energy Partnerships (LEPs) in the South West to create the South West Energy Hub and a pull-through mechanism for viable projects across the region. https://theenergyst.com/local-authorities-plan-100m-energy-fund/

Mark Bramah Managing Consultant Municipia Tel: 07858 465003 Web: www.municipia.co.uk Email: mark@municipia.co.uk