Everyone in local government is familiar with the environmental arguments for generating energy from renewable sources. But with Comprehensive Spending Review (CSR) budget reductions of 26 per cent, the need to purchase allowances for emissions under the Carbon Reduction Commitment Energy Efficiency Scheme and Landfill Tax set to reach £80 per tonne by 2014, the financial case is also becoming more compelling.
The government has set a target for 15 per cent of energy to be generated from renewable sources by 2020 and the Energy Security and Green Economy Bill provides a framework for securing low carbon energy supplies and fair competition in energy markets in the future. While overall Department of Energy and Climate Change (DECC) funding has been reduced, the CSR signaled £200m for low-carbon technologies – including offshore wind technology and manufacturing infrastructure at port sites – and £860m for the Renewable Heat Incentive, which will drive a tenfold increase in renewable heat over the coming decade.
Good business sense
The Association for Public Service Excellence (APSE) represents 260 councils providing front-line services across the UK and, in the face of a bleak outlook for the public sector, we see renewable energy as offering significant opportunities for local government. Championing use of solar, wind and tidal and geothermal energy, as well as biomass and energy from waste, makes good business sense in the current economic climate and gives councils the chance to expand their community leadership role through pursuing a green agenda locally. They can also cut the costs of the energy used for their own buildings and services and make supply more secure in response to uncertainty surrounding pricing and availability of gas and electricity. What’s more, developing renewable energy technologies can have a valuable economic development role in creating of jobs and boosting businesses locally.
We believe that local authorities are particularly well-placed to make the most of renewable energy opportunities as they have the flexibility and innovative approach required. Impressive examples include Birmingham City Council retrofitting houses and business with solar panels and Halton Borough Council’s partnership to develop a biomass operation. East Riding of Yorkshire Council is looking at installing its street lighting with mini-wind turbines and Swindon is creating a waste to energy plant.
There is a sound commercial case for adopting a DIY approach to renewable energy schemes because that is the way to maximise the income generation and energy efficiency gains for councils and there are potential new opportunities for direct service providers particularly in relation to the retrofitting of public buildings and housing. APSE is now putting together business cases to promote the new ‘green DSO’ creating local employment, investing in skills and supporting local supply chains
Light at the end of the tunnel
Cornwall County Council has a comprehensive strategy to be self-sufficient in energy by 2025, through solar energy, wind and a range of other measures. Consultant and APSE associate Stephen Cirell, who was until recently the director responsible for Green Cornwall at the authority, told APSE’s annual conference in Derry earlier this year: “The green agenda is the only light in the very long dark tunnel that local government is in at the moment. It offers a way of generating income while delivering non-financial benefits. Green agenda investment pays for itself so it’s a surprise that more authorities have not picked this up yet.”
If ever there were a compelling invest to save argument, renewable energy is certainly it. Sale of Electricity by Local Authorities Regulations 2010 now allow local authorities to sell power generated from renewable sources. And DECC estimates that they could boost their incomes by £200m a year as a result.
APSE member authorities that are leading the way in developing renewable energy are currently also looking into selling it on to generate income. Derby has schemes in place including a hydro electric plant at Longbridge to both power the council headquarters and sell any surplus on to the National Grid. As well as saving 700t of carbon emissions, projected income covers the costs of financing this project.
Waste Framework Directive
The potential of waste to energy measures is growing particularly in light of the new Waste Framework Directive placing greater demands on councils to increase recycling and reduce residual waste. Hampshire has three energy from waste plants, which generate enough energy from processing residual waste to power 50,000 homes each year and divert 90 per cent of the county’s waste from landfill. The county council is now working with other public sector partners and looking at large-scale renewable energy options.
These are some of the positive examples from around the UK. If local authorities are to embrace the opportunities that renewable energy offers, their first step is to produce a renewable energy strategy and APSE consultants can share their expertise in doing so. Councils then need to develop specific business cases for a phased renewable energy programme applying new technologies. Capital outlay could be through prudential borrowing or private sector investment.
While it may be tempting in an atmosphere of budget cuts to look to handing over renewable energy schemes to external players who have resources to invest, maintaining local government control provides better value in APSE’s view. We have been examining the business case for investment in renewable energy and are producing guidance on this topic containing models which show that, for example, £4.5m capital cost of wind turbines, can generate net income of £0.8m per annum with a payback period of six years and net return 20 per cent.
We hope to see as many councils as possible grasping the renewable energy mettle. Such examples make it clear that, despite budget cuts, investment in green public sector infrastructure is a means of both tackling climate change and making best use of diminishing resources in this age of austerity.
Debbie Johns is principal advisor on environmental issues at the Association for Public Service Excellence (APSE).
Tel: 0161 7721880
Web: www.apse.org.uk
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