Decision - Home Energy Efficiency Investment Options - Installation of Solar Panels to council owned homes

(1)   That Cabinet approves a capital programme budget up to a maximum of £15.0 million for Solar Photovoltaic Panels on council housing stock to be financed through unsupported borrowing in the Housing Revenue Account, which will only be drawn against subject to the approval of the Strategic Director for Place and the Director of Finance, in consultation with the Cabinet Member for Housing to proceed with the scheme.

(2)   That authority be delegated to the Strategic Director for Place, in consultation with the Cabinet Member for Housing to approve the planning, supply, installation and maintenance of the panels via an approved framework agreement and a call off contract or contracts under an approved framework agreement.

(3)   That Cabinet notes the outcome of the initial options appraisal undertaken by Climate Energy, indicating that there is an outline business case to support delivery of a solar photovoltaic scheme across the council housing stock and to meet strategic housing and other council priorities, including private sector housing renewal, reducing fuel poverty and reducing carbon emissions.

(4)   That Cabinet notes the procurement exercise to establish the Solar Bourne framework agreement undertaken by Eastbourne Borough Council with involvement from partners in the BEST consortium, and that the costs identified through the above procurement further support an outline business case as indicated by the initial options appraisal work.

Approval is required now to realise the benefits of the Feed in Tariff scheme and to take advantage of any opportunity this offers the Council to gain investment and energy savings before the Feed in Tariff is reviewed in April 2012.

Approval is required now to realise the benefits of CO2 reductions and the provision of free or cheap electricity to tenants who may be living in, or at risk of, fuel poverty.

To realise and maximise the additional benefits outlined in this report.

The Council has worked with partners in the current BEST consortium to establish the Solarbourne framework agreement for the provision of the planning, supply installation and maintenance of solar PV panels in order to establish actual costs and to take advantage of any potential for creating economies of scale. The outcome of this procurement process, led by Eastbourne Borough Council, allows further consideration of the business case and appropriate funding model.  The actual costs identified in the framework agreement support the business case developed as part of the initial options appraisal by Climate Energy. Both the framework agreement and the options appraisal indicate that the greatest benefits to the city could be achieved through a fully owned and funded model.

Solar PV installation companies, together with the backing of private investment companies, are willing to pay the capital costs to install solar PV panels onto the roofs of homes if, in return, they receive the Feed In Tariff (FIT) incentive over a 25-year period. It may be possible for the Council to generate additional receipts, by some form of “profit share” or roof rental agreement. This would be in addition to an element of free or cheap electricity and the CO2 savings such a scheme would generate. There are potential additional benefits in this option including; no or less capital borrowing required and reduced or shared risk related to delivering the installation and ongoing maintenance and monitoring of solar PV installations. However this model would be unlikely to deliver the same benefits outlined in the report, and the income would be significantly less than that achievable through a fully funded and operated model. The Solarbourne framework agreement includes an option for the ‘rent a roof’ scheme. However only one supplier is on the framework and the information available to us at this stage is not sufficient to calculate what the expected return would be.

Indications from the initial options appraisal, by Climate Energy, suggest that on balance a fully owned and operated scheme has the potential to provide significantly greater benefits to the city as a whole and that risks associated with this model can be adequately mitigated through in-house and procured expertise. These initial indications have been backed up through the Solarbourne framework agreement procurement exercise. A fully funded and owned model of delivering a solar PV scheme has the potential to create significant income, generated by the Feed in Tariff payment, to the council over a 25 year period. A fully owned and funded model gives the council greater influence over delivering the benefits outlined in this report.

The focus of work to date has been on the procurement of the Solarbourne framework agreement to inform a business case for proceeding with the installation of solar PV on council housing. We are not committed to accessing this framework and have explored options for accessing other frameworks to provide further opportunities and as a contingency if issues arise that prevent the council from maximising potential benefits through the Solarbourne framework agreement. Legal and procurement advice has been taken on other existing framework agreements for supply and install of solar PV which are accessible by the council and meet our needs. Officers continue to assess these options to ensure benefits are maximised for the council and local residents.