London Energy Project’s 10 year programme to Energise the future of London’s energy landscape Barry Phelps, Head of Procurement and Joe Baker, Head of Carbon Management, Haringey Council 25 June 2019

Who is LEP? 74 LEP Member Authorities 2018 - 2020 Hillingdon Harrow Ealing Brent Hounslow Barnet Enfield Haringey Waltham Forest Richmond Kingston Wandsworth Merton Sutton Croydon Bromley Lewisham Lambeth Southwark Greenwich Bexley Redbridge Havering Barking & Dagenham Newham Tower Hamlets Camden Islington Hackney City H’smith & Fulham Ken & Chels Westminster Including London-wide organisations - London Fire Brigade, Metropolitan Police, Transport for London Regional Authorities - Hertfordshire CC, Oxfordshire CC, Reading Borough Council, Southampton City Council, Surrey CC, Worcestershire CC 37 NHS London Procurement Partnership (and South) members

LEP Group Profile: Strength in Numbers 45,000 Electricity supply points across London’s public authorities 3.5TWh Electricity consumed annually £750m London authorities’ annual spend on energy (electricity/gas) Potentially Zero CO2 emissions 10,000 gas supply points across London’s public authorities 5.5TWh Gas consumed annually

The issues to address Individual low contract value (only a few million) could not secure value through bulk buying Contract design was poor Contract management was weak Issues not properly resolved by suppliers Expensive, long, and risky procurement exercises Common problems - Knowledge not shared between LAs Poor prices from suppliers Energy projects design being replicated across the LAs with little design and delivery sharing knowledge Suppliers wanted standardisation of approach Insufficient evidence as to what we collectively could achieve and deliver

2018-2020 Working together toward LEP Goals keeping energy & water affordable The London Energy Project 2018-2020 Working together toward LEP Goals Stronger together (Collaboration) combined expenditure improved products and services innovative commercial models/tech. resilience and business continuity Cheaper (Savings) contain costs reduce price/ contractual risks better terms and conditions appropriate price risk management options/ improved commercial outcomes Better (Commercial & Innovative) products, services, delivery models that meet our business requirements almost bespoke service specifications, no additional costs Faster (Efficiencies) maintain aggregation/ collaboration reduce significant back-office costs respond to new regulatory requirements on a once for all basis

London Energy Project Trajectory 2007-2018 2008 2009-2010 2011-2012 2013-2014 2015-2016 2017-2018 LEP launches Energy Value for Money Assessment LEP launched as a change management programme, funded by Capital Ambition London spends £300m pa on energy London spends £350m pa on energy London spends £400m pa on energy Water market deregulation London authorities managing utilities in isolation LEP develops Water SOR/ conducts pre-market engagement with water market 50% London authorities adopt Energy Flex Contracts LEP joint procurement CRC Audit Service Framework LEP Energy Annual Achieved Prices Benchmark launched Fixed price energy contracts the norm 35 authorities renew their LEP MOA (mixed community) First LEP Energy Statement of Requirements (SOR) developed LEP wins national GO Award for Best Procurement Initiative Capital Ambition closes LEP joint procurement water & ancillary services call-off contract Evidence Gathering – threat to established ways of working 100% LEP authorities adopt Energy Flex Contracts 35 authorities commit to joint MOA and direct funding of LEP work programme Enhanced LEP Energy Annual Achieved Prices Benchmark launched CRC EES Phase 1 launched Energy Flex Contracts negotiated with CPBs and introduced to London authorities Updated LEP Energy SOR/ conducts pre-market engagement with energy market CRC Phase 2 begins National RIEP funding LEP’s first CRC training & guidance service CIPS Supply Management Awards Finalist SRM National GO Awards Finalist BPI

LEP Intelligent Client Value, Resource Efficiency, Monitoring Category and Supplier Management Category Development - new energy and water supply contracts Shared Supplier / Contract Management - energy and water suppliers and service providers Pan-LEP Procurement Options Appraisal and Statement of Business / Technical Requirements Better Use of Resources Street Lighting VfM Review Bill Validation Standards, & Bureau Practice Energy Management Software Improvement Improved Data Quality & Management Information Commercial Options Demand Reduction & Generation Utilities Procurement Value for Money Benchmarking - Annual Achieved Price Assessment traded energy prices Aggregation Benefits Analysis - Maximise Authority-specific VfM contracting support Leadership & Representation Strategic Supply Market Influence Senior Managerial Guidance /Business Continuity Government/Regulator lobby and represent our sector’s interests Carbon Compliance & Environmental Improvement Carbon Compliance Support and Audit Service Legislation/Regulatory Updates and impact plan Emerging Technology & Industry Innovation Updates & Implementation Guidance Webinars/ Teleconferences Specialist Support to Build Capable and Agile Workforce Workshops, Training Peer Focus Groups, Development Opportunities Support for Authority Business Programmes

Utilities – Price risk and budget management Commodity prices are volatile Managing price risk supports effective budget management New risk models needed to deal with short term supply & price volatility of wind, solar etc. Cost could go up by ~ 25% in 3 years without action Cashable savings impossible on price alone Government pass-through costs Cost of carbon Brexit Underlying non-energy costs are rising and need action Infrastructure Demand response New generation

Utilities – Price rises

We’ve learned that buying off the shelf doesn’t serve us Our 10 years experience tells us that: buying the standard market offering doesn’t reduce overall cost and deliver the savings, efficiencies, sustainability, community benefit, budget control and VfM we want and need all authorities can achieve greater benefits more quickly and with reduced risk than if acting alone or in small groups, now and in future Simplify & consolidate supply chain Suppliers deliver what we need Managing budget and energy price Local policies and priorities More control, easy to manage Fit our business practices, operational efficiencies Retain aggregation, suitable risk products, ability to sell Local apprentices, SME, green energy, low carbon, EV roll out LEP-managed contracts designed to offer different route to market and price risk products with enhanced specification to typical CPB contracts

Seeking a Big Prize! Pan-LEP energy and water procurement is a big opportunity, which can shape markets Suitable commercial terms, risk products, suppliers, control of supply chain Able to trade electricity, develop local apprentices, SMEs into supply chain, low carbon, London Living Wage, education packs, demand reduction, etc Water Resource? Pollution? Renewable? Local Economy? Local Community? Education? ©line.do

LEP working for members Long-term commitment to shared strategy Project leadership/ facilitation by a category-expert team Common goal / Formal compact (MoA) Dedicated Market Intelligence / Market-shaping remit Strategic impact & operational benefits independently verified throughout the Programme Proven approach to market engagement so the contracts, products and services make commercial sense for all users Proven approach to harmonising public sector customer requirements Customer (member)/ Supplier upskilling

Benefits Our long-term approach has helped member authorities realise £60m savings - avoided costs.  Lobbying and getting regulations changed or simplified Compliance and Reporting – Best Practice Back-Office transactions Resolving contractual disputes and contracts that meet needs Procurement costs and efficiencies, Training, Contract Management

London Energy Project’s 10 year programme to Energise the future of London’s energy landscape Barry Phelps, Head of Procurement and Joe Baker, Head of Carbon Management, Haringey Council londonenergyproject@haringey.gov.uk 25 June 2019