Decentralised Energy Supporting Climate East Midlands in the development of local renewable and low carbon energy Ben Lynch & Barry Knight – Carbon Trust Alison Crompton & Kirsten Elder - AECOM 28 th February 2011

Our mission is to accelerate the move to a low carbon economy We cut carbon now by Providing specialist advice and finance to help organisations cut carbon Setting standards for carbon reduction We cut future carbon emissions by Opening markets for low carbon technologies Leading industry collaborations to commercialise technologies Investing in early stage low carbon companies

 Introduction  Context of Decentralised Energy  The DE Programme  CT Experience and UK Market  Internal Engagement  Policy Development  Next Steps Agenda

 Introduction  Context of Decentralised Energy Agenda

UK CO 2 emissions – reaching future targets

Timeline and National Policy Context

Code level 1 – Part L 2010 Code level 2 – Part L 2010 Code level 3 – Part L 2010 Code level 4 – 25% < Part L 2010 Code level 5 – 100% < Part L 2010 Code level 6 – Zero Net CO 2 Emissions *Code Level 6 includes both regulated and unregulated emissions and the definition of ‘zero carbon’ is currently being redefined

East Midlands in Context 4.5 million people 20% population growth by ,000 GWh total energy demand (excl transport) 800 GWh from renewable energy (2007) ie 1% 41 Mtonnes CO 2 p.a. (10.3% of UK emissions) 7% CO 2 reduction since 1990

We can no longer consider a single building or single energy sources Energy sharing is a key element

Advantages of Decentralised Energy Improved security and diversity of supply Decarbonised local energy supply in line with national policy objectives Decoupling of economic growth and development from CO 2 emissions Use of strategic infrastructure to provide wider benefits to businesses and community Strengthening of the region’s position as a low carbon economic area

Linking Planning and Investment 1. District Planning Policies 2. Cross Boundary Policies 3. Infrastructure Contribution funds 4. Public sector commitment 5. Energy Services Delivery 6. Existing Network investment Energy Spatial Plan

Key Questions What is your understanding of Decentralised Energy? Have you identified opportunities for potential Decentralised Energy schemes within the authority? What are the key issues for you in developing Decentralised Energy projects?

The DE Programme for the East Midlands Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Programme Aims Aim 1: Provide bespoke support to improve knowledge across the East Midlands on Decentralised Energy Aim 2: Carbon Trust to act as an independent advisor in discussions with financers and delivery partners Aim 3: Facilitate collaborative learning between Local Authorities and provide a knowledge hub for shared learning Aim 4: Develop the business case for investment in DE across the East Midlands Aim 5: Create a lasting relationship between the Carbon Trust and participant authorities Aim 6: To achieve CO 2 reductions in the East Midlands, at lower unit costs through the development and delivery of a planned approach

 Introduction  Context of Decentralised Energy  The DE Programme Agenda

Decentralised Energy Process Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Political Support and Commitment Engage with key internal stakeholders Capacity Building Win Hearts & Minds: Raise awareness and understanding of DE Engage Senior Members Establish internal working group Secure DE as relevant priority for the borough Engage key stakeholders Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Policy Development Strategy and Policy Identify strategies to facilitate the implementation of DE Ensure consistently worded DE policies (e.g. waste, housing, energy, planning, LDF, Core Strategy) Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery Using DEMaP methodology, accumulate heat loads into clusters East Midlands DECC Study - Strategic analysis of the region for renewables and decentralised energy (report due March 2011) Produce a viable heat load profile for CHP/DH project opportunity Identify key stakeholders - public and private sector Heat Mapping

Detailed Feasibility Studies Viability Options Analysis Feasibility studies, engage stakeholders to identify infrastructure routes and constraints Test operation scenarios and CHP sizes, identify anchor loads and lead organisation Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Procurement Strategy Procurement and Contracts Identify SPV options for borough and stakeholders Advice on options for heat tariffs, use of electricity Licences, revenues and ownership issues, maintenance contracts, risks and liability Standard Heads of Terms, MoUs, Contract templates etc. Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Developing the business case Resource Commitment Identify and secure budget to carry out options Appraisal and feasibility study for DE projects Develop implementation programme Secure internal resource to deliver the DE project Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Develop ESCo Model and Delivery Vehicle Inter-dependent on (1) What are the ESCo objectives, and how should the model reflect this? –Maximise revenue –Tackle fuel poverty and other social objectives? –Reduce public sector energy costs? –Finance –Risk Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

 Introduction  Context of Decentralised Energy  The DE programme  CT Experience and UK Market Agenda

Carbon Trust project list Projects InternalStakeholderengagementPolicyDevelopmentHeat mappingFeasibilitystudiesProcurementStrategyBusiness CaseAdvice onImplementation Manchester Region Manchester City √√√√√√√ Oldham√√√√√ Bury Stockport√√√√√√√ Rochdale√√√√√√√ Manchester Met University √√√ Manchester University √√√√ West Gorton√√√√√√

Carbon Trust project list Projects InternalStakeholderengagementPolicyDevelopmentHeat mappingFeasibilitystudiesProcurementStrategyBusiness CaseAdvice onImplementation Other Areas Coventry√√√√√√√ Bath & North East Somerset Council √√√√√√ Leeds Council√√√√√√√ Redhill Council√√√√√√ Crawley Council√√√√√√√ Thurrock Council √√√√√√√ Bristol√√√√ Stoke on Trent√√√√√√ Other√√√√√√

Coventry City Potential Savings Coventry study area’s total heating demand is 350,000 MWh/yr A city-wide Coventry district heating scheme, to provide heating to 35% of homes and businesses, would save 22,000 tonnes CO 2 /year (40% of total Council carbon footprint)

Planners’ Toolkit Assists planning officers to determine compliance with low carbon energy generation policies and help the developer submit a compliant application Developed by Carbon Trust, Encraft and planning officers from Coventry, Solihull and Warwickshire districts

 Introduction  Context of Decentralised Energy  The DE programme  CT experience and UK Market  Internal Engagement Agenda

The First Step Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Project sponsor – choosing the right person Which skills will this person have? –Technical –Planning – policy or development –Financial –Communications –Knowledge of local businesses No one person will have all of the skills so it will be important to recognise that he/she will need to draw upon others to augment their own skills

Choosing the right person Someone who wants the role Someone who has the time – it is part of their day job Someone who will be able to form a Working Party and who will report to a Senior Level Steering Group

Also required... Able to secure political will Understand who the key internal stakeholders are Understand the wider need for engagement Secure long-term commitment To be discussed at Workshop No.1 (April)

Discussion To what extent is there Corporate buy-in and commitment to developing and implementing projects to reduce CO 2 emissions?

 Introduction  Context of Decentralised Energy  The DE programme  CT experience and UK Market  Internal Engagement  Policy Development Agenda

Step Two Political Support and commitment Policy Development Heat Mapping Detailed Feasibility Studies Procurement Strategy Developing the business case Partnering and Delivery

Policy Development – Why and How? Commitments National Corporate / Community Local Regional?

PPS1 & Climate Change Supplement Expects local authorities to encourage the uptake of decentralised, renewable and low carbon energy generation through the LDF

Draft PPS: Planning for a Low Carbon Future Replacement for PPS22 and Climate Change Supplement Reduced role of energy targets Emphasis on delivery of local heat networks through local policy Where is it now...?

Household Energy Management Strategy Former Govt strategy New focus on DH by removing barriers Encourages better use of surplus heat through carbon pricing Continued support by Coalition Govt ?

Regional Level Regional Spatial Strategy Policies LZC capacity study –Commissioned by East Midlands Councils –DECC requirement –Identifies potential renewable energy resource –Identifies areas of interest e.g. heat density Next step...turning opportunity into delivery

Policy Development – Local Level Local Development Framework Development Plan Documents (R) Core Strategy (R) Principle document which will replace Local Plans/UDPs Proposals Map (R) Site specific policies / Identification of areas of protection Area Action Plan (O) Such as ‘growth areas’ which require specific policies Other DPDs (O) E.g. Housing, employment, etc Local Development Scheme (R) Statement of Community Involvement (R) Annual Monitoring Reports (R) Supplementary Planning Documents (O)

Policy Development - Powers & Incentives “Localism, Localism, Localism ”! The Localism Bill “The Bill will devolve greater powers to councils and neighbourhoods and give local communities more control over housing and planning decisions”

Policy Development - Powers & Incentives Community Infrastructure Levy General Powers of Competence Community Energy Fund Carbon Buyout and Developer Contributions

Discussion At what stage of development is your LDF Core Strategy? e.g. submitted to Secretary of State. Do you have policies in place relating to climate change and/or the reduction of CO 2 emissions? If yes: –Do they apply on-site energy targets for the generation of renewable energy? –Do they relate to low carbon energy such as CHP and/or district heating? –Have these policies been adopted or do they form material consideration?

Next Steps

Thank you!