Energising your Budgets Bruce Pittingale Carbon Special Reserve

“It’s ridiculous that the 1976 Local Government Act prevents councils from selling electricity from local wind turbines, or from anaerobic digestion. “I want to see this repealed and by the end of the year I hope local authorities will be able to sell electricity from renewables – generating revenue to help local services and keep Council Tax down. Local communities can truly benefit from the low-carbon transition.” Chris Huhne Secretary of State, DECC

Now Councils are encouraged to deliver budget for the general fund Via the generation of small scale renewable energy plants of up to 5 Megawatt Feed in Tariff That situation was addressed on August 18th 2010 and is now operational

Feed in Tariff At present the Feed in Tariff (FiT) or Clean Energy Cashback Scheme is provided for the following technologies: –Photo Voltaic (PV) arrays –Wind Turbines –Anaerobic Digestors –Hydro projects Guaranteed payment for generating electricity Any energy used by national grid sold separately Own use electricity, free of charge to use. Feed in Tariff

Kilowatt Peak The peak kilowatt input or output of a device, for example the highest possible output from a PV solar panel under ideal conditions. This is also known as its 'rated capacity'.

How the Feed in Tariff is built up for an existing installation. Generator National Grid Saving units provided to you by National Grid at present Building using green energy All units generated are paid an amount per unit no matter where it is used by your energy supplier (£various) Any excess units are sold to the National Grid through your energy supplier (3 pence per unit)

The tariff levels for the electricity financial incentives (pence), calculated to offer between 5-8% return on initial investment in the technology are: Tariff levels for electricity financial incentives TechnologyScaleTariff level for new installations in period (p/kWh) [NB tariffs will be inflated annually] Tariff lifetime (years) Year 1: Year 2: Year 3: Anaerobic digestion≤500kW Anaerobic digestion>500kW Hydro≤15 kW Hydro > kW Hydro >100kW - 2MW Hydro >2kW - 5MW PV ≤4 kW (new build) PV ≤4 kW (retrofit) PV >4-10kW PV > kW Wind ≤1.5kW Wind > kW Wind > kW Wind > kW Wind >500kW - 1.5MW Wind >1.5MW - 5MW

Types of Possible Ownership Sole ownership: For this to be undertaken, the landowner will need to provide the capital required to install and purchase the renewable technology. The capital is returned between nine and twelve years at a return of 8.3% per year or more. Arrangements are also made to ensure that the landowner takes its own electricity use from the technology through the National Grid.

Types of Ownership Landowner/ Financier Partnership: This option is available where the landowner works with a banker or partner to CSR to provide the capital investment required to deliver the turbine and sharing the profits from the technology on a percentage basis as well as providing free electricity to the landowners of the project.

Types of Ownership Bank Loan:- The provision of a bank loan to the landowner to facilitate the construction of the technology, payments from FiT are then utilised to pay the interest. Obviously, this is a more speculative option as interest rates may vary widely over the life of the technology or whilst the loan is repaid. Types of Ownership

Rented Land:- The Council provides the site for installation of technology. The partner developer installs and operates the technology commercially and provides a lands rental to the landowner for the site where the annual payments per megawatt installed is available. Rents are tied to the output of the technology and can vary from year to year with a minimum rental megawatt being agreed, which the landowner will receive on annual basis. Types of Ownership

Community led projects:- Working with a community in the provision of capital, repaid via the Feed in Tariff, delivering low carbon energy whilst ensuring community buildings are utilising low cost electricity. Types of Ownership

The next Steps Develop portfolio of sites in partnership with Asset Manager/ Community leaders Provide sites to Carbon Special Reserve (CSR) to assess technologies CSR assess sites and report back to Council preferred areas Preliminary approval of sites to take forward by Council and CSR CSR to write reports on approved sites to attract technology developer CSR assists Council in developing structured delivery plan CSR develops arrangements with partners to deliver the identified technology Planning department outlines any challenges from chosen sites

Timelines for a wind turbine ProcessTiming Minimum time elapsed Maximum time elapsed Transfer confidentiality agreement months3 months6 months Developer/ partner agrees to move forward 2 months5 months8months Signing of Option Agreement 1 month6 months9 months Signing of Heads of Terms agreement 3-6 months9 months15 months Planning application made 1 month10 months16 months Planning Permission attained 3-9 months13 months25 months Commencement on Site 2 months16 months27 months Generation commences 3 months18 months30 months

Expected budget produced for Council owned generator Landowner develops –Cost of 330kilowatt turbine, £790,000 –Budget for EIA and Planning, £75,000 –Total cost around £865,000 –Benefits, Generation tariff, £85,000p.a –Export Tariff, £15,000p.a. –Worth of 7,000 units used electricity, £15,000 –Income per year, £110,000p.a. Overall Income against expenditure, £1.02 million over 27 years

Expected budget produced for partnership owned generator Partnership development The figures for this option are variable dependant on the % income that a financial partner needs to invest. It may not be a comparative % as overheads will need to paid for no matter what level of investment is made

Expected budget produced for developer owned generator Developer provides 100% costs, 2 MW Outgoings, nil Heads of Terms payment, £500 once only Options payment,£1,000 once only Legal costs, £2,500, once only payment Construction Payment, £5,000 once only Land payment, min £8,000p.a. Overall minimum Income against expenditure, £ 225,000 over 27 years, average £8,333p.a.

First decisions to take!! Should the Council develop own income? Identify the basic concept to move forward on? Instruct Officers to deliver possible sites! As this is a financing opportunity, instruct Finance Officers to work with CSR to deliver best value!

Contact Details Bruce Pittingale, FRSA Carbon Special Reserve 3 the Bungalows Caston Road Carbrooke Thetford Norfolk, IP25 6TF Tel: Mobile: Web: