Decentralised Energy

1. 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 28th February 2011

2. 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 Our mission is to accelerate the move to a low carbon economy

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

4. Agenda • Introduction • Context of Decentralised Energy

5. UK CO2 emissions – reaching future targets

6. Timeline and National Policy Context

7. 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 CO2 Emissions *Code Level 6 includes both regulated and unregulated emissions and the definition of ‘zero carbon’ is currently being redefined

8. East Midlands in Context • 4.5 million people • 20% population growth by 2027 • 78,000 GWh total energy demand (excl transport) • 800 GWh from renewable energy (2007) ie 1% • 41 Mtonnes CO2 p.a. (10.3% of UK emissions) • 7% CO2 reduction since 1990

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

10. 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 CO2 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

11. Linking Planning and Investment Energy Spatial Plan

12. 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?

13. The DE Programme for the East Midlands

14. 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 CO2 reductions in the East Midlands, at lower unit costs through the development and delivery of a planned approach

15. Agenda • Introduction • Context of Decentralised Energy • The DE Programme

16. Decentralised Energy Process

17. 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

18. 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)

19. Heat Mapping • 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

20. 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

21. 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.

22. 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

23. 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

24. Agenda • Introduction • Context of Decentralised Energy • The DE programme • CT Experience and UK Market

25. Carbon Trust project list

26. Carbon Trust project list

27. Coventry City Potential Savings A city-wide Coventry district heating scheme, to provide heating to 35% of homes and businesses, would save 22,000 tonnes CO2/year (40% of total Council carbon footprint) Coventry study area’s total heating demand is 350,000 MWh/yr

28. 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

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

30. The First Step

31. 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

32. 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

33. 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)

34. Discussion • To what extent is there Corporate buy-in and commitment to developing and implementing projects to reduce CO2 emissions?

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

36. Step Two

37. Policy Development – Why and How?

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

39. 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...?

40. 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?

41. 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

42. Policy Development – Local Level

43. Policy Development - Powers & Incentives “Localism, Localism, Localism”! • The Localism Bill 2010-2011 • “The Bill will devolve greater powers to councils and neighbourhoods and give local communities more control over housing and planning decisions”

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

45. 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 CO2 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?

46. Next Steps

47. Thank you!