Agenda item

Heat Networks Delivery Approach

Decision:

Cabinet agreed to:

1. Support the zonal approach to heat network roll out in Plymouth, as set out in the report, and the procurement of a development partner to take forward these proposals to delivery;

2. Grant delegated authority to the Service Director for Strategic Planning & Infrastructure, in consultation with Cabinet Member for Environment & Climate Change, to determine the following matters in respect to the heat network delivery project:

(a) Approval of revenue business case;

(b) Procurement of development partner;

(c) Submission of an application to the Green Heat Network Fund to support the delivery of the first phase of the project; and

(d) Any other matter to secure delivery of the project, subject to such being within approved budget.

Minutes:

Councillor Briars-Delve (Cabinet Member for Environment and Climate Change) introduced the report and highlighted the following points:

a) Delivering a new Strategic Heat Network for Plymouth was a milestone in the mission to make Plymouth a Net Zero City;

b) Heat was the largest user of energy in Plymouth and accounted for around 28% of the total city emissions. Plymouth could not become Net Zero without action to decarbonise heat;

c) The development of heat networks was something that the council had recognised and was an objective incorporated into every climate emergency and Net Zero action plans since the Climate Emergency Declaration in 2019;

d) Plymouth had been recognised nationally by the Department for Energy Security and Net Zero as one of the 17 cities in its Advanced Zoning Programme;

e) By using an at scale approach to the work, two separate zones were identified which offered the greatest potential for deliverable heat networks. The largest was for a Strategic Heat Main in the southern zonal area which would be around two large waste heat sources, the Southwest Water Plant and the Devonport Energy from Waste Plant;

f) Rollout for the Strategic Heat Main would be in phases from 2026 to 2050. Phase one would include the university area, the civic quarter and Millbay. Phase two would include Derriford, the Hospital and Marjon University;

g) Annual carbon savings with full buildout for both zones had been estimated to be 31,000 tonnes of CO2;

h) Recent market engagement showed strong interest from private sector heat network developers who had significant investment to deploy;

i) PCC had met with independent legal and commercial advisors who helped identify and evaluate the different options for delivering the Strategic Heat Network;

j) On the basis of the evaluation, which included an assessment of risk and reward, it was proposed that the best route for delivering the project was through a City Council led procurement. This option did not require any capital investment from the Council as the project could be supported in other ways, including bidding for grants from the Government’s Green Heat Networking Fund;

k) It was crucial to make sure that benefits were secured for the people of Plymouth, for example incorporating measures in the contract to ensure local employment and training opportunities for residents;

l) The initiative would delivery ten wider benefits:

1. Deliver over £350 million of investment in green infrastructure over a period of 20 years with the first phase commencing in 2025, involving approximately £60 million of investment;

2. Kick-start Plymouth’s most significant opportunity to decarbonise heat;

3. Create around 400 direct green jobs and develop local capacity and green skills;

4. Provide businesses and residents with the lowest cost decarbonised heat;

5. Enhance the city centre as a location for investment;

6. Improve air quality by reducing harmful nitrogen oxide emissions;

7. Improve water quality in Plymouth Sound by capturing heat from the warm waste water before it is discharges from Southwest Water Works;

8. Improve the city’s energy security by reducing the dependence on fossil fuels for meeting heat demands;

9. Improve resilience to the adverse impacts of climate change by providing decarbonised cooling options and;

10. Deliver long term energy cost savings for buildings, including on PCC estate;

m) In 2023, the Labour Administration was elected under a manifesto which put green investment as one of its five key pledges. This £350 million plan was the clearest example of the environmental step change that the Administration was starting to deliver.

In response to questions, it was explained:

n) Various cities across the UK had been operating and running heat networks successfully;

o) The Council had gone down the procurement route to ensure their values were at the heart of the project;

p) The Council did not have the capacity or skills to run a £100 million energy company so the opportunity was to get private companies involved to provide the capital whilst maintaining PCC’s core values;

q) The 2021 Energy Act highlighted and detailed zonal opportunities which were would be part of the future of heating in large sections of the city;

r) There were ten main industry players working in the UK, and there was a positive response from the market engagement;

s) There were various funding streams including pension funding, which would be a 40 year plus long-term model which suited this type of infrastructure.