The energy entrepreneurs of local government

Councils are increasingly tapping into the income-producing effects of low cost energy. The area is a complex one, with incentives available from various sources, but one of the most direct ways for councils to save money is by creating low cost energy.

Bristol City Council has had an Energy Management Unit since the eighties. The unit runs a self-sustaining fund to research and build energy projects. The council is the first to develop its own wind turbines (which will go up this October after a decade of work). It already has a cluster of biomass boilers because it had the funding for them before much of the UK and has 550KW of photovoltaic cells, installed before the Feed in Tariff dropped.

“The emphasis is on carbon reduction,” says Paul Isbell, energy manager for the unit. “When you get a grant for something you have an emphasis on getting the money spent, but that isn’t having a true goal of achieving something. The key thing is the unit is self-funding, it gives us flexibility to be able to go out and do things in an environment with more and more cuts where people don’t have that flexibility.”

The unit has around £800,000 income per year and overheads of around £400,000. When it invests in something like a biomass boiler it can claim Renewable Heating Incentive back. “It means we act a bit like a business,” says Isbell. “We put the boiler in say a school and we claim the RIH money. We’ve got one big photovoltaic scheme where the income from that is funding the unit and that is the model we have to look at more and more. Local government is going to have to be more like small business in this area.”

Bristol’s Energy Management Unit also helps the city to access European funding. One project is funded through Energy Cities and in another one Bristol is partnering with a German company to help find creative ways to communicate energy measurement data.

Stoke is aiming to be energy self-sufficient by 2030 and was awarded £200,000 in funding from the National Endowment for Science, Technology and the Arts as one of six local authorities to receive its ‘creative council’ title.

“Our climate change strategy is not just about getting people to cut down on energy use, but it is about creating our own renewable energy and is producing great returns on investment,” said Councillor Andy Platt, cabinet member for green enterprises and clean city at Stoke. “Our work includes the use of biomass fuel and tapping into the underground hot water supply, turning them into fuel as part of a district heating project to support a city centre regeneration plan.”

Producing lower-cost energy should help the city’s ceramics industry, added Platt, and attract new business to the area. “With OFGEM predicting a 60% increase in energy prices by 2016, when it comes to companies that are looking to start up or relocate, having a cheaper source of local energy is an excellent selling point.”

Peterborough City Council recently signed an agreement to build a plant generating energy from waste. The facility will be able to process more than the current amount of waste the city produces and provide renewable electricity equivalent to the amount required to power 15% of Peterborough’s homes.

In addition, dealing with the city’s waste locally and with a council plant will save money, with the cost of landfill set to increase to £5m for 2014, from £3.5m this year. In a statement the council said: “The proposed energy from waste facility will make the era of landfills virtually a thing of the past by reducing the volume of our residual waste by 94%.”

The Carbon Trust has worked with 600 organisations on public sector programmes, helping to identify over 93m tones of carbon savings and cost savings of over £2.6bn.

But it seems that councils may be missing out on private funding for renewables projects. In a recent Guardian live chat on the subject BDO senior manager Kate Denham said: “Our corporate finance team have investors literally queuing out of the door to fund waste-to-energy or biomass for local authorities, that could easily heat the entire local authority property portfolio – but there seems to be little appetite to explore this type of financing from the public sector at the moment.”