Decision details

The Cabinet will be asked to approve proposals relating to the establishment of a Council-owned energy services company (ESCO), to be known as B&D Energy Limited, to deliver an energy investment programme which will bring environmental, social and economic benefits for the community and generate an income for the Council.

Further to Minute 115 (24 March 2015), the Cabinet Member for Finance, Growth and Investment presented a report on the detailed plans for the creation of a Council-owned Energy Services Company (ESCO), to be known as ‘B&D Energy Limited’.

The Cabinet Member referred to the main aspects and advantages of the ESCO, which were to:

·  catalyse investment and funding for a wide range of energy-related investment opportunities that may not otherwise be available;

·  act as expert project developer and asset manager to optimise the use of existing and new energy assets;

·  assume technical, contract and performance risk related to energy projects and energy services;

·  supply heat, hot water and, subject to regulatory restrictions, electricity to residential and commercial customers;

·  develop community-owned energy enterprises;

·  work with a wide range of external partners to develop schemes, drawing on private sector expertise for the benefit of the Council and community; and

·  compliment the Council’s holistic approach to tackling domestic carbon emissions, fuel poverty and providing affordable warmth.

The Cabinet Member outlined the costs associated with the establishment of the ESCO and the working capital required to support the initial projects under the Barking Town Centre District Heating Scheme, which represented the first of four proposed District Heating Schemes.  The Cabinet Member also clarified the position regarding the interest rate assumptions in the financial modelling and that the ESCO’s operations would not be supported by Government funding.

Cabinet Members spoke in support of the proposals and the Leader commented that B&D Energy Limited would be the largest scheme of its kind across London, supporting the Council’s aim to be recognised as “the Green capital of the Capital”.

Cabinet resolved to:

(i)  Agree the establishment of an Energy Services Company as a Company Limited by Shares, as group holding company for the purposes of producing and supplying low and zero carbon heat, power, energy efficiency and related services to the Council, schools and the community including residential and commercial consumers;

(ii)  Agree that the company be named 'B&D Energy Limited';

(iii)  Agree the establishment of a Special Purpose Vehicle(s) as required by B&D Energy Limited to develop, own and procure the construction, management and maintenance of heat and energy assets on a project by project basis for the purposes of risk management, financing and operational efficiency;

(iv)  Agree the following strategic aim and objectives of B&D Energy Limited:

(a)   The strategic aim of B&D Energy Limited is to develop and deliver the Council’s strategic energy and carbon reduction objectives;

(b)  The objectives of B&D Energy Limited are to:

·  deliver affordable heat, low carbon and renewable energy projects

·  reduce fuel poverty

·  create wider social and economic benefits for the community

·  generate income

(v)  Approve the initial B&D Energy Limited Business Plan at Appendix 1 to the report;

(vi)  Agree that a business plan be submitted to Cabinet for approval by the B&D Energy Limited Board on an annual basis thereafter or such other frequency as may be required for the approval of specific projects;

(vii)  Agree that B&D Energy Limited shall be established to provide heat and power to the following initial projects as the first element of the Barking Town Centre District Heating Scheme:

·  Gascoigne East regeneration area

·  Greatfields School Academy

·  Axe Street residential and mixed use development

·  Barking Town Hall and Abbey Leisure Centre

(viii)  Agree that the Council borrow £3.0m to on-lend to B&D Energy to fund the initial projects set out in (vii) above;

(ix)  Agree the provision of cash flow support of £1.7m from the Invest to Save reserve to establish B&D Energy Limited and to provide working capital;

(x)  Agree that B&D Energy shall develop District Energy Schemes for the following projects as set out in the Business Plan:

·  Barking Town Centre District Heating Scheme

·  Dagenham Civic Centre District Energy scheme including the Civic Centre, Becontree Leisure Centre and Ship & Anchor and Becontree regeneration schemes;

·  Heath Ward South West;

·  Village Ward West;

·  Thames Eastern End Thames View

·  Chadwell Heath

·  Village ward East

(xi)  Approve the following nominations as company executive directors of B&D Energy Limited and to delegate authority and responsibility to implement the B&D Energy business plan to:

·  Strategic Director for Finance and Investment

·  Strategic Director for Growth and Homes

·  Strategic Director for Customer, Commercial and Service Delivery

(xii)  Delegate authority to the Strategic Director for Finance and Investment to approve the selection and appointment of non-executive director(s) to provide sector expertise and support to the executive directors, in order to help deliver the objectives of B&D Energy Limited;

(xiii)  Delegate authority to the Strategic Director for Finance and Investment, in consultation with the Director of Law and Governance and the Cabinet Members for Economic and Social Development and Finance, Growth and Investment, to negotiate terms and agree the corporate, loan and contract documents to fully implement and effect the project(s); and

(xiv)  Delegate authority to the Director of Law and Governance, or an authorised delegate on her behalf, to execute all of the legal agreements, contracts and other documents on behalf of the Council.

(Part of this item was considered after the resolution had been passed to exclude the public and press from the remainder of meeting under the provisions of paragraph 3 of Part 1 of Schedule 12A to the Local Government Act 1972 (as amended), as the information related to the financial and business affairs of the Council and the public interest in maintaining the exemption outweighed the public interest in disclosing the information.)