Agenda item

The Panel will consider a report setting out the outcomes of the Huddersfield District Energy Network Outline Business Case Study, the draft Cabinet report and proposed next steps ahead of Cabinet considering this issue on 20^th September 2022

 

Contacts:

 

John Atkinson, Group Leader – Energy and Climate Change

 

The Panel received a presentation by John Atkinson, Group Leader Energy and Climate Change in relation to the Huddersfield District Energy Network (HDEN). Mr Atkinson was joined by Katherine Armitage, Service Director, Environment Strategy and Climate Change and Rob Green, Environment Officer, Climate Change.

 

Councillor Will Simpson introduced the item by thanking the climate change team for the work completed in relation to the Climate Change Action Plan and the Environment Plan.

 

Cllr Simpson informed the Panel that the HDEN had been at the planning stage for some time, but in a short period of time, a huge amount of progress had been made.   He advised the Panel that the Department for Energy, Business and Industrial strategy had acknowledged the exciting opportunity the HDEN would bring.

 

Cllr Simpson explained that the project would maximise the benefit from Energy from Waste (EfW) and minimised the waste from it, contributing to the work the Council was making towards decarbonisation and ensuring the climate change objects were being met.

 

Cllr Simpson advised the Panel that ambitions were high, but the outcomes could not be delivered all at the same time, and the HDEN was a manageable project which could be built upon in the future.

 

Cllr Simpson read a statement from Councillor Naheed Mather, Portfolio Holder for Environment in which she explained that the HDEN project provided an excellent opportunity to reduce carbon emissions associated with our largest town and helped improve our future energy resilience, linked to how we processed waste in the district.

 

Cllr Mather advised that establishing a heat network would help ensure energy customers in Huddersfield had access to lower carbon and fair priced energy. Establishing the network as set out in the Outline Business Case was the first step, and that she intended to look at opportunities for how the network could expand and help Huddersfield further reduce its emissions for Council to address its priorities in future.

 

Cllr Mather continued that the project had been developed over several years and was supported by the Government's Heat Networks Delivery Unit.

 

Cllr Mather’s statement explained that she was pleased to support the initiative in terms of its ability to help achieve the Council’s climate goals and to achieve further co-benefits alongside the Waste Strategy.

 

Mr Atkinson then introduced the presentation to the Panel which gave information relating to the Outline Business Case and next steps for seeking Cabinet approval and implementation.

 

Mr Atkinson gave an overview of what a District Energy Network, also known as a Heat Network, was as follows:

 

·       A distribution system of insulated hot water pipes that took heat from a central source and delivered it to several buildings.

·       A long-lasting infrastructure to enable efficient delivery of heat and power from low carbon, renewable and recovered heat sources that otherwise could be used.

·       It was suited to urban areas where there was a sufficient density of energy demand.

 

Mr Atkinson then explained the strategic interdependencies in relation to the Strategic Case:

 

·       It contributed to the District’s Net Zero carbon emissions target of 2038.

·       A strategic opportunity to align the Council’s Waste Services Contract (renewed in 2025), with achieving the district’s net zero goal and providing an extra source of revenue for the EfW operator

·       A significant Council-led redevelopment via the Huddersfield Blueprint and Station to Stadium – sites could connect where possible, which in turn could make the area more attractive for developers.

 

Mr Atkinson informed the Panel that the scheme expected to save 111,000 tonnes of Carbon emissions versus gas boilers over its 40 year life span and save around 68% versus a typical gas boiler.

 

The critical success factors, Mr Atkinson explained, agreed through a series of workshops involving portfolio holders and senior officers of the Council, were:

 

·       Financial returns where the Council control the financial benefits

·       Future development which supported further expansion.

·       Procurement which would be completed in accordance with the Procurement Strategy.

·       Social, supporting the Councils objectives of regeneration and enhancement.

·       Environmental performance providing a clear strategy for affordable, secure and low carbon supply of heat.

·       Customer protection to ensure customers were receiving a good service.

·       Control where the Council was able to control the scheme ensuring project outcomes were met.

·       Schemes were able to access external funding.

 

The Panel was informed that in March 2022, the Government had launched the Green Heat Networks Fund, a 3-year £288m capital grant fund and the Council would be applying for this fund for Round 2 for over £8m for Commercialisation (up to £1m) and Construction.

 

The Panel was then introduced to the network design which sought to be flexible and adaptable for future long term aims. Phase one of the network would include Council sites plus four external partners.

 

The Panel was advised that backup heat would be provided by gas boilers, and thermal storage would be included to allow flexibility.  The proposed Energy Centre, based on Old Leeds Road would provide the backup gas boilers, energy storage and pumps for the network.

 

Mr Atkinson advised that following the engagement with portfolio holders and senior officers, Council ownership of an Energy Service Company was the preferred commercial option. This would maintain the Council’s ability to transfer ownership to the private sector in the future if it were valuable to do so.

 

The Panel was informed that commercialisation was the name given to the development of the outline business case through to the full business case stage that would take place between approval and 2024 at the cost of approximately £1.2m.

 

Mr Atkinson outlined the financial pre-requisites and commercialisation noting the interim funding of up to £200k from the Council Capital Plan and the external funding bid of up to 50% of the eligible cost and with £1m for commercialisation plus construction costs.

 

In relation to the next steps, the Panel was advised that the Outline Business Case was being considered for approval at the Cabinet meeting in September 2022.

 

Following a question from the Panel, Mr Atkinson explained that connection with the stadium would be considered as a connection in the future, but as the stadium demand could be ‘spikey’ consideration would need to be given as to whether connection would be a help or a hindrance.

 

The Panel noted the start date for anticipated construction was April 2024 but that the network route included the A62 which was undergoing major works with completion due in 2023.  The Highways Act stated following capital reconstruction, no further work should be done within the space of three to five years.

 

Mr Atkinson explained that timing relating to the commencement of work was not ideal, and the intention had been to incorporate the heat network pipework within the current A62 scheme.  However, the risk to incorporate the network infrastructure at this stage was too high, but that different technical solutions were being considered as an alternative to digging up the road.

 

The Panel suggested that screens in areas of Huddersfield, perhaps at the Energy Centre or in the new library or museum, showing data of how much energy was being produced could be installed and Mr Atkinson confirmed that would be considered as an option of the type of approach they were looking at.

The Panel noted that in relation to the coordinated approach with the waste strategy, the deadlines appeared quite tight, Mr Atkinson acknowledged this, which is driven by the waste contract timescales. He explained that the aim was to get the network up and running as soon as possible.

 

In response to a question from the Panel, Mr Atkinson explained that there was gas fired backup boiler capacity and electricity could be drawn down from the National Grid and heat could be provided by the backup gas boilers.

 

The Panel asked in line with the promotion of recycling and the reduction of waste if there would be a time when there was insufficient energy from waste to meet demand and conversely if excess energy was produced, whether this could be stored or sold back to the National Grid.

 

Mr Atkinson explained that there would be backup boilers in the Energy Centre which also had hot water energy storage units which was a way of holding a limited amount of energy in the system to smooth out the peaks and troughs in demand across the network.

 

Mr Atkinson explained that it would be for the Council to decide where the dividends from the scheme would be spent or invested.

 

In response to a question from the Panel, Mr Atkinson explained that there was a process of engagement with other teams within the Council in relation to the Huddersfield Blueprint.

 

RESOLVED – The Panel noted the Huddersfield District Energy Network report, the  information relating to the Outline Business Case , the next steps and thanked officers for their presentation.