An opportunity to deliver
Submitted commercial in confidence
July 2010
Overview
Project Partners
Introduction Introduction The reversal of the ban preventing local authorities generating revenue from renewable electricity is a significant opportunity for local authorities to secure beneficial income streams. The formation of public private partnerships to deliver local wind farms will enable design, planning, power transmission and finance elements to be undertaken by an experienced partnership, with the track record and resources to deliver. Local Enterprise Partnership Outline proposals for the formation of Local Enterprise Partnerships (LEP) have been requested to be submitted by 6th September and it is recognised that collaboration with business in the local area is crucial to the success of LEP’s. In addition, the ability to bid into a £1 billion regional growth fund (RGF) for finance can provide funding for authorities wishing to take an equity stake in a renewable scheme. Clear indications are that the ability to return investment will show compliance with the intent of the ban reversal and will be considered favourably against any RGF bid. Revenue generation through an equity stake The model detailed within this document is designed to meet the individual objectives of the local authority whilst drawing on the specific expertise of each partner. In doing so the equity stake held by the authority and the principle partners can be adjusted to suit the authority’s objectives whilst providing a model that is fully replicable.
Land holdings The model presented is based upon a public private partnership to development onshore wind farms using either local authority or private land. In both cases the partnership works in conjunction with British Telecom. Suitable sites not within authority ownership can present viability with revenues being generated from power export and through payment from Renewable Obligation Certificates or Feed in Tariff mechanisms. The ability of the local authority to provide suitable land presents additional financial benefits associated with landowner royalties and land rights payments, which can
be used to meet or supplement the authority’s equity stake. Ownership Concept Suitable site’s for the installation of wind turbines have been identified across the region by Banks Developments. Some of the turbines on a site will be wholly owned by British Telecom with the remainder owned by the other partnership members. This will enable connection costs to be shared to increase viability. Where authority land is used the land owner royalties will be paid by British Telecom, which can contribute towards or even meet the authority’s equity stake. Power output The power generated by the partnership turbines will be exported via Npower and can be sleeved to provide offset to the local authority whereby the power will be credited against current grid usage. The power generated by the British Telecom turbines will be credited against BT accounts by Npower. Income The authority can expect to generate savings via the offsetting of electricity against these current Npower accounts, whilst also accessing a proportional share of the income from any export sales. In addition, when the wind farm is located on authority land, land owner royalties can also be expected. Local Authority or LEP The authority will in its collaboration with the partnership be able to provide revenue generation from green energy, whilst also providing
energy security and delivering protection against future increased energy costs. In addition the model presents significant bid potential through the regional growth fund. The ability to take a variable stake in the project and to offset grid derived power can reduce expenditure and give the authority resources to help assist in the financing of follow on projects. In addition, the option to gain community support from areas local to proposed sites opens up revenue opportunities to local communities who could benefit from a share in the revenue to support local projects. Carbon Savings Indications are that carbon savings resulting from wind farms located within authority boundaries may be credited to the authority. British Telecom British Telecom has given full support to the scheme and would look to take full ownership of a turbine or turbines on any given site. The turbine and its generated output would be used specifically to provide electricity to BT operations and will be routed via the existing contract with Npower. Landowner royalty payments made to the local authority as landowner could contribute to an equity investment by the authority. Npower Npower holds accounts with both the authority and British Telecom are able through a partnership agreement to pass the power from the turbine to the grid providing an offset arrangement against current grid derived power accounts.
Npower have significant experience delivering and facilitating the distribution of green energy and have the ability to provide critical energy services to the scheme, particularly where power is credited against areas of fuel deprivation. Banks Developments With a track record of achieving planning consent, engineering and constructing onshore wind farms, Banks Developments are one of the largest and most successful development teams in the UK. As the primary developer Banks are able to provide equity and resource contributions to build and operate the wind farms; and have already undertaken a study of potential sites across the North East region to identify potential sites.
UK Sustainable Energy As a registered Ofgem generator and engineering support consultant advising on energy supply contracts, Newcastle based UKSE provides engineering and project coordination roles whilst identifying ongoing development opportunities for future schemes.
Contact For further information please contact:Don Lord ESP Ltd 13 Quay Level St Peters Basin Newcastle Tel 0845 519 5912 don.lord@espprojects.com