A report detailing the outcome of the full business case for phase 1 of Solihull’s proposed town centre energy network was taken to the Council’s Cabinet session last night.
The network will utilise low carbon and renewable energy, distributing heat from a single Energy Centre, directly into town centre buildings via a system of underground pipes.
Despite the complex picture in the current construction and energy markets the business case for this exciting project has been successfully concluded, strengthened by emerging National Policy and the Council’s own net zero ambitions.
Full Planning approval for the Energy Centre building, which will lie at the heart of this network (on land next to Tudor Grange Leisure Centre), was granted in May 2021. Housing a range of renewable and low carbon energy solutions, including Air Source Heat Pumps and Gas Combined Heat and Power, the Energy Centre will provide heat and power to nearby public and private sector customers, including Council owned buildings, education campuses and commercial offices. These customers will benefit from a highly efficient and affordable new low carbon heat supply.
Currently, CO2 emitted from heating in Solihull accounts for almost 30% of the borough’s total greenhouse gas emissions (over 400,000 tonnes of CO2e annually).
For individual buildings, decarbonising heat is expensive and often disruptive to occupants. A town centre energy network enables existing buildings and new developments to benefit from centrally based low carbon heat generation with minimal disruption and in a cost-effective manner benefitting from economies of scale.
Since securing planning permission for the Energy Centre, the project team have continued working with partners to finalise a robust Full Business Case (FBC), which has now been concluded, and are in the process of completing the next steps to establish an Energy Services Company to appoint the contractor to build, maintain and operate the network.
So far, funding for this carbon saving scheme has been provided by the government’s Heat Networks Investment Programme (HNIP), with a further £2.9m recently awarded (subject to conditions) to help mitigate against current pressures in the construction industry and wider energy market. This is in addition to the £5.9m already secured from HNIP and previously secured West Midlands Combined Authority funding to develop the business case. The Council’s own investment in the project will be provided through £8.7m of prudential borrowing.
Underpinned by detailed financial modelling, the recently completed FBC forecasts that the project will be able to repay this borrowing, resulting in a small surplus over the lifetime of the scheme. With more customers expected to sign up as additional connection phases of the project are rolled out (each subject to further business case assessment), this rate of return will further improve.
Councillor Andy Mackiewicz, Portfolio Holder for Climate Change, Planning & Housing said:
“The UK government’s commitment to net zero emissions by 2050, and WMCA’s ambition to achieve this goal by 2041, supports the need to commence the switch of heat generation from fossil fuels to low carbon or renewable heat alternatives. Locally we are supporting the delivery of this ambition through the promotion of our very own Net Zero Action Plan (NZAP).
“The establishment of a heat network in Solihull town centre offers a clear opportunity to make significant reductions in CO2 emissions while offering customers greater certainty in a transitioning energy market. The potential carbon savings associated with our heat network are considerable. Phase 1 alone is projected to save 26,109 tonnes of CO2e over 25 years. That’s equivalent to the total annual emissions of over 5000 individual Solihull residents. Phase 1b, is projected to save a further 10,000 tonnes and future phases could provide an additional 70,000 tonnes reduction.
“While the financial modelling is complex, it demonstrates that an affordable position can be obtained with the ability to deliver both increased carbon savings and a greater financial return as further connection phases are rolled out. What we now have is a compelling business case which shows that, if done right, this scheme will eventually pay for itself while delivering a range of key benefits in the meantime. The carbon savings will make a material contribution towards the Council’s response to the climate emergency, while also providing good value to customers and to helping promote and encourage investment in Solihull Town Centre. This project also brings huge environmental education opportunities and builds further pride in Solihull’s low carbon commitment.”
First phase customers could be hooked up and start benefitting from the network from as early as Autumn 2024.
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