What’s The Big Idea? The Energy Economy. It’s the Energy Economy Growth in a Time of Recession Opportunities in the Green Economy Southampton’s Track.

What’s The Big Idea?The Energy Economy

It’s the Energy Economy

• Growth in a Time of Recession• Opportunities in the Green Economy• Southampton’s Track Record• The Challenges• Southampton’s Vision• Delivery Projects• Next Steps

Growth in a Time of Recession

• We want growth but no one wants to invest• Green opportunities?

FiT (Feed in Tariff) CRC (Carbon Reduction Commitment) RHI (Renewable Heat Incentive) ECO (Energy Companies Obligation) GIB (Green Investment Bank) Low energy baseline

Southampton’s Track Record

BBC TV Studio’s

RSH HospitalCivic Centre

Southampton Solent UniversitySkandia Life

DeVere HotelQuays

Heat Station

IKEA Carnival

ABP

Polygon

West Quay

Southampton’s Track Record

• CESP – Euro £18 million upgrading 4 +1 tower blocks

• Community Heating• energy efficiency increased

by a factor of 10

• Solar PV in addition

The Local Challenge

• Energy prices continue to rise (energy inflation c10% pa)

• Security of supply will increase in importance

• Councils are exposed to market fluctuations

• Carbon Reduction Commitment

Energy Spend Profile

Council Spend@+4%pa

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Years

Cost

Council Spend Energy 1 Year Deals Energy 2 Year Deals (El) Energy 2 Year Deals All

Energy Spend

Time Now

Southampton’s Challenge:

Projected Southampton City Council Housing Electricity Heating Budget & Deficit

2011 Heat Budget - £3.5mHeat Account Deficit - £1.6m

• 19% increase in heat charges approved – July 2011.

• Current pass through cost of Electricity is 8 – 9 pence per unit.

2021 Heat budget = £9.4m and Heat deficit (due to rising fuel poverty) >£4m

• No reduction in carbon emissions

40 million kWh = 206,800 tonnes CO2

£0

£1,000,000

£2,000,000

£3,000,000

£4,000,000

£5,000,000

£6,000,000

£7,000,000

£8,000,000

£9,000,000

£10,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Heat Budget Heat Account Deficit

The Vision

• The Municipalisation of energy

• Building green investment across the City and the sub-

region

Southampton Energy - Strategic Actions

• A Strategic Approach to Delivery

• Capturing the benefits of partnership working both locally and nationally

• Business case development (feasibility, funding, delivery structures etc)

• Facilitation versus Direct Delivery

• Working with commercial partners and the Universities

Building the corporate capacity to support a strategic programme

Local Authority Energy Partnerships

• The ‘Oxford’ national LA partnership (up to 30 Local Authorities)• Local partnerships (ECO, Green Deal, Collective Switching)

• Creating a joint capacity to deliver through sharing best practice, technical capacity and IP

• Supporting a corporate approach (finance, legal, procurement etc)• Building required economies of scale for finance and funding (project

pipeline)

• Supporting other strategic benefits (Economy, Anti poverty, Health etc)

Local Authority Delivery Issues

• Why should Council’s invest?• Delivery structures (ESCOs)• Reporting of savings/avoided costs• Management Issues:

Design, Build, Operate and Maintain A smart client role

Energy for Housing - Strategic Drivers

• The Council’s energy ambitions (SEAP) • Fuel poverty for residents and control over current and

future energy costs• Building performance and long term maintenance and

replacement costs• Potential revenue streams • Reducing CO2

Energy Company Obligation (ECO) Funding

ECO for Housing • Initial Euro 50 million investment to 2015 (Southampton)• Euro 200 million over 5 - 7 years • Funding for Insulation and Heating improvements • A partnership tender (November)• A regional partnership (c Euro 500 million)

• ECO and Green Deal for privately owned homes

Benefits for the Green Economy in Skills, Training and SMEs

District Energy

• High level technical and financial assessments in selected housing areas using different technologies

• City Centre network expansion (e.g. Station Quarter, Holyrood)

• Southampton Football Club

• Housing Schemes

Thornhill District Energy Scheme

• A whole estate approach (Euro 50 million scheme)• New heating, hot water and insulation for 1,600 residents• Initial energy cost savings of up to 20%• Future protection from price rises• ECO Capital Support • Reduced capital and maintenance charges• Council revenue from generated electricity• Opportunities for expansion

Corporate Built Estate

• Energy Efficiency Improvements• Solar PV schemes (e.g. corporate buildings and housing)• Heating upgrades including Renewable Heat schemes• Energy Performance projects

Schools investments (retrofit and new build) - Salix funding

Future opportunities (public and commercial)

Some Next Steps

• ECO works commenced on 3 estates before end of 2013• DE scheme commenced Spring 2014• A further Solar PV programme in 2014• Expand City Centre DE network 2014/15• Expand Thornhill Network 2015• Other DE and communal heating schemes from 2015