Agenda item

To receive a report from the Director of Regeneration & Environment detailing progress on development of the Lee Valley Heat Network Business Plan and seeking approval to the inclusion of funding for the scheme in the capital programme.            (Report No.25A)

Please note Report No.27A on the Part 2 agenda also refers.

Members are asked to note:

·                The Phase I Business Plan was approved by Cabinet on 23 July 2014.  Council is only being asked to approve the addition of funding on the Council’s Capital Programme to support development costs through to financial close in September 2015.  (Key Decision – Reference Number 3706)

·                The additional appendices referred to in the report have previously been made available for members with the Cabinet agenda.  A reference copy will be available in the Members Library, Group Offices and with this agenda as a supplemental pack on the Democracy page of the Council’s website.  If required additional copies can be obtained by contacting James Kinsella (Governance Team).

Councillor Sitkin moved and Councillor Stafford seconded a report from the Director for Regeneration and Environment (No.25A) detailing progress on development of the Lee Valley Heat Network business plan and seeking approval to the inclusion of funding for the scheme in the capital programme.

NOTED

1.         The Phase I Business Plan had been approved by Cabinet on 23 July 2014 and referred on to Council in order to approve the addition of funding in the capital programme to support development costs through to financial close by September 2015.

2.         Additional information in support of the capital funding requirement had been outlined in an accompanying report (No.27A) listed as Item 1 on the Part 2 Council agenda (Min.55 refers).

3.         The aims behind the Lee Valley Heat Network (LVHN) as detailed with section 1 of the report which included the opportunity to deliver the significant economic, environmental and social benefits, detailed in section 3 of the report.

4.         The risks identified in relation to delivery of the LVHN associated with its status as a large-scale capital infrastructure project, as detailed in section 1 and 7 of the report.

5.      The significant interest already generated in respect of development of the Network as detailed in section 3.5.8 of the report.  This had included support and funding from the Greater London Authority, as detailed in Appendix 5 of the report.

6.      The timetable, delivery mechanism and Procurement Strategy developed for delivery of Phase I of the LVHN as detailed in section 3 of the report.

7.      Development of the Business Plan had been supported by detailed external technical, commercial and legal advice from consultants with recognised experience in District Heat Networks.

8.      Whilst not opposed to the concept behind Heat Networks, concerns were expressed by the Opposition Group in relation to the following issues:

a.         The significant financial risks associated with delivery of the project given the current constraints on the Council’s capital and revenue position;

b.         The commercial viability of the Business Plan given the identified need to secure sufficient consumer demand and progress still to be made on the Meridian Water development.

c.         The complexity in developing and maintaining energy efficient district heat networks.

9.      In response to the concerns expressed the Leader of the Council supported by the Cabinet Member for Economic Development advised that the risks associated with the Business Plan and delivery project were fully recognised.  The potential to deliver a sustainable heat network was however seen as a unique opportunity to deliver the economic, environmental and social benefits identified as well as linking with energy strategy and policy at a national, regional and local level.  Delivery of the project had been planned in tranches, to ensure that the Council’s exposure to financial risk was managed with the final decision relating to the overall capital investment not required until demand had been confirmed and the various procurement exercises completed.

A lengthy debate then followed during which members felt it would be beneficial to consider the supporting financial detail contained within the Part 2 report on the Business Plan.  Members therefore agreed to continue the debate in Part 2 of the agenda.