Agenda item

Expansion of Energetik's Heat Network

To receive a report of the Executive Director of Resources on the expansion of Energetik’s Heat Network.

 

The Council is asked to:

 

1.    Approve the addition of £5m to the Capital Programme, in addition to the £32m budget approved by Council in March (KD5210), for the purpose of extending the Energetik heat network as detailed within Appendix A.

 

2.    Approve the total investment in the proposed expansion identified in Appendix A of £49m, comprising £12m grant funding and £37m borrowing as included within the Capital Programme, to fund the proposed expansions, as follows:

a.    £12m grant funding from the Heat Networks Investment Project (HNIP), to be invested in the company as equity funding;

b.    £12m loan from HNIP at an interest rate to the Council of 0.01%, to be on-lent to the company at a negotiated interest rate compliant with Subsidy Control regulation;

c.    £25m loan funded from either the Mayor’s Energy Efficiency Fund (MEEF or Public Works Loans Board (PWLB) or a combination of both.

 

3.    Delegate to the Executive Director of Resources, in consultation with the Director of Law and Governance, authority to execute on-lending and subscription agreements with Energetik to transfer the funding in paragraph 5, these agreements to at minimum mirror and reflect the requirements identified within Appendices Ci and Cii. To approve that as part of these agreements Energetik will be required to present the Executive Director of Resources with a quarterly connection statement detailing confirmed and perspective property connections compared to projections, prior to the release of required funding.

 

4.    Approve the revisions to the company’s 40-year Business Plan as outlined within the company’s   Business Plan second Addendum, whilst working with the company Directors to implement the  financial model updates, in recognition of the observations in the Ernst & Young review.

 

5.    To instruct the Director of Legal and Governance, in collaboration with Company Directors and council officers, to undertake an options appraisal and strategic review identifying a preferred strategy to support the company’s future growth with external funding and knowledge by November 2021 and consider options to reduce the Council’s interest as referenced in paragraph 56. No further funding beyond this report to be agreed until this review is complete, and a clear strategic financing direction identified and approved by Cabinet.

 

6.    To note the ongoing discussions between Energetik and LB Haringey and LB Hackney to supply heat to residents of other north London boroughs, as included in the Energetik business plan.

 

Supporting documents: