How one council plans to eradicate its CRC bills within five years

Life’s tough for councils with increasing demands on resources and an inability to raise taxes. But one council has found a way to offset its budget restraints while becoming greener, says Mike Scott

Peterborough City Council is looking to reduce its reliance on fossil fuels and bolster its aim of becoming the UK’s environmental capital while cutting its emissions by 35% from 2008 levels by 2014.

In doing so, it hopes to move from being a passive buyer of energy to generating its own power and heat, and selling what it doesn’t need to other authorities, businesses and communities.

The council has created an energy services company called Blue Sky Peterborough, which it hopes will be the country’s first public sector micro-utility, taking advantage of changes to the rules that allow it to become an energy generator.

“Local authorities were previously not allowed to engage in the energy market,” says Neil Kalita of engineering consultancy Aecom, which has been working with the council on the scheme. “But a few years ago, the rules changed, which has opened up this opportunity.”

Aecom says there are three reasons for local authorities to invest in energy generation – it can be an engine for growth, by providing investment opportunities that deliver long-term security in energy supply and price, as well as driving further investment locally.

It also supports the government’s Big Society agenda, by allowing local councils to participate in the energy market, thus reducing fuel poverty in local communities and creating a fairer price for all.

Finally, it helps safeguard front-line services by creating revenue streams and well as cost savings that can make up the shortfall in local authority budgets.

In addition, says Kalita, it can lead to a massive reduction in the authority’s – and the region’s – carbon footprint.

Moving the goalposts

However, the initiatives roots were not auspicious, says council executive director of strategic resources John Harrison. “We had the opportunity to build a fairly chunky roof-mounted solar programme with a capacity of about 1.5MW, but then the Department of Energy and Climate Change changed the rules, making it unviable.

“We had to reduce it to about 250kW so we started looking around at what else we could do.”

The authority aims to create three renewable energy parks that will generate energy from wind and solar power and it is also planning to install 1MW of solar panels on council-owned properties and local schools.

It also decided to “turn on its head” a planned energy-from-waste plant being built in the city by Viridor. “Instead of the contractor taking the energy and selling to, we will take all the energy,” says Harrison. “We can aggregate that up along with all the other generation facilities we have.”

The focus on generating power is being coupled with efforts to cut energy consumption in homes, businesses and council premises throughout the city. The authority has signed an Energy Performance Contract with Honeywell Solutions to improve the energy efficiency of all council buildings and schools in the city, with the efficiency measures being paid for out of the energy savings that will result.

As well as cutting bills and carbon emissions, it is estimated that the contract will reduce the council’s £200,000 a year in payments under the government’s Carbon Reduction Commitment. “The aim of this project is to reduce the council’s carbon footprint to the point that the council will no longer be liable to make these payments within five years,” says the council.

This deal complements another initiative whereby British Gas will fund up to £20m of energy efficiency improvements in Peterborough homes under the government’s new Energy Company Obligation (ECO) scheme, whereby energy suppliers must pay for improvements in homes suffering from fuel poverty or where efficiency gains are expensive.

ECO works alongside the Green Deal to provide additional support for energy efficiency packages, providing insulation methods to low income communities. As well as tackling high fuel bills and carbon emissions, the project will also create up to 600 jobs in Peterborough and surrounding areas, with a focus on young people not in education, employment or training.

The British Gas deal is a vindication for the council’s focus on environmental issues, with Andrew Bacon, the company’s regional director, saying: “We wanted to build a partnership with Peterborough Council as one of the leading organisations in local government in tackling the wide-range of challenges that local residents and businesses face.”

Another example of the council’s innovative thinking is its Ready to Switch scheme, in which Peterborough is involved alongside 12 other councils. The initiative uses the collective purchasing power of residents to obtain cheaper prices.

There have been three auctions since the scheme started last November, with the latest one in June offering those who signed up average savings of £79 a year.

Earlier this month, the scheme was extended to small businesses, with figures showing that up to 80% of SMEs are paying up to 35% more than they need to for their energy, mainly because small business owners either don’t have the time or don’t know where to start looking for a new energy supplier as tariffs are not as readily available as domestic ones.

Harrison says that the various low-carbon energy projects could benefit the council to the tune of around £5m a year to help protect local service in Peterborough, as well as increasing its energy security and limiting future price rises. And, he adds: “We’re looking to use Blue Sky as a vehicle for regeneration.

“If we put in the infrastructure, people will pay to use it. The government has not really caught on to the financial implications of this. We need to let people know what the art of the possible is.”