Decision details

District Heating Update: Investment Plans and Renewal of Local Development Order

Reference: D54994

Decision Maker: Executive Board

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: Yes

Purpose:

To make decisions to

·  utilise grant funding already awarded on future proofed extensions to the Leeds PIPES district heating network, rather than returning this grant to government.

·  apply for additional support from government for two new strategically important extensions.

·  accept the principle of recovering capital investment from new connections via a long-term standing charge mechanism.

·  Adopt the renewed LDO3 (district heating) until 2025 to facilitate the roll-out of district heating by the council and others. 

 

Decisions:

Further to Minute No. 34, 21st July 2021, the Director of Resources and the Director of City Development submitted a joint report which provided an update on the progress of the District Heating Network and which set out new opportunities to extend the network and to connect more customers, supporting the Council’s net zero ambition for the city as well as helping to further improve the financial position of the network. The report also provided an update on how national policy was developing and sought approval to renew the Local Development Order to enable efficient continued development of the network.

 

In presenting the report, the Executive Member extended her thanks to the Chief Officer (Sustainable Energy and Air Quality) and her team for their continued work in this area to progress the District Heating programme to its current position, with the importance of the scheme as part of the city’s future development and sustainability being highlighted.

 

Members welcomed the measured approach which had been taken towards the development of the District Heating scheme.

 

Responding to an enquiry about how a greater number of users could potentially benefit from the scheme and in relation to comments about the need to continue to explore the range of options available for energy generation via renewable sources, the Board received further detail on the ongoing work in this area, with reference being made to the forthcoming national approach being taken towards District Heating Zoning Policy, in which Leeds was acting as a pilot city.

 

Members also welcomed the work which had been undertaken to date on the decarbonising of Council housing, with it being noted that the expansion of that initiative would be welcomed, as resource and the securing of further funding permitted. 

 

Following consideration of Appendix 1 to the submitted report designated as being exempt from publication under the provisions of Access to Information Procedure Rule 10.4(3), which was considered in private at the conclusion of the public part of the meeting, it was

 

RESOLVED –

(a)  That subject to Heat Network Investment Programme (HNIP) funding being secured, approval be given to the injection of £7.188m into the Capital Programme, funded through £3.863m of supported prudential borrowing; £2.875m of grant from the Government’s HNIP and £0.45m of match funding; with approval also being given for the related Authority to Spend of the entirety in order to enable the delivery of the Phase 3 of the District Heating Network;

 

(b)  That the necessary authority to award contracts to Vital Energi Utilities Limited and to procure a NEC3 Project Manager to enable these works to be delivered, be approved;

 

(c)  That given resolution (a) above is subject to the approval of the HNIP grant from the Department for Business, Energy and Industrial Strategy (BEIS), the necessary authority be delegated to the Director of Resources in order to enable the Director to conclude negotiations, including minor variations within the framework agreed at Executive Board, in consultation with the S151 officer;

 

(d)  That the necessary authority be delegated to the Director of Resources to enable the Director to underwrite the required match funding of a maximum of £450k, in consultation with S151 officer;

 

(e)  That the necessary authority be delegated to the Director of Resources to enable the Director to conclude arrangements with Leeds District Heating Pipeco Ltd to deliver this work, including finalising loan arrangements and associated use of system charges, novating contracts to the Special Purpose Vehicle (SPV) and providing parent company guarantees, and passporting grant funding with no mark up or deductions to the SPV;

 

(f)  That the adoption of the revised Leeds District Heating Network Local Development Order 3, as set out in Appendix 2 to the submitted report, be approved; and that agreement be given for the Chief Planning Officer to submit a copy, together with the statement of reasons, to the Secretary of State for Levelling Up, Housing and Communities; and due to statutory time constraints and therefore reasons of urgency as set out within paragraph 41 of the submitted report, approval be given to exempt this resolution (f) from the Call In process.

 

(The Council’s Executive and Decision Making Procedure Rules state that a decision may be declared as being exempt from the Call In process by the decision taker if it is considered that the matter is urgent and any delay would seriously prejudice the Council’s, or the public’s interests. In line with this, resolution (f) above was exempted from the Call In process, as per the approval of the Board detailed within the same resolution, for the reasons as detailed within section 41 of the submitted report)

Reason Key: Financial Impact>£500K;

Portfolio Holder: Executive Member for Infrastructure and Climate

Other reasons / organisations consulted

Consultation will take place via scheduled meetings with the Director of Resources. Consultation will also take place via board meetings held with Leeds PipeCo Ltd. The Executive Member for Climate Change, Transport and Sustainable Development will be briefed as part of regular briefing meetings. PACs and Resources & Housing Financial Management will also be consulted.

Consultees

Director of Resources.

Executive Member for Infrastructure and Climate

PACS.

Resources & Housing Financial Management.

Leeds District Heating Pipeco Ltd

Contact: Polly Cook, Chief Officer Sustainable Energy and Air Quality Email: polly.cook@leeds.gov.uk.

Report author: Polly Cook

Publication date: 11/02/2022

Date of decision: 09/02/2022

Decided at meeting: 09/02/2022 - Executive Board

Effective from: 19/02/2022

Accompanying Documents: