Agenda item

To accept the Section 31 grant for the replacement of the heating system at the Council Offices and to delegate authority to the Head of Finance and Asset Management to enter into any necessary documentation in respect of the grant award.

1.       That the grant award, as detailed within the report, be accepted.

2.       That authority be delegated to the Head of Finance and Asset Management to enter into any necessary documentation in respect of the grant award.  

109.1        The report of the Head of Finance and Asset Management, circulated at Pages No. 149-153, advised the Committee of a grant which had been awarded to the Council by the Department for Business, Energy and Industrial Strategy (BEIS) to deliver a replacement heating system. Members were asked to accept the grant award, as detailed within the report, and to delegate authority to the Head of Finance and Asset Management to enter into any necessary documentation in respect of the grant award.

109.2        The Head of Finance and Asset Management explained that the current heating system was past its best. Given the age and inefficiency of the current gas powered heating system at the Council Offices, the replacement of the system was given a high priority within the detailed Climate Change and Carbon Reduction Audit Action Plan and a target of replacement was set for 2022 - it was envisaged that the cost of replacement would be met by the Council’s Asset Management Reserve. The application to BEIS had assessed a reduction in the carbon tonnage consumed by the Council Offices of over 92 tonnes per year which represented a reduction of 78% on the current annual gas consumption and, to enable those works, a bid for £304,200 had been made to the fund. Given the high profile of climate change neutrality in public sector organisations, the £1 billion scheme was heavily oversubscribed and the Council’s initial application was frozen but, after further due diligence on the applications, BEIS had realigned some awards and the Council’s application had now been earmarked for funding. Subject to a final feasibility report, it was anticipated that the Council would tender for a works contract in April with installation completed by early autumn. In addition to the Council’s own Officers the project would be supported by project managers previously employed on the leisure centre construction and office refurbishment to ensure the project was delivered on time and within budget. Since writing the report, the initial consultant’s report on the preferred heating system had been completed and an air source heat pump, rather than ground source, had been recommended. Officers were currently in consultation with BEIS to ensure it would continue to support the Council’s project.

109.3        A number of Members expressed concern about the use of an air source heat pump; they had understood the preference had been for a ground source heat pump which, although more costly to install, cost less to run as they did not require as much maintenance as an air source heat pump. In response, they were advised that the feasibility study had shown that, taking account of the Council Offices building and its usage, an air source heat pump would be more efficient in this instance. The report was based on the actual location, rather than the previous desktop exercise, and the distance from the car park to the building meant there would be a lot of heat loss and therefore the overall efficiency would be less when the ground source heat pump was properly modelled. The BEIS funding was relevant to the carbon savings so a ground source heat pump would only be partially covered and the air source heat pump would be covered by the majority of the funding. A Member noted that the Climate Change and Flood Risk Management Group had recently received a presentation which had stated that a ground source heat pump would be preferred, and his own investigations had also shown them to be more efficient, so he questioned whether the Council would gain the same carbon savings with an air source heat pump. In response, the Asset Manager explained that in an ideal world the location of the pump would be near the building and, in the early stages, it had been hoped this would be the case. However, the detailed feasibility study on the building, taking account of its heating needs, the layout of the building, losses of heat etc., meant the efficiency saving for an air source heat pump was far greater than the ground source heat pump in this particular situation with 84 tonnes of carbon savings. There would be cost and efficiency savings but, in addition, Officers were looking at the installation of more photovoltaics – whilst this was not a primary element for the Public Sector Decarbonisation Scheme funding it would be investigated as part of the business case for savings on energy costs. A Member indicated that 84 tonnes of carbon savings was good even though it was less than previously stated and he would be happy to propose that the grant should be accepted. He questioned whether some kind of time lapse video information would be possible to show how the pump was installed etc. In response, the Asset Manager undertook to speak to the communications team about how to document the process; he was of the view that a video would be difficult due to the way the system was installed but he felt sure there was something that could be done.

109.4        Another Member indicated that the heat pump would cost a considerable amount of money and he questioned what would happen if BEIS would not pay the grant for an air source heat pump. He also indicated that, when the report had initially been made to the Climate Change and Flood Risk Management Group, he had undertaken a lot of his own research and had noted that the British climate was difficult for air source heat pumps as it did not have the ideal temperatures needed and as such meant they were not usually as efficient. In response, the Head of Finance and Asset Management explained that the amount of rods needed for a ground source heat pump would mean the cost was too high for the grant funding being provided so the Council would have to use a lot of its Asset Management Reserve to make up the shortfall. The draft consultant report would be concluded shortly and Officers could then send that to Members for information. It was the case that ordinarily ground source heat pumps gave the best efficiency if they could be located near to a building but this was not the case in this instance. A ground source heat pump would give 60 tonnes of carbon savings and would run at a 26% reduction in carbon emissions; a water source heat pump would save 75 tonnes which was a 30% reduction and an air source heat pump would give 80 tonnes of carbon savings which was a 32% reduction. The company that had been commissioned to undertake the work had a great deal of information from a feasibility and information point of view – they had also looked at some hybrids of systems but had found they would not be cost efficient or provide the necessary carbon savings. In terms of the Asset Management Reserve, the amount was in excess of £400,000 – the BEIS grant would not cover the back up boiler system so some of the reserve would be required for that. Until the tenders were received, it was not known what the exact costs would be although it was estimated that around £60,000 may have to come from reserves.

109.5        Members continued to express their disappointment that the information provided now was different to that previously given to the Climate Change and Flood Risk Management Group and Officers confirmed that the information was now based on the actual location and use of the Council Offices rather than on a desktop study using the ideal scenario. It was also confirmed that BEIS required a great deal of information about the project moving forward to ensure the Council was getting value for money as well as making the carbon reductions that would be expected from the scheme, as such it was essential the Council made sure it was getting the best output from the system that was put in. It was for that reason that consultants with a wealth of experience in this field had been engaged. In response to an earlier comment about the temperature in the UK, the Asset Manager confirmed that air source heat pumps did become less efficient in colder weather but this had been taken into account within the feasibility study. One of the reasons that BEIS was being consulted about the use of the grant for an air source heat pump was that it could be run in reverse to cool the building and this was something BEIS had expressed concerns about – there were ways the system could be stopped from doing that and those were being explored. If BEIS would not support the grant for an air source heat pump, the issue would have to be reconsidered by Officers and brought back to Members to agree a way forward. In terms of a query regarding whether the amount of electricity used, and the amount of carbon expended to produce that electricity, was taken into account in the calculations, the Asset Manager confirmed that the consultants had a sophisticated modelling system which was used to measure costs. Baseline data had been compiled using bills and current consumption levels and the modelling showed where the energy costs would be. Another Member queried whether an existing Officer would undertake the role of accountable officer to ensure compliance with the grant conditions and also why the air source heat pump could not be used to cool the building as she felt this was very much needed in the warmer months. In response, the Head of Finance and Asset Management confirmed that he would be the accountable officer. In terms of the air conditioning element of the system, this was not as efficient which was the reason BEIS may not be supportive; however, it may support the system with regulators to ensure it could not be run in that way and the Council would obviously have to consider that if it was the way to gain the funding.

109.6        It was proposed and seconded that the grant funding should be accepted and authority delegated to the Head of Finance and Asset Management to enter into any necessary documentation in respect of the grant award. Accordingly, it was