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LEICESTER DISTRICT
ENERGY SCHEME
Nick Morris
Head of Energy Services
Leicester City Council
District Energy Vanguards Event - 17th
July
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Overview
• Leicester – a city of 300,000 people (10th largest in the
UK)
• “Environment City” with Strong Climate Change Strategy
and Energy Planning Policy with District Energy at it Core
• Key Aim: “the provision of controllable and reliable warmth
to a group of buildings at an affordable price, minimising
CO2 emissions and using Combined Heat and Power via
a District Heating System”.
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How did we start ?
• False dawns including a significant community energy
program grant 2003
• Change in political leadership
• Strategic priority to reduce Leicester’s carbon footprint
• Re-energised process and in 2007 a detailed study was
undertaken which confirmed the potential of utilising
existing district heating schemes
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Feasibility Study
• Study identified the technical feasibility
Buildings that could be connected
Potential energy centres and technologies
• Business case identified environmental, social
and economic benefits
• Political approval gained to proceed with
procurement in July 2008, based on the
extension of existing district schemes
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St Matthews to St Marks Link
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Commencing the Procurement Process
• Soft Market Testing end 2008
• Competitive Dialogue procedure selected
• Procurement led by Housing due to high proportion of
residential district heating in the overall scheme
• LCC formed a team to take procurement forward:
• Project Director; Project Manager; Working Group to include Legal,
Financial, Technical, Environmental expertise
• Highways, Planning and other departments consulted
• OJEU issued in August 2009
• Following PQQ, dialogue commenced October 2009
• 12 month dialogue and evaluation process
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The Leicester Partnership
• LCC were keen to include as many public bodies as
possible in the process to ensure scheme size and
carbon/cost benefits could be maximised.
• The OJEU was issued by LCC as the “enabler” on behalf
of the Leicester Partnership which comprised:
• Leicester City Council
• University of Leicester
• HMP Leicester
• OJEU Notice also had a wide scope and covers
expansion or delivery of entirely new schemes across the
City where these involve public buildings.
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Key Outputs Required
• There were a number of key outputs required from the procurement process:• Affordable and reliable warmth
• Secure and sustainable energy supply
• Significant reduction in CO2 emissions
• Expansion potential
• No investment by LCC or any of the members of the Leicester Partnership
• Future energy charges that deliver a whole life cost savings
• A mechanism to assess the cost/benefit of individual residential heat meters
• An acquisition fee for the existing plant in recognition of the long term contract (if possible)
• Confidence in a long-term partner to deliver the agreed solution – both in terms of experience and financial standing
• All of these have been achieved with the selected solution
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The Procurement Process
• Significant interest was generated in the market
• Three companies were ultimately taken forward
and Invited to Submit Final Bids (May 2010)
• Final contract award was made in October 2010
• Contracts between LCC and Cofely District Energy
(CDE) were signed on 14th January 2011
• CDE signed contracts with the University of
Leicester in April 2011.
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First Dig
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St Matthews
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Key Lessons Learned• Political Support:
• Requires a political sponsor and champion
• Project Manager:• Important to have a dedicated and experienced project
manager who is capable of working across council departments
• Project complexity meant it proved essential to closing the Leicester scheme
• Quality of Data:• Competitive dialogue process moving into binding Final
Bids means that information supplied to bidders should be good quality and should be checked thoroughly – no assumptions
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Key Lessons Learned• Standard form of contract
• Try to use a standard form of contract, this saves time and
avoids reinvention
• Also prevents ambiguity between different parts of the
contract
• Experienced Partner
• Conduct soft market testing early on to inform the process
• Select an experienced partner who can meet your
objectives and can demonstrate how they have done the
same in other schemes
• LCC selected CDE who had already delivered a number of
schemes including Southampton and Birmingham
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What did we procure ?
25 year energy services agreement with the potential for a 5 year extension to deliver:
• Citywide District Energy Schemes – 6 MWe of CHP and over 16 km of new network
• £15M of private sector investment into the City and adoption of existing assets (included £1M from CESP)
• Over 100 GWh of low carbon energy supplies for c.3000 homes, 35 administrative buildings and the University of Leicester
• Whole-life cost savings
• Expansion plans to connect to prison and many other public and private sector buildings in the city
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Benefits
• An experienced long term partner
• WLC cost savings
• Significant reduction in CO2 emissions
• Increased resilience
• Investment in the City
• No capital expenditure for LCC - a capital receipt
• Significant potential for future expansion with
associated profit share