Report for: ACTION Item Number: 11 Contains Confidential NO or Exempt Information Title Energy Strategy for Ealing Responsible Officer(s) Pat Hayes, Executive Director Regeneration & Housing [email protected] Author(s) Jo Mortensen, Sustainability Programme Manager Portfolio(s) Hitesh Tailor – Housing; Bassam Mahfouz – Environment For Consideration By Cabinet Date to be Considered 17 December 2013 Implementation Date if 3 January 2014 Not Called In Affected Wards All Keywords/Index Energy, fuel poverty, affordable warmth, efficiency, sustainability Purpose of Report: To update cabinet on the development of the energy strategy and to seek specific authority for activities related to implementing the strategy. 1. Recommendations That Cabinet agrees to: 1.1 Note and agree the attached Energy Strategy and the strategic priorities identified in the strategy. 2. Reason for Decision and Options Considered 2.1 The purpose of the Energy Strategy is to establish the intentions of the council related to energy use and production and to recognise the significant relationship between energy and health. The Strategy identifies the ambitions of the council organised by the key drivers: a. Meeting our regulatory obligations b. Reducing energy consumption and improving operations c. Utilising renewable energy to secure the cleanest supply possible d. Delivering value by achieving the best price for energy e. Protecting the health and wellbeing of our most vulnerable residents f. Seeking inspired solutions that deliver learning and results g. Achieving community benefits as a result of our actions 2.2 Targets have been agreed as part of this Strategy, which will guide internal resource allocation and decision making. The action taken as a result of this strategy will improve domestic and corporate energy efficiency in Ealing, save council resources and assist vulnerable residents in both social and private housing. 2.3 Targets include: a. Reduce domestic CO2 emissions by 40% on 2010 levels by 2020 b. Raise SAP rating of all properties judged to be in lowest EPC bands (G, F and E) to minimum SAP 70 (EPC ‘C’) by 2018 c. Reduce corporate CO2 emissions by 22% on 2012/13 levels by 2017/18 d. Reduce corporate energy consumption (KWh) by 20% on 2012/13 levels by 2017/18 e. Complete the first phase of renewable technology installation by March 2015 f. Deliver additional solar photo voltaic (PV) panels on council owned homes, bringing the total to 500 across the estate g. Reduce fuel poverty by 30% by 2016 from 2011 levels 2.4 The council has improved energy efficiency of its corporate portfolio and housing stock, but strategic decision making and investment is required to deliver greater savings and benefits as well as to protect the health of residents. 2.5 The price of energy has changed significantly in recent years. The price has increased from 2004 to 2011 by 121% for gas and 79% for electricity. It is difficult to accurately predict the future prices of energy as they are sensitive to multiple factors. Current predictions from The Department for Energy and Climate Change (DECC) include a gas price increase of 37% by 2018. National Grid estimates that the worst case scenario for electricity prices would be a 30% increase by 2018. Large scale renewable energy is increasing nationally (driven by government policy) meaning the UK’s dependency on fossil fuels will gradually be reduced. 2.6 Increasing costs impact the operating budget of the council as well as residents of the borough. In some cases, the cost of energy threatens the health and well-being of residents. 3. Key Implications 3.1 Prioritising resources to achieve the targets identified in paragraph 2.3 will deliver the following expected benefits: a. Financial savings to residents and the council through reduced energy and building maintenance costs b. Reduction in the council’s Carbon Reduction Commitment and Energy Efficiency Scheme (CRC) liability c. Income generation through utilising feed-in tariffs (FITs) for renewable energy generation d. Demonstrating leadership in the borough with flagship energy saving projects e. Development of local case studies f. Positive changes in staff behaviour at work, which could also lead to positive changes in behaviour outside work g. Reduced cold-related ill health (excess winter deaths and winter hospital admissions) 4. Financial 4.1 Financial background The high increase and volatility of energy prices over the past few years has had a significant impact on the cost of the council’s energy consumption. The most effective way to manage this cost is to control the consumption of energy through implementing programmes to reduce energy use and raise energy awareness. 4.2 Financial impact on the budget Any bids for funding would need to be identified through the Council’s budget review process, in the context of reducing overall council resources and through detailed individual business cases as additional projects seek to be added to the Councils Capital programme. Business cases will include implementation costs, e.g., technical support and impacts to maintenance budgets. All internal project management costs will be managed within existing Regeneration & Housing and Business Services Group budgets. Examples of funding to be sought: a. Schemes identified through the HRA Asset Management Strategy which include improving thermal efficiency of HRA stock, reducing carbon emissions and fuel poverty b. Re-fit projects on Ealing’s office buildings c. Boiler Replacement Programme d. Energy surveys within the Council’s Corporate Portfolio e. Energy efficiency campaign f. Resourcing and training staff to deliver energy advice provision, project and programme management Management of the Strategy will come from the Sustainability Team within the Regeneration & Housing Directorate and staff from Housing, Planning, Business Services Group and Finance will be involved in ensuring the objectives and targets are met. 4.3 Financial background In order to finance these potential initiatives, the following funding streams could be used: Internal: capital funded projects, Communities Infrastructure Levy, Invest to Save initiatives and prudential borrowing External: EU funded projects, GLA and other central government funded projects, Salix Energy Efficiency Loan Scheme, Energy Company Obligations, Feed in Tariff and Renewable Heat Incentive Projects and programmes could receive funding from multiple and combined sources. 5. Legal The UK and European Union have used policy and legislation to counteract climate change and encourage the improvement of building energy performance. In particular the Climate Change Act 2008 requires the UK to reduce its Greenhouse Gas Emissions by 80% (from a 1990 baseline) by 2050. Further details of the council’s legal obligations are set out in the Strategy itself. 6. Value For Money 6.1 Value for Money is integral to the Energy Efficiency Strategy. The strategic priorities have value for money and health and well-being at their core. 6.2 When planning projects and programmes of work, value for money will be driven by the selection of contractors on the basis of Most Economically Advantageous Tender where the successful contractor is selected on the basis of both price and quality. All contracts will be procured under the Council’s Contract Procedure Rules, applied as appropriate to the value of contract. In many cases the contract value will exceed the £500,000 threshold and requires full Cabinet approval. 6.3 Monitoring progress toward targets is an important aspect of the strategy and updates will be provided to corporate board on an annual basis. 7. Sustainability Impact Appraisal 7.1 The strategy represents a commitment from the council to consider its use of natural resources and take action to reduce the negative impacts associated with energy use. The strategy considers financial, environmental and socio- economic costs and benefits and represents the council’s commitment to understanding the impact of each of these on future generations. This implementation of the strategy will contribute to reducing carbon emissions and to reducing fuel poverty. 8. Risk Management 8.1 Energy cost increases: By reducing energy consumption, this strategy will protect residents and the council to some extent from increased energy prices. 9. Community Safety None 10. Links to the 5 Priorities for the Borough If none, say so. Please keep to one paragraph. The 5 Priorities are: Making Ealing Safer None Securing Public Services By realising the aims of using less energy and securing the best price possible for its energy supplies, the savings and avoided costs improve the operating budget of the council. This savings may contribute to securing public services. Securing Jobs and Homes Delivering this strategy will contribute to a growth in the green economy. All projects that arise from the adoption of this strategy will look for training and employment opportunities for local residents. Delivering Value for Money A key aim of the strategy is to deliver value for money by securing the best energy price. The aims related to affordable warmth and alleviating fuel poverty directly relate to reducing costs to health services. Making Ealing Cleaner Securing the cleanest energy supply possible improves air quality by reducing the greenhouse gasses emitted as a result of burning fossil fuels. 11. Equalities, Human Rights and Community Cohesion After the initial equalities impact assessment, it was determined that a full EIA was not necessary. 12. Staffing/Workforce and Accommodation implications: None 13. Property and Assets All property related projects that arise as a result of adopting the Energy Strategy will be reviewed against the planned disposals list and/or with the housing asset management team to ensure any investment is appropriate. 14. Any other implications: None 15. Consultation Internal consultation was conducted to bring together views from across the council. All reviewers are listed in the Consultation table. 16. Timetable for Implementation This strategy covers 2013-2018. Action plans will be developed and revised annually, corresponding to progress reports to corporate board.