LEICESTER DISTRICT

ENERGY SCHEME

Nick Morris

Head of Energy Services

Leicester City Council

District Energy Vanguards Event - 17th

July

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”.

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

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

St Matthews to St Marks Link

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

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.

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

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.

First Dig

St Matthews

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

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

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

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