To update Cabinet about the progress that has been made regarding the Smart System of Heat Programme (SSH) and secure Cabinet support to continue to develop the programme going forward which will require BCBC to create a Special Purpose Vehicle, commission further works to advance the project, improve governance within the programme and identify and procure suitable private sector partners.

The Corporate Director Communities submitted a report, the purpose of which, was to update Cabinet about the progress that has been made regarding the Smart System of Heat Programme (SSH) and secure Cabinet support to continue to develop the programme going forward which will require BCBC to create a Special Purpose Vehicle, commission further works to advance the project, improve governance within the programme and identify and procure suitable private sector partners.

By way of background information, he confirmed that BCBC was selected as a demonstrator for the SSH Programme in October 2014.  Cabinet previously received a report (3^rd February 2015) regarding the programme and to authorise BCBC participation.  The SSH Programme was an ambitious, highly prestigious project, which will catapult BCBC into the role of one of the leading low carbon local authorities in the UK.  The programme offers significant benefits and opportunities to the Authority, and these were outlined in paragraph 3.1 of the report.

He then advised that the programme within Bridgend would be divided into three phases, with Phase 2 comprising of two distinct stages, namely Phase 2 Development and Phase 2 Delivery, and further information regarding these processes was shown in paragraphs 3 of the report.

The Corporate Director Communities then advised that two demonstrator schemes had been proposed, and these were the Bridgend Town Heat Network Project and the Upper Llynfi Valley Geo-thermal Heat Network Project.

He then referred to paragraphs 4 of the report, which updated Members on some of the work being undertaken in respect of these Projects, and of the pivotal role that the ABMU had played in the Bridgend Town Heat Network Project.

Paragraphs 4.9, 4.10, 4.11 and 4.12 of the report then outlined current governance structures within the programme which existed at three different levels, while paragraphs 4.13 to 4.18 advised of the Delivery Structures and a variety of different models that could be used.

The Corporate Director Communities that a Business Case would be established, and that this would inform a future Cabinet report with recommendations for the most suitable strategic, commercial, financial, economic and management outcomes that were most suitable to meet the aims and objectives of BCBC and the SSH programme

He advised also that a soft marketing exercise would be carried out, to establish any local private sector interest in terms of the proposals of the report, as well as the possible establishment of a Special Purpose Vehicle (SPV) with ESC as a vehicle through which finance for the project could flow from a national to a more local level, subject to approval from the various grant awarding bodies, without exposing BCBC to undue financial risk.

The final part of the report referred to the City Deal and how this could assist in the Smart System and Heat Programme, the next steps that will be followed in relation to the schemes, with the report culminating with the financial implications upon which the Corporate Director Communities expanded upon.

The Corporate Director Communities advised that the report gave an example of some significant economic development benefits to the BCB, ie £76m worth of investment, particularly in a period where energy costs after a small decrease in cost overall, were then expected to rise.

The Deputy Leader confirmed that the schemes would benefit the towns of Bridgend and Maesteg, and for example in Bridgend, 10,000 properties would benefit from the scheme. This would also benefit residents etc, particularly those who were often faced with fuel poverty as a result of not being in a financial position to pay large energy bills. This scheme had worked in Southampton he added, and would benefit the environment also.

RESOLVED:                     That Cabinet:

1. Agreed to undertake a soft market testing exercise to identify opportunities that private sector involvement in the programme could offer BCBC.

2. Agreed to BCBC working with Energy Systems Catapult to build the business case (using the Five Case Model) to identify the preferred option for the strategic, economic, commercial, financial and management structure for the project and the role that BCBC has within that structure.

3. Approved in principle, the creation of a Special Purpose Vehicle to provide a contractual structure to deliver the SSH Programme, subject to completion of the Five Case Model and suitable funding available to provide the necessary specialist legal and financial advice to create the structure.

4. Receives a further report in due course for their consideration in order to progress the Special Purpose Vehicle.     

5. Agreed that the Council produce a tender specification and advertise via Sell2Wales for a consultant to be appointed to carryout detailed feasibility studies for the Upper Llynfi Valley Heat Network project.

6. Approved the creation of a strategic level board (comprised initially of BCBC and WG) to provide senior level governance and decision making capabilities for the programme.

Receives a further report in due course, on the details of the proposed strategic level board for their approval once draft terms have been finalised.