The Corporate Director – Communities submitted a report, the purpose of which was to seek approval in principle of the financial case of the Outline Business Case (OBC) for the Bridgend Town Heat Network (Civic Centre) Project (Appendix 1); to recommend to Council the inclusion of £794,000 of borrowing in the Capital Programme, outlining the revenue implications of borrowing and confirming they will be covered by the scheme once all funding sources have been approved, and finally, give permission for the Corporate Director – Communities to submit a grant funding bid to the HNIP capital fund in Autumn 2018 and subject to the approval of the Section 151 Officer accept the funding if successful.

He advised that BCBC had for the last 5 or 6 years, undertaken a considerable amount of work, in order to explore opportunities within the County Borough for alternative and more cost effective energy projects as part of a scheduled programme. The programme offered some significant benefits and opportunities for the Authority and these were detailed in paragraph 3.2 of the report.

The Corporate Director – Communities then advised that three options for a Phase 1 development of a Heat Network Project within the town of Bridgend were recommended following the carrying out of a Feasibility Study and these were shown in table format in paragraph 4.1 of the report, where Option B was decided upon, as this was considered more deliverable than the other two.

Following the completion of the Feasibility Study, the next step was the creation of an Outline Business Case (OBC), which was attached at Appendix 1 to the report, for the project, based upon the UK Treasury Five Case Model.

The Project was not yet finalised as this was awaiting the conclusion of the undertaking of a Business Case, though the Corporate Director – Communities added that this could be delivered through a Special Purpose Vehicle (SPV) created by BCBC. Subject to successful Cabinet approvals, the timeline for the project (to be carried out in phases), were as was proposed in Table 2 at paragraph 4.8 of the report.

The Corporate Director – Communities referred to the report’s financial implications and including some risks that came with the project, and confirmed that the funding for the project would come from a number of different sources, as was reflected in paragraphs 7 of the report. It was considered however he concluded, that the benefits of the project would ultimately outweigh these risks.

The Cabinet Member – Communities commended both the work that had been undertaken and the potential of the project, which was a complex yet prestigious programme. He was conscious that the Business Case attached to the project would take 12 months to complete, but he was confident that the benefits of the project would be considerable, and he felt that we owed it to partners involved in the project to take this forward.

Other Cabinet Members also commended the project, whilst the Leader likened it to the Caerau Minewater project, where BCBC had been the first Authority in the UK to develop this. He added that it was important for BCBC to plan for the future in its aim to reduce energy costs, and to look at ways to reduce the energy we consume, through looking at more energy renewable sources, as there was funding available to support this both through the Welsh and UK governments.

RESOLVED:  

That Cabinet:

(i)            Approved in principle the financial case of the OBC  for the delivery of the Bridgend Town Heat Network Project recognising that the approval of the delivery of the project is subject to:

a.    A successful HNIP grant application;

b.    A full business case that demonstrates the market can deliver the project for the costings contained within the OBC.

c.    Approval from Council for any additional capital funding required in the event that the TRIP grant bid is not successful.

d.    Confirmation that borrowing costs and the full cost of the SPV will be covered from revenues generated from the scheme. 

(ii)          Recommended to Council the inclusion of £794,000 of prudential borrowing in the Capital Programme, either provided by Welsh Government or an application for such borrowing will be made by BCBC, outlining the revenue implications of borrowing and confirming they will be covered by the scheme and for the scheme to be included within the capital programme for delivery once all funding sources have been approved.

Gave permission for the Corporate Director – Communities to submit a grant funding bid to the HNIP capital fund in Autumn 2018 and subject to the approval of the Section 151 Officer accept the funding if successful.