Agenda item

Report of Corporate Director for Communities, Environment and Resident Services

Roisin Hickey, Energy Projects Officer (Solar Hub), presented the report and stated the following:

(a)  Nottingham City Council (NCC) own and operate over 3,200 domestic solar PV systems installed on NCC social homes. These assets are split into two phases: Phase 1 - which were purchased via the Housing Revenue Account (HRA) and Phase 2 - which are owned directly by NCC;

(b)  around 10% of the total portfolio are installed at private houses where a tenant has opted to purchase the property under the right to buy scheme after solar panels were installed;

(c)  NCC also owns and operates around 30 individual commercial solar PV systems, installed on operational buildings, and commercial buildings owned by NCC and leased privately;

(d)  around 95% of assets receive Feed-in Tariff (FiT) payments, which was a government incentive to install renewable generation. The FiT income for both phases is detailed in Table 1 of the report;

(e)  the commercial solar PV systems installed on NCC’s operational buildings also offer bill savings, as the building can use some free electricity produced by the solar panels rather than paying to import electricity from the grid. These significant bill savings to the authority are also detailed in Table 1 of the report;

(f)  funding for maintenance works has been secured via several budgets:

Phase 1: budget has been secured for this financial year, FY 2025/26 and FY 2026/27. This will be funded via the HRA, and the Solar Hub will re-charge them quarterly for all works completed during the period. HRA spend on solar maintenance has been agreed with the relevant Programme Manager in Housing Services;

Phase 2 & Commercial: budget has been secured for this financial year. Funds will be drawn down from reserve and allocated to cost centre 13021. It is anticipated that the budget allocated for this financial year will not be completely spent by March 2025. This has led to the recommendation for a sinking fund/reserve to be requested to be set up to ensure that the funding for the maintenance costs is available moving forward into the future financial years, thereby reducing possible impact on future Medium Term Financial Planning;

(g)  currently, an annual payment of approximately £220,000 is made from the General Fund to the HRA to repay a loan that funded the installation of the solar panels. There is a LKD currently in progress to transfer ownership of Phase 2 domestic assets to the HRA which would remove this payment. Should this be agreed, funding for the next two financial years will come from the savings this would release. If not agreed, budget for the next two financial years would need to be identified elsewhere at a later date;

(h)  the invitation to tender will stipulate that we may spend up to £2,299,498, but there will be no commitment to spend this in total. Table 2 of the report gives a summary of the financial forecast across the whole solar portfolio;

(i)  where the forecast exceeds the available budget, priority will be given to the safety of assets to ensure they are operating safely, and those with a higher FiT rate to maximise returns to NCC and ensure budgets are not exceeded., and a detailed breakdown of the forecast for domestic and commercial solar assets is detailed in sections 2.3 and 2.4 of the report.

In response to questions, the following was also stated:

(j)  there will be separate audit trails for HRA and General Fund assets;

(k)  the figure of £3,272,576 in paragraph 8.1 of the report has been revised since the legal comments were obtained and the figure of £2,299,498 (as per recommendation 1) is now the correct one.

Resolved to

(1)  approve tendering for a 3-year contract, with a spend of up to £2,299,498, to procure a solar PV operation and maintenance service;

(2)  delegate authority to the Director of Environment Sustainability to tender, award and enter into the contract;

(3)  authorise setting up of a sinking fund / reserve to ensure that funding for the maintenance costs is available in future financial years, thereby reducing possible impact on future Medium Term Financial Planning.

Reasons for recommendations

(a)  NCC are responsible for the safe operation and maintenance of their solar assets, and therefore have a duty of care to ensure they are inspected and tested regularly and pose no safety concerns to the tenants, building, building users, staff and members of the public.

(b)  Solar PV systems must be maintained and problems affecting performance, such as failed components replaced. This will provide the site with continued renewable energy and allow the authority to receive revenue from the FiT, as well as electricity savings on commercial sites.

(c)  Maintaining NCC's solar assets will continue to contribute to NCC's carbon neutral 28 aspirations and provide a cleaner environment for tenants, citizens, and visitors to Nottingham City.

Other options considered

(a)  Do nothing - doing nothing means that NCC will neglect its duty of care to ensure that the authority’s solar PV assets are operating safely and pose no danger to building users and citizens. Systems that have developed a fault would no longer be providing free electricity to tenants/homeowners and the authority would not receive the expected FiT income nor electricity savings on commercial buildings where solar is installed. Furthermore, this would be a step back in the council’s CN28 ambitions as more properties would rely on carbon-intensive grid electricity.

(b)  Use internal resource – this would require multiple MCS qualified electricians to be hired or trained up within NCC and housing services; these skills do not currently exist within the council. Currently housing services electricians cannot work on Phase 2 solar assets due to the ring-fencing of HRA funds. Additional team resource would also be required for making appointments, buying in stock, processing any changes to systems etc. Due to anticipated fluctuation in the management of the solar assets, there is a risk with this option that the right level of internal resource would not be able to be maintained for a full-scale maintenance program. It is more favourable to have continuity of the program through the procurement of an external supplier.