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Agenda Item No: 4 Cambridgeshire Renewables Infrastructure Framework and Community Energy Fund

To: CRIF/CEF Steering Group Date: 19th December 2011 From: Sheryl French on behalf of the Officer Steering Group Purpose: • Share progress on the CRIF and CEF Projects

• Identify the scale of renewable energy investment and

delivery needed to put Cambridgeshire onto a pathway

of greater energy self sufficiency

• Identify how the CRIF and CEF Projects support growth

of the Clean Tech Sector in Cambridgeshire, attract

investment and create new green jobs

• Identify key issues arising on the CRIF and CEF

Projects

• Identify an emerging strategic framework for Local

Authorities and partners to facilitate investment and

delivery of renewable energy

Recommendation: The Steering Group to:

• Note progress on the Projects

Provide a steer on:

• The key issues identified in section 5.0

• The emerging strategic framework to facilitate the growth in the Clean tech sector and delivery of renewable energy in section 6.0

Contact: Name: Job Title: E-mail address: Telephone No:

Sheryl French Delivery Manager Sheryl.French@cambridgeshirehorizons.co.uk 01223 714052

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1. Purpose

• Share progress on the CRIF and CEF Projects

• Identify the scale of investment and delivery in renewable energy to put Cambridgeshire onto a pathway of greater energy self sufficiency

• Identify how the CRIF and CEF Projects support growth of the Clean Tech Sector in Cambridgeshire and the creation of green jobs

• Identify key issues arising on the CRIF and CEF Projects

• Identify an emerging strategic framework for Local Authorities and partners to facilitate investment and delivery of renewable energy

2. Background

2.1. The Coalition Government signed up to deliver 50% reduction of carbon

emissions by 2025 (based on 1990 baseline) within the ‘Domestic Action Budget’ i.e. without the support of international carbon markets and signed up the UK to source 15% of its energy from renewable sources by 2020 as part of the EU Renewable Energy Directive. This commitment translates into targets of:

• 18% contribution from onshore renewable electricity

• 35% contribution from renewable heat by 2030.

2.2. The CRIF Project was agreed by Cambridgeshire Horizons Board in September 2010. An Officer Steering Group has managed the project to date and it includes representatives from Cambridgeshire Local Authorities, Suffolk and Hertfordshire County Councils, Peterborough City Council as well as representation from the Energy Sector, RSLs, EEDA and Sustainability East. Cambridgeshire Horizons Board provided the strategic steer and guidance to the Project until its last Board meeting in September 2011. It was agreed to set up a Member Steering Group including Local Authorities and a representatives from the RSLs, Developers and Environment Agency to oversee the completion of the CRIF and CEF Projects and development of the next steps by the end of January 2012.

2.3. DECC commissioned in 2010 and subsequently published in May 2011 a

report to identify the Renewable Energy Capacity for the East of England. This identified for each County the key renewable energy resources 1based on high level constraint mapping. The CRIF Project2 is Cambridgeshire’s response to this Study (www.crif.citizenscape.net). It identifies in more detail the renewable energy opportunities in Cambridgeshire, the scale of investment needed to support the transition to a low carbon economy; what is needed to support the growth of the Clean Tech sector in Cambridgeshire and how Cambridgeshire residents and businesses can become more energy self-sufficient and manage the long term costs of rising fuel bills

2.4. The CRIF Project will provide:

• a robust evidence base for the Local Authorities to adopt and which can be used to inform local plan and policy development

1 http://www.sustainabilityeast.org.uk/index.php?option=com_docman&task=cat_view&gid=82&Itemid=62

2 www.crif.citizenscape.net

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• three action plans which identify how the community, commercial and public sectors can deliver local energy generating schemes and provide the policy and context for capturing the investment of £6billion for low carbon infrastructure.

Community Energy Fund(s) – CEF

From 2016, zero carbon policy identifies that all new homes must be zero carbon on all regulated emissions they produce (i.e. those emissions arising from space heating/cooling, lighting and hot water).

2.5. For small and medium sized new developments, achieving zero carbon can

be technically difficult to achieve and/or costly. A Community Energy Fund (CEF) is a mechanism to help developers deliver their carbon emission obligations by offsetting residual carbon emissions associated with the development through payment into a Fund (£/tonne CO2). The CEF then channels this investment into local energy efficiency or energy generating projects to help deliver emissions savings.

2.6. In February 2010, consultants Element Energy were commissioned to scope

the potential for a Cambridgeshire CEF(s). This report was presented to Councillors at a briefing in July 2010 at which Councillors identified several key issues for further development (Appendix 1) including:

• Ensuring accountability and governance of the fund(s)

• Understanding the appropriate scale of the fund – local and/or County

• Identifying links between allowable solutions, Section 106, the Community Infrastructure Levy and Carbon Reduction Commitment

2.7. A second report commissioned in February 2011 and developed as part of

the Climate Change Skills Fund, explores in detail the issues raised by Councillors. A draft CEF report is now with Cambridgeshire Local Authorities for comment and finalisation by end of January 2012. Copies of this technical report are available from Sheryl.French@cambridgeshire.gov.uk or 01223 728552. An Officer Steering Group made up of representatives from the Local Authorities and Sustainabilty East has overseen the development of the CEF project reporting to Cambridgeshire Horizons Board and now to this Steering Group.

3. Project Progress

3.1. The CRIF Project is made up of five key areas of work:

• a baseline assessment of energy demand across Cambridgeshire and the potential to deliver 28% of its total energy demand (excluding transport) from renewable energy by 2031 (Workpackage 1)

• the financial and other mechanisms to capture the investment needed to provide Cambridgeshire with greater energy security (Workpackage 2)

• the delivery pathways for key stakeholders including community, public sector and commercial (Workpackage 3)

• dialogue and engagement with stakeholders to identify the key issues and to shape the delivery pathways (Workpackage 4)

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• documentation of the CRIF Process to share with other local authorities to inform learning across the East of England (Workpackage 5)

3.2. Consultants Camco have now completed the baseline assessment report. It

provides the technical facts and figures on how much renewable energy Cambridgeshire already delivers; the technical potential of renewable energy available in Cambridgeshire and the scale of local energy infrastructure needed up to 2031 across a range of technologies to increase local energy generation by up to 28% of total energy demand.

3.3. A draft report on the finance and delivery mechanisms has just been issued

to the CRIF Officer Steering Group (12/12/2011) for comment and discussion. This identifies the scale of investment required (@ £3-6billion) if Cambridgeshire wants to secure up to 28% of its energy from local renewable energy schemes. See diagram below. The draft report identifies funding opportunities including government incentives; policy context and the actions required by the key stakeholders over the short, medium and longer term if we are to achieve up to 28% of our energy from local renewables by 2031.

3.4. During May – November 2011 a programme of digital and face to face

engagement with the three key stakeholder groups has taken place. This has included

• Three events for all stakeholders – May, July and November

• Five stakeholder specific events – September, October and November (including Clean Tech Sector, Developers, Councillors, Public Sector and Community)

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• Seven community events including Ely Market, Alconbury Family Day, Sustainable Parishes South Cambs ; Gamlingay, Whittlesey Fair, Warboys Greener Living Event and Transition Cambridge, Village SOS meeting

• Online and face to face questionnaire –over 100 completed

The www.crif.citizenscape.net website has provided a space for sharing information and presentations providing progress on the project to Cambridgeshire communities.

3.5. A condition for project funding, is the need to share and support other local

authorities with the learning on the CRIF project to inform development of their renewable energy infrastructure planning. A model/blueprint of the process and learning is now being developed in partnership with Sustainability East and Public-I. It is recognised that the process developing the Renewable Infrastructure Framework and the process to implement the CRIF (post Report sign off) is of greater potential significance than the production of the final report itself.

Progress on the Community Energy Fund

3.6. A draft Report on the Community Energy Fund was produced in November

2011. It is currently with the Local Authorities for comment and feedback with a view to sign off the report by the end of January 2012. The report covers

• the emerging Allowable Solutions Framework (please see Appendix 2) and the role of Community Energy Funds within this

• the scale of investment, a potential to attract up to £54million of developer contributions up to 2026

• the most appropriate structure for a Fund. This is seen as a Company Limited by Guarantee similar to the role of Cambridgeshire Horizons which attracted and managed over £100million of Funds for Cambridgeshire as part of Cambridgeshire’s growth strategy

• the most efficient geographic scale for a fund. This identified as County wide, based on administrative efficiency, skills, ability to leverage the Fund and the potential to invest in larger scale infrastructure that brings a lower £per tonne cost for CO2.

• Carbon accounting processes

4. Growing the Cambridgeshire Clean Tech Sector

4.1. The UK is the world’s sixth largest low carbon and environmental economy, with 3.5% of global market share3. The Environmental sector accounts for £22.3 billion (21%) of total UK market value, Renewable Energy for £31.1 billion (29%), and the Emerging Low Carbon sector for £53.3 billion (50%). The ‘newer’ sectors of Renewable Energy and Emerging Low Carbon are significantly higher in value than the more established Environmental sector. In terms of size, the low carbon and environmental economy lies somewhere between the UK’s healthcare and construction sectors.

3 www.bis.gov.uk/files/file50254.pdf):

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4.2. The Greater Cambridge and Greater Peterborough LEP is signed up to growing the local CleanTech Sector as the third new cluster to complement the ICT and Biotech clusters and deliver new green jobs. This will build on Peterborough as an Environment City and its existing Clean tech sector which is currently made up of more traditional environment services and link this into the greater Cambridge area and its emerging ‘newer’ low carbon Clean Tech businesses.

4.3 If we view this emerging Clean Tech sector spatially, we need to link the Peterborough cluster to the north of the County with the newer emerging technologies from the greater Cambridge area. There are two key corridors

Cambridge area

BIO TECH

Pharmaceuticals Diagnostics

Research/Info Tools

Industrial

Genomics Bioinformatics

Proteomics

INFO TECH Hardware Software

Communications

CLEAN TECH Renewables Low carbon

Environmental

Building technologies

Alternative fuels Waste management

Photovoltaics Energy management

Nanoelectronics

The THIRD CUSTER – CLEAN TECH

South Cambridgeshire

Peterborough

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along which the Clean Tech sector can be encouraged to grow. These include the guided bus route via the new towns of Northstowe and Alconbury which can attract and host new Clean Tech companies and the Cambridge – Ely- March- Peterborough raillink. Connecting the Peterborough cluster with Cambridge is important for enterprise and innovation in this sector and distributing this growth across the County.

4.4 IThe work on the Cambridgeshire Renewables Infrastructure Framework

(CRIF) has identified that delivery of 18% renewable electricity and 35% renewable heat for Cambridgeshire will realise investment of between £4-6billion into local energy generation. Cambridgeshire has sufficient renewable energy capacity to deliver this challenge but needs to set the strategic framework to attract the investment and deliver the infrastructure to ensure that significant financial and economic benefits are retained locally.

5. Key issues

5.1. The CRIF Project is producing an evidence base for adoption by the Local Authorities to support the development of local renewable energy policies and plans (alongside other evidence e.g. De-Carbonising Cambridge). This will provide the Local Authorities the ability to plan renewable energy development in a way that suits your district or area. The risk of not doing this is Local Authorities can be subject to speculative planning applications which go to appeal. The new presumption in favour of sustainable development contained in the National Planning Framework will mean that they are likely to be successful unless the local authority can demonstrate that it has plans in place to support delivery of the Uk’s Renewable Energy targets. If Local Authorities adopt the evidence base and the CRIF Action plans this can demonstrate that you are managing and planning the delivery of renewable energy to deliver UK renewable energy targets and provide strength to your decisions. An example of how this has worked in the past is the speculative planning application submitted for development at Hanley Grange for a new Eco-Town. South Cambridgeshire and its partners could argue that it had planned for housing growth through the growth strategy. This provided a successful approach and ability to win at appeal. It is therefore key to the success of the CRIF Project that the local Authorities formally adopt the CRIF Project report (evidence base and action plans) and that this process is identified and programmed into decision making.

5.2. The CRIF Project is producing three action plans. One of these plans is how

the public sector can use its hard (e.g. buildings, land etc) and soft (policy, incentives; growth) assets to support the delivery of new energy generation schemes. The leadership role of the public sector and how it facilitates the context for business growth in the Clean Tech sector up to 2031 is really important. Ownership of this action plan by Members is key to delivery. (Please see appendix 3: draft Public Sector Action Plan)

5.3. The CRIF Project will also produce action plans to support the community

and commercial sector to deliver their fair share of renewable energy in Cambridgeshire. These plans also need to be owned. The public sector will

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have a role to facilitate their adoption by the community and commercial sectors and will need to plan interventions to support delivery of these plans.

5.4. To deliver the scale of infrastructure required across the range of different

technologies and to capture the £6billion investment for Cambridgeshire - up skilling of staff and capacity building across the public sector is needed. Resource planning is an important consideration.

Community Energy Fund(s)

5.5. Geographic Scale of the Fund: The draft CEF report indicates that a

Cambridgeshire wide CEF would offer the greatest benefits as it maximises the size of the fund for investment and minimises administration costs. This is a decision that will need to be taken jointly by the Local Authorities and the processes to make this decision, if appropriate, need to be worked up and agreed.

5.6. Local authorities are required to identify a local plan policy for a CEF and a

list of infrastructure for a CEF to invest in. The Local Authorities will need to work together to agree a policy and the infrastructure list. The CRIF project has started this process for renewable energy for Cambridgeshire but it will need to be supplemented with energy efficiency and waste to energy projects and in the longer term low carbon transport infrastructure.

5.7. Governance of the CEF: The governance of a CEF, although potentially

challenging, will need to facilitate a prioritised and balanced infrastructure plan including strategic and cross-boundary infrastructure and more local community scale investment. Cambridgeshire Horizons is a local example of how Cambridgeshire has already managed a pot of funding and prioritised its investment as a partnership. This is an opportunity to learn from this experience.

6. An emerging Strategic Framework

6.1. The CRIF Project has identified that the scale of infrastructure delivery to

realise the £3-6billion investment in energy generation and growth for the Clean Tech sector in Cambridgeshire is between 200,000-400,000 total installations across all technologies including photovoltaics, waste to energy, ground source heat pumps, wind etc. To manage the scale of change and investment in low carbon energy infrastructure delivery, breaking the work into bite sized chunks is necessary. The CRIF Project has already started this process. It has identified the number of energy installations the community can deliver for itself; the number of installations that the commercial sector can deliver and the number of installations that the public sector can deliver. Action plans are under development to identify how to facilitate this emerging market and provide investor confidence. These action plans need to be shared with stakeholders for comment and input.

6.2. In May 2011, an EU bid was submitted for €1.2million technical assistance

to help mobilise local energy investment. The EU Bid is currently being negotiated with the Commission and contracts are expected to be concluded early February 2012. The EU Bid recognises the scale of infrastructure

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required in the CRIF and what support is needed locally to mobilise investment. Most importantly the EU bid will provide resources to support the Local Authorities to:

• Set up a sustainable finance model to secure investment over the longer term. This will likely include public sector mechanisms such as incentives and grants, CIL, S106 alongside private investment such as developer payments into a Community Energy Fund.

• Set up an Energy Services Company (or similar) that can commission, design, build and manage new energy generating schemes (community scale and larger)

• Support the legal and financial costs to set up a Community Energy Fund(s) for Cambridgeshire

• Develop the skills and capacity within the Local Authorities to deliver energy generating schemes using public sector assets as a means to facilitate and lead local investment

6.3. In discussion with CLG on Allowable Solutions and Community Energy Fund

there is potential for Cambridgeshire to become one of four pilot Community Energy Funds starting in 2012. This means that Local Authorities will need to make a decision on how to proceed on a Fund(s) ideally by the end of January 2012.

6.4. Bringing this all together, CRIF evidence base and action plans, Community

Energy Fund and the EU project we :

• understand what we are trying to deliver

• know what tools are available to use to provide the ambition and policy to attract investment into Cambridgeshire low carbon rather than other areas or countries

• access resource via the EU Project to create a sustainable finance model using public sector assets and opportunities and set up delivery mechanisms such as the Community Energy Fund

• agree infrastructure plans and projects that are priorities for investment and reducing carbon consumption

• agree how to resource the delivery of the CRIF action plans

7. Next Steps

• A Councillor Briefing is being planned on the Community Energy Fund for. January 2012 to discuss the draft report and options for taking the Fund(s) forward

• Discussions with key stakeholders will take place on the CRIF Action Plans during January 2012 to continue to shape the actions

• The negotiation with the Commission on the EU project will be progress during January 2012 with a view to sign contracts by end of January/February 2012

• CRIF and CEF Final Reports will be completed ready for sign off by the Steering Group by end of January 2012 and for the Local Authorities to take forward

8. Recommendations – see cover sheet

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Appendix 1: Summary of key issues raised at a Member Briefing Session 27/02/2010 Key issue Further work needed Inclusion in COF

Report Inclusion in the Next Steps

• Carbon accounting – how to measure the emissions savings from fund investments.

Chapter on carbon accounting to be included

More detailed work will be required

• Financial accountability – how to ensure scrutiny of fund investments when investments is undertaken by a Partner organisation.

Ensuring accountability of the COF

• Member representation/ democratic accountability – how to ensure member involvement in investment decisions.

Identify governance models currently working or under discussion in Cambridgeshire working at this scale

Further detailed work will be required to develop the structures and accountability systems.

Analysing the lessons learnt from current Carbon Offset Funds

To be included in the Report.

Implications of the Code for Sustainable Homes on the size of the Fund

For inclusion in the report.

Understanding the appropriate scale of the fund

The business case for a county-wide fund

More explicit reference to the benefits at a county scale, as opposed to a district level

More detailed work will be required

Clearer descriptions on the different elements and their linkages.

Identify the links between Allowable Solutions, S106, the Community Infrastructure Levy and Carbon Reduction Commitment

Clear indication of the cost to developers of the Code for Sustainable Homes.

Make clear that the COF does not impact on section 106 or Community Infrastructure Levy monies – it is a separate pot.

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Appendix 2: Allowable Solutions

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Appendix 3: Early DRAFT of the Public Sector Action Plan for discussion and amendment during Dec/January 2012 Short Term

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