Agenda item

To scrutinise the financial Business Case for the proposed Barkham Solar Farm.

The Committee considered a report, set out at Agenda pages 93 to 106, which gave details of the financial business case for the proposed Barkham Solar Farm. (The Committee considered Part II financial information in private after excluding the public).

Sarah Kerr (Executive Member for Climate Emergency and Resident Services) attended the meeting, supported by officers, to present the report and answer Member questions.

The report stated that energy generation was one of the key priorities in the Council’s Climate Emergency Action Plan (CEAP). The Barkham Solar Farm was a specific project within the CEAP.

The financial business case for the Barkham Solar Farm was approved initially by the Executive and Council in 2021. The forecast costs and revenues were based on the best estimates available at that time. The latest report included an update on the Capital costs of the project together with the General Fund Income and Expenditure forecast (Part II).

The latest forecasts indicated a net income (after Capital financing costs) over the 25 year life of the project of 67.16m (£2.69m per annum on average). This compared to the initial expenditure of £26.85m. The forecast return compared extremely variably against the forecast return of £480k per annum in the 2021 business case.

On 30 June 2022, a Special Council Executive Committee meeting approved the procurement strategy for the contractor required for the construction of the solar farm. The report stated that procurement of the contractor was progressing via a framework with the appointment expected in November 2022. The current delivery programme indicated that the solar farm would commence operation in the summer of 2024.

In the ensuing discussion, Members raised the following points:

In relation to the technical business case for the Barkham Solar Farm – had the business case been reviewed by technical experts? It was confirmed that officers had held discussions with other Councils which had developed solar farms and were using technical consultants in order to ensure that the project was a success.

In relation to discussions with SSEN, had a deal been agreed for grid connection for the solar farm? It was confirmed that a price for the grid connection had been agreed and formally accepted. It was suggested that the Council should lobby the Government and the energy companies to ensure that the price of grid connections was reasonable.

What was the impact of recent events on the financial business case for the solar farm? It was confirmed that the calculations in the business case were prudent and that the current state of the energy market indicated higher returns than those stated in the report. Interest incurred in funding the project would be repaid over its lifetime.

What was the break-even rate for electricity prices? It was confirmed that a written response would be provided for this question.

What was the current availability of solar panels to supply the project? It was confirmed that there were some delays in delivery. However, a combination of pre-ordering and work with the contractor would mitigate any supply issues.

The solar farm had a project life of 25 years. How had this lifespan been determined? It was confirmed that the 25 year period was based on the lifespan of the equipment used in the project. The relevant planning permission had been granted for 25 years.

The report referred to the option of “sleeving” the electricity output directly to WBC’s operational portfolio through a licenced supplier. Were any additional costs relating to sleeving contained within the business case? It was confirmed that the two potential options (export to the grid or supplying WBC) had been evaluated and both stacked up financially. The options would be assessed and evaluated further as the project progressed.

Did the solar farm project envisage the use of batteries to extend the period for energy usage? It was confirmed that the project did include the installation of batteries – details would be discussed with the design and build contractor. The location and screening for batteries would be discussed with the Council’s Planning team in due course.

RESOLVED That:

1)     Sarah Kerr and the relevant officers be thanked for attending the meeting to answer Member questions;

2)     responses to Member questions not answered at the meeting be circulated to the Committee in due course;

3)     following the Committee’s consideration of the financial business case for the Barkham Solar Farm, the following points be referred to the Executive:

a)    the Overview and Scrutiny Management Committee has reviewed and scrutinised the financial business case for the Barkham Solar Farm;

b)    the Committee identified a number of issues requiring further officer investigation and feedback, including: break-even calculations, risks relating to changes in the energy market and the pros and cons of split versus turnkey projects;

c)    whilst the Executive should consider these issues fully, the Overview and Scrutiny Management Committee supports the Barkham Solar Farm project in principle and believes that it should proceed in a timely manner;

d)    the Council should lobby the Government and Energy Companies in relation to charges for grid connection, in order to ensure that charges are realistic and viable for Councils and other affected organisations.