Damian Hemmings provided Members with an update on the delivery of the agreed recommendations resulting from the Climate Change and Green Deal Scrutiny Task Group review.

Damian Hemmings highlighted the following:

Recommendation 9: Legal advice has been procured to establish the council’s scope and legal limitations in generating, distributing and selling energy and to seek advice on the development of an ESCO. This will include identifying a legal framework for energy provision and more detailed information will be gathered on scenarios for the development of solar PV and district heat networks and any models that may be utilised by the council.

Recommendation 7: There is scope for involvement in future schemes for the use of an ESCO. Models would need to be explored in the first instance. The legal implications of this model will be informed by decisions taken on the development of an ESCO. A tender for technical support in developing the councils district heating plans will be released in October 2015, utilising funding secured from the HMDU.

Councillor John Sargeant asked if further development of district heating was linked to the council’s regeneration scheme. Damian Hemmings confirmed this was the case. Councillor Russell Makin asked if CHMP regeneration proposals were also linked to the development of heat and energy networks. Damian Hemmings explained that the council has had input on the master planning for the estate regeneration planned by CHMP. Highpath Estate has the potential for district heating at present. For this to be viable on all estates there are a number of factors that need to be considered. Councillor David Dean asked if residents on CHMP estates could have a choice of energy provider should Merton establish an ESCO. Damian Hemmings explained that the council are far from the stage at which these kinds of decision would be taken. Merton’s involvement in generation, management or distribution would need to be considered alongside third party management and other distribution options.

Councillor David Dean explained that a similar model had been established through Opportunity Sutton and that the council could not have a monopoly on the transmission network. Damian Hemmings explained that the council are far from the stage at which these kinds of decision would be taken. There is a need for a detailed feasibility study on the technical and financial elements before the council can decide on the model.

Councillor Daniel Holden asked if there could be combined heat and power available. Damian Hemmings explained that there are restrictions regarding the distribution of electricity and the council’s role as a retailer and vendor. The legal report to be received will address this.

Recommendation 8: Rolling out Solar PV is underway and across 28 sites to date. Feasibility studies are being undertaken to determine other sites that could benefit from Solar PV. There are also proposals regarding an 80% reduction in feed in tariff levels, as of January 2016, which will impact on the current model which is predicated on the feed in tariff. These proposals would have a significant impact on the project going forward.

Councillor David Dean welcomed the proposals on Solar PV roll out and stated that this work should be encouraged to increase sustainability, not just for financial reasons. Damian Hemmings explained that all proposals on Solar PV are based on a business case and return on investment of at least 4% is expected. However, changes coming forward will make it harder for this to be met. There are further potential opportunities for energy sales presented by the GLA’s ‘License Lite’ programme whereby the GLA (or partner supplier) would hold the supply license and purchase energy from the boroughs.

Councillor Daniel Holden asked if there were opportunities for solar PV to be rolled out through collective purchasing. Damian Hemmings explained that the council are exploring a collective purchasing process at present that could allow residents to make a saving on the market cost of Solar PV. Should the council seek to deliver these services jointly with other councils then one council could lead on procurement and the other could fund marketing and promotion costs. However any future delivery is dependent upon the outcomes of the Government’s Feed in Tariff consultation.

Recommendation 3: Damian Hemmings explained that the Climate Change Strategy was completed in July 2014 and that a steering group had been set up with the aim of monitoring progress and reviewing action taken.

Councillor David Dean asked if the council still use the Merton Rule model and seek to gain 20% sustainable energy in all developments. James McGinlay explained that this has been overtaken by changes in building regulations which are now established in planning policy. Damian Hemmings added that under recent changes around domestic planning policy there is now a limited amount that the local authority can do in terms of setting local limits and standards. Councillor Andrew Judge added that the council had to lobby Government to adopt the Merton Rule in the UDP. As we are now legally prevented in planning regulations, we cannot enforce this rule. However, Merton seeks to be innovative as a local authority.

RESOLVED: The Panel noted the report and requested that an update be received in 6 months.