Still ‘no clear role’ for Edinburgh Council energy company

Tuesday August 22nd 2023

Edinburgh-City-Chambers


Written by Local Democracy Reporter, Donald Turvill

An energy company set up by Edinburgh Council still has “no clear role” more than seven years after it was started.

Councillors are set to debate several options for the future of Energy for Edinburgh, including winding it up, after a report cast doubt over the value of an arms-length company delivering projects such as heat networks.

Launched in 2016 to deliver affordable energy initiatives with a view to reducing carbon emissions, fuel poverty and heating costs, it has not yet carried out any activity despite funds being allocated every year since, including £200,000 in the 2023-24 budget.

It was originally proposed Energy for Edinburgh (EFE) would focus on developing local heat networks – systems which carry hot water to consumers from a central source via underground pipes – as well as solar panel and non-domestic energy efficiency projects.

However a new appraisal has concluded that there is “no clear role for the company at the current time”.

There would be “limited added value” in using the organisation to take forward initiatives, a report said.

Six options have been set out for EFE’s future by officials: to wind-up the company, use it to progress solar panel projects; use it to progress heat network projects; use it to progress non-domestic energy efficiency projects, sell 50% of shares to a delivery partner, or use it to leverage funding.

The report said it was not considered realistic for a council-owned energy company to develop capabilities in every area and it would be better to “focus wholly or primarily on a single area of activity and concentrate upon developing capabilities and core competencies in this area”.

It warned other local authorities which have set up energy services companies have faced “significant losses”.

The council is already exploring delivering heat networks in-house at Granton Waterfront and the Edinburgh BioQuarter, as well as for housing schemes at Gracemount, Sighthill, Craigentinny, and Seafield.

The report urges councillors to consider why it would be better for an arms-length organisation (ALEO) to carry out projects rather than the council doing it itself.

“The City of Edinburgh Council benefits from certain advantages that can assist with the viability of projects. These include exemption from certain taxes…access to lower cost finance…access to certain grant funds; and access to public sector procurement frameworks offering preferential prices,” it added.

“It is conceivable that utilising EFE to deliver projects instead of the council could result in unintended consequences, for example increased tax burdens. While in theory any number of Council projects could be transferred to EFE, it is likely that in some cases this would result in additional cost for the same outcome given the above factors.”

A decision on the future of EFE has been delayed until later this year once business cases for heat networks are finalised.

Councillors will discuss the options set out in the report at the Policy and Sustainability Committee on Today..

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