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Retrofit for the future

Source: Public Sector Executive May/June 2013

Leeds City Council is now in the second phase of an innovative retrofitting agreement that uses energy performance contracting to transfer risk to the private sector. PSE talks to the council’s executive project manager, Polly Cook.

Following the success of the multi-award winning RE:FIT model in London, Core Cities asked for volunteers keen to try it outside of the capital. Leeds was one of the first, and after beginning as just a pilot area, it is now taking it forward to its second phase and planning a third.

RE:FIT, originally developed by the London Development Agency, is based on an energy performance contract under which an energy company (E.ON in Leeds’ case) guarantees the savings made through the implementation of a number of energy conservation measures.

Polly Cook, who has been leading on the scheme for the council, told us: “There are two key attractions: one, it’s already been OJEU’d and PQQ’d, so the timescales are shorter. Also, the way the contract terms are set up means you’ve got a transfer of risk to the private sector. With Salix-type schemes, you get the funding but at the end of the day you’ve got to ensure the technologies you put in do make the return you’re saying, because you’ve still got the loan to pay back. With this, someone else, who has more knowledge and experience in that area, is taking that risk.”

Building life

Once Leeds decided to go ahead with the scheme, the diffi cult part early on was choosing the right buildings.

Cook said: “The longevity of the asset was important, the building life. When we first started looking at RE:FIT, it was when all the austerity measures were coming in, and a lot of councils were in turmoil – you’ve got to ensure that the life of the building is going to be longer than seven years, and that the building hadn’t had too much Salix or previous work done on it, so there are enough opportunities for more.

“For RE:FIT phase one, we picked a range of buildings: secondary and primary schools, a data centre, leisure centres, normal office blocks – quite a variety. The idea was, because we were piloting it, we wanted to give a true fl avour of how it worked across different sectors. So we approached it slightly differently in phase one to what we otherwise would have done.

“The first phase took quite awhile; we’ve done a second phase since then, probably within a six-month timescale, but in the first phase there was a lot of work in terms of developing the actual documentation and the models. A lot of authorities struggle with the initial phase of actually finding appropriate buildings. Once you’ve been through that, it’s a lot easier.”

Physical upgrades

The buildings themselves have seen a whole host of upgrades, from air handling units and thermostatic radiator valves to pool covers and LED lighting, as well as pipe insulation, adjustments to data cooling centres, and lots of new building management systems. 

Phase two, which will benefit major buildings like Leeds Civic Hall, the City Gallery and City Library, Leeds Town Hall, and the John Charles Centre for Sport, also involves some combined heat and power projects. For the nine buildings involved in phase two, the upgrade programme should reduce energy consumption by 20% and save 1,317 tonnes of CO2, E.ON said.

The transfer of risk to the private sector is clearly a key benefit – we asked Cook whether there was any downside that comes with this model of contract, and she said: “Not particularly! It’s very positive.

“There are some things to consider: for example, we have our own maintenance team in-house. So we’ve retained maintenance responsibility, but therefore need to ensure our maintenance regime is good. You don’t want to give any opportunity for it to be said that the reason that buildings aren’t performing is due to something that we’ve done.

“So you need to make sure there are clear responsibilities and that that’s well-managed – but as long as you’re aware of that when you go into it, it’s a positive.”

‘A £6bn market’

Richard Scott, head of energy efficiency for E.ON’s Connecting Energies business, told PSE: “Moving on to the second phase of this agreement is a great sign of the success we’ve already seen in helping Leeds City Council work towards its sustainability goals in a straightforward and financially viable way.

“The real beauty of this project is we’re cutting energy costs and carbon emissions to meet the evolving needs and expectations of local people without the need for the authority to shoulder the operational costs itself.”

He added: “This is potentially a £6bn market and the opportunity is huge – we’ve barely scratched the surface of saving energy in large buildings. To date only a couple of dozen councils and private companies have caught on to the idea that energy efficiency investment is an excellent use of their resource and have seen the results to prove it.”

Carbon targets

RE:FIT is just part of Leeds’ wider target to cut its estate emissions by 40% by 2020.

Cook said: “I think on an annual basis these two phases of RE:FIT combined will save about 3,000 tonnes of carbon. It’s not going to be that alone that does it; we are also going to do a rolling programme with our schools, which I think will have a bigger impact – maybe three times the size. That will be a school-specific third phase of RE:FIT, linked with the DfE and Salix, which is out to tender at the moment.

“There’s also lots of other work going on; whenever buildings are being re-commissioned, they’re being done in a much more energy efficient way. There are solar panels being put in, various district heating options. Energy efficiency is one element of it, but the rationalisation of buildings also contributes, for example.”

Cook is an enthusiast for the RE:FIT model, and says it could work “anywhere”, having proved itself at a number of councils now (including Nottingham and Ealing as well as Leeds), plus Transport for London, fire and police services.

Leeds is now working with Local Partnerships (jointly owned by the LGA and the Treasury) to help roll RE:FIT out across the country. Cook said: “We’re going out to other authorities and organisations, Apse (the Association for Public Service Excellence) for example, and doing presentations and supporting other councils to go through the process.

“We’ve also now been approached by other public sector bodies. The idea is that, by us supporting them, they go through it a lot more quickly than we did the first time round.”


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