Do you have hidden assets that will power your long term economic growth?
Energy is rising rapidly up the agenda for local authorities. They are already dealing with the challenge of rising prices but there is also growing concern about the closure of large volumes of generating capacity that, without new investment to replace them, could increase the risk of energy scarcity and the need to directly manage demand. In addition, when public health becomes local authorities’ responsibility in April 2013, local authorities will have a direct interest in reducing the impact on health of fuel poverty.
Local energy self-sufficiency, combined with careful management of demand, can help address some of these challenges by providing locally available and affordable energy. Successive UK governments have tried to encourage better energy management through initiatives such as the Carbon Reduction Commitment and the Green Deal, but local authorities have yet to make the most of the options available to them. This has partly been due to their focus on meeting immediate demands to reduce costs and partly due to a lack of clarity among local authorities about how they can manage energy better and how to move towards greater self-sufficiency.
To improve energy management and become more self-sufficient, local authorities need to understand exactly what energy-producing assets they have within their locality and what the local energy needs are. They then need to work with local industry to begin to develop local energy sources. Depending on their location, councils could develop wind and tidal power, harness geothermal energy or use the residual heat generated from permanent industrial facilities. There will be a wide range of energy-producing and energy reducing opportunities available and it seems clear that many authorities will find that more energy could be generated locally than at present.
Having carried out an assessment of demand and potential supply for their council area, local authorities can then develop a local energy map. Local authorities then need to determine how they can work with local businesses and industrial premises to secure new energy supplies.
In the current climate many authorities do not have sufficient funds to develop new energy provision, but they could secure central funding from the Green Investment Bank. The UK government has assigned the Green Investment Bank the task of attracting private funds for the financing of environmental preservation and improvement initiatives.
It can also act as facilitator to encourage third-sector organisations and businesses to work together to exploit the energy resources available to them. For example, a residential care home may currently receive its energy from the local grid. However, the local authority could broker an arrangement where it is connected to a local hospital to benefit from an existing or expansion of a combined heat and power energy-producing source.
This could bring benefits to both parties by reducing costs. It could also help alleviate fuel poverty in deprived areas. Excess heat from an industrial plant, for example, could be channelled to a housing estate in a deprived area of the locality.
It is also clear that there is a real opportunity for local government to use the development of energy self-sufficiency to stimulate local economic development. The availability of locally provided reliable and affordable energy could be an attractive incentive for new business to locate in the local area, for example to a new industrial park. This includes the possibility of attracting foreign investment from companies that are looking to create greener, cheaper supply chains closer to their markets.
The challenge is that these developments are very new to local authorities. The business case will include many uncertainties and will be difficult to fit with the existing decision making processes. However, the prize is so great that they should not be deterred. There is real potential to save money, to bring new jobs and growth, and to operate in a greener way. Forward thinking local authorities should be looking to seize those opportunities on their doorstep.
Marietta Di Ciacca, local government expert, PA Consulting Group
For more information, visit www.paconsulting.com/greeningbusiness