Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
Consideration was given to a report of the Director of Environment which sought a decision on the preferred option for delivery of Wrigley Head Solar Farm.
The Solar Farm project was a 891kW ground mounted solar PV array at a Council-owned former industrial landfill site at Wrigley Head in Failsworth. The solar farm would improve the site, including in terms of biodiversity via wildflower planting and other measures, and would generate a significant amount of renewable energy, potentially contributing to the Council’s 2025 carbon neutrality target and / or the borough 2030 target. The project would save an average of 50 tonnes of CO2 per annum over the lifetime of the scheme and cost around £1.1 million to develop. The specification of the project was set in 2019 when the original feasibility work was done it was possible that with improvements in technology, the scheme could achieve 1MW of generating capacity.
In spring 2020, the impact of the coronavirus pandemic and national lockdown on the economy meant that the long-term outlook for wholesale electricity prices was revised downwards. The change in this assumption underlying the financial model for the solar farm meant that with the new outlook, the solar farm no longer showed a viable business case.
As a consequence, the project was considered by Cabinet in the summer of 2020 in the context of the Creating A Better Place capital programme review. A decision was taken at that time to stop work on the project.
Before work on the project was paused, a fee was paid to Electricity North West to accept a grid connection offer. A further ‘staged payment’ of around £35K was due in 2020 but was not paid as a consequence of the Cabinet decision to pause work on the project. Electricity North West have confirmed that the grid connection offer was still valid and have provided updated details in terms of grid connection costs and timescales.
The solar farm scheme was dependent upon a cable easement across third party owned land. Two adjoining landowners have indicated a willingness to grant a cable easement across their land, however, no terms have been agreed. It is expected that the third-party landowner would want a payment or the transfer of the council’s adjoining land for nil consideration for the grant of the easement.
In July 2019 at Full Council, a new 2025 carbon neutrality target for the Council was announced - to cover Council buildings and street lighting.
The Oldham Green New Deal Strategy (adopted in March 2020) confirmed the Council carbon neutrality target for 2025 and set an additional carbon neutrality target of 2030 for the borough as a whole.
According to methodology from Salix, it was estimated that Wrigley Head Solar Farm could save around 50 tonnes per annum of CO2. The outline financial model also showed that the project could generate an IRR of between 3.5% and 7% from savings on the Council’s energy bill. The expected lifetime of the solar farm is 30 years.
The project gained Planning Permission in December 2021, with a number of Planning Conditions attached relating to environmental surveys and the construction of a screening fence alongside the tram track, which was agreed with TfGM in order to remove their objection to the scheme.
Electricity North West have confirmed that the grid connection offer for the solar farm is still valid. ENWL are now waiting for the next ‘staged payment’ of around £35K for connection works already accepted (which was not made after the project was paused in 2020).
For the scheme to be taken forward, negotiations would need to resume with the third party landowners who own the land across which the cabling connecting the proposed solar farm to the ENWL grid connection point must pass. This will likely be done by ENWL as part of the grid connection works, rather than by the Council.
The GM Combined Authority recently set up a framework agreement for low carbon projects called the “Go Neutral” framework. This framework has a number of lots, including two lots relevant to the Wrigley Head solar farm project. Lot 4 is for Council-funded ground mounted solar and Lot 5 was for developer-led and funded hybrid low carbon projects on Council-owned land, which can include ground-mounted solar. The framework agreement was available to Oldham Council.
In September / October 2022, the Council tested the market for the Wrigley Head project by placing an Expression of Interest on both lots 4 and 5 of the Go Neutral framework. These EOIs were placed to attract market feedback in terms of the practical deliverability of the project (Lot 4) and the financial case for the project (Lot 5). The EOI process is now complete and attracted two returns on each of Lots 4 and 5.
One of the two respondents on Lot 4 stated that due to a rise in costs, the Council should increase the available budget for the scheme by 25%. This would mean that the estimated capital budget required to construct the solar farm will rise from £1,080,465 to £1,350,581. This is the most accurate estimate of project cost available at the time of writing. A final cost can only be established through a full procurement process – which is likely to take the form of a mini-competition on the GM Go Neutral framework.
It was estimated that a revenue budget of around £70K would be required to progress the scheme to construction stage. This figure comprised £35K for a ‘staged payment’ on the grid connection, and £35K for the procurement and appointment of an ‘owners engineer’ in accordance with Contract Procedure Rules to act as a ‘client side’ external Project Manager for the scheme, overseeing the ‘Engineer, Procure and Construct’ (design and build) contractor.
If the Council decided to proceed with the recommended option (Council to fund and own the solar farm), the next step would be a mini-competition on Lot 4 of the Go Neutral framework. This would give the Council formal bids from contractors on the framework, from which a successful bidder would be selected. As two contractors have expressed interest in the project, it was likely that the Council will receive bids from these two in a formal mini-competition.
Option 1 - Do nothing. Under this option, no further work would take place on the project, and no further expenditure would be incurred. However, the project would not generate a revenue income for the Council nor make any contribution to reducing carbon emissions in Oldham, GM nor generate electricity for a future Oldham Local Energy Market.
Option 2 - Proceed with a mini-competition under Lot 4 of the GM Go Neutral framework and procure the Owner’s Engineer. Under this option, the Council would see a contractor to design, build and operate the solar farm, which would be funded and owned by the Council, with the Council receiving the electricity generated via a Power Purchase Agreement with the Council’s main electricity supplier.
Option 3 - Proceed with a mini-competition under Lot 5 of the GM Go Neutral framework and procure the Owner’s Engineer. Under this option, the Council would seek a contractor funded and operated model for delivery of the Wrigley Head solar farm, with the Council purchasing electricity from the developer via a Power Purchase Agreement at a rate yet to be determined.
RESOLVED – That:
1. The preferred delivery option to proceed with a mini-competition under Lot 4 of the GM Go Neutral framework and procure the Owner’s Engineer. Under this option, the Council would see a contractor to design, build and operate the solar farm, which would be funded and owned by the Council, with the Council receiving the electricity generated via a Power Purchase Agreement with the Council’s main electricity supplier be agreed and the allocation of £1,350,581 capital funding from the Creating a Better Place programme for construction of the project be approved.
2. The appointment of a contractor further to a mini-competition on the GM Go Neutral framework delegated to the Director of Economy and the appointment of an Owner’s Engineer in consultation with the Executive Director for Place and Economic Growth, the Leader of the Council, the Cabinet Member for Finance and Low Carbon, the Chief Executive and the Directors of Finance and Legal Services.
3. The acceptance of any grant funding from the Unlocking Clean Energy in Greater Manchester project be delegated to the Director of Economy in consultation with the Executive Director for Place and Economic Growth, the Leader of the Council, the Cabinet Member for Finance and Low Carbon, the Chief Executive and the Directors of Finance and Legal Services.
Publication date: 25/01/2023
Date of decision: 23/01/2023
Decided at meeting: 23/01/2023 - Cabinet