Gravesham Borough Council. Leader of the Executive

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1 Classification: Key Decision: Part 1 Public Yes Gravesham Borough Council Report to: Leader of the Executive Date: 18 January 2013 Reporting officer: Subject: Kevin Burbidge, Director (Housing and Regeneration) and Nick Brown, Director (Finance and Environment) Purpose and summary of report: To seek authorisation to embark on a project to install photovoltaic panels (solar panels) on council-owned housing. Recommendations: The Leader is requested to: 1. Give authorisation to the Director (Housing and Regeneration) and Director (Finance and Environment) to take all necessary steps, including entering into appropriate legal arrangements to install, by way of a roof rental arrangement, photovoltaic panels on approximately 565 council-owned housing properties. 1. Introduction 1.1 Photovoltaic Panels (also known as solar panels) are devices that convert light energy from the sun into electricity that can be used to power lights and appliances in the home. The key benefits of the installation of solar panels are: Reduced energy bills the solar panels generate their own electricity which means that, a household can use this electricity meaning less electricity needs to be bought from the main suppliers. Typical savings are suggested to be around 70 to 120 per year (information taken from the E-on website) Lower household carbon emissions household carbon emissions could be reduced helping to lower the impact on the environment Support for council tenants reduced electricity bills will help council tenants in the current difficult economic times.

2 1.2 The electricity that is generated cannot be stored therefore it must be used at the time that it is generated, during daylight hours. Any electricity that is not used is sold back to the national grid at an Export Tariff which is set by the government. 2. The Photovoltaic Project in Gravesham 2.1 In order to determine whether the installation of solar panels is feasible, the council commissioned a consultant experienced in undertaking solar panel projects, Battle McCarthy, to assist. The cost of employing the consultant for this piece of work was 7,500 which has been funded from within existing Housing Revenue Account budgets. 2.2 To identify housing stock within the borough that may be suitable for the installation of solar panels, it was necessary to identify which of the council s housing stock had an energy performance rating of D or better. The intention is to install solar panels on all suitable council-owned housing properties within the borough, with a focus on those that are within the most income deprived areas of the borough. 2.3 An analysis of the council s housing stock was undertaken and, as at the beginning of November 2012, 677 council-owned housing properties had Energy Performance Certificates (EPCs) in place. Of these, 614 properties were identified as having a rating of D or better. A number of these properties are within some of the most income deprived areas in the borough, 2.4 Battle McCarthy has undertaken a feasibility study of all 614 properties, in order to identify those properties that are suitable for the installation of solar panels (based upon pitch of the roof, orientation, over-shadowing etc). Based upon the feasibility study Battle McCarthy has broken down the suitable properties into the following classifications: 95% efficiency and potential for a very high return 105 properties 90% efficiency and potential for a high return 311 properties 80% efficiency and potential for a medium return 158 properties 70% efficiency and potential for a low return 13 properties 2.5 Of the remaining 27 properties sent to Battle McCarthy for analysis, 22 properties are unsuitable for the installation of panels and the remaining five properties still require the feasibility study to be completed, although these are the new properties at Henry Gardens and it is considered that they too, will be suitable. 2.6 Battle McCarthy have confirmed that, for a roof-rental installation of solar panels, suitable suppliers are only likely to undertake the installation of panels on those properties that have an 80% efficiency/medium return or above. As such, this would equate to installation of panels on 574 properties, out of the original list of 614. Of the 574 properties identified, there are 14 which are unsuitable due to the age of the roof but it is anticipated that the properties at Henry Gardens will be suitable. As such, it is anticipated that 565 properties out of the 614 will be suitable for the installation of solar panels..

3 3. How the project will be rolled-out 3.1 Tenant Consultation Based upon the 565 properties that have, so far, been selected for the project, it will be necessary to undertake a consultation with the tenants regarding the works that will need to be undertaken to install the solar panels It is the council s intention that a letter will be sent to each tenant informing them that their property is suitable for the installation of panels and also to set out the benefits that the panels will bring to them. This letter will simply ask tenants to let the council know if they are willing to participate in principal, in this project. The letter will also provide contact details for the Housing Team should a tenant have any specific questions they wish to ask and will also ask them to contact the Housing team to confirm that they are willing to participate in the scheme Once a suitable PV supplier has been identified, more in-depth consultation will take place with the tenants. 3.2 Market Research and Procurement The council will continue to work with Battle McCarthy to ascertain the potential market interest in the project On behalf of the council, Battle McCarthy will evaluate the marketplace and identify suitably qualified and interested suppliers for the installation of panels on a roof rental basis. This means that there would be minimal financial outlay for the council. The council would rent the roofs of its housing stock to a company which would share the electricity generated from the panels with the tenants. The tenants would use the electricity that they require and any extra electricity generated would be sold back to the grid with any income being payable to the solar panel supplier/investor The procurement will be advertised and, should suppliers wish to tender for the project; this will be handled by Battle McCarthy in consultation with officers. 4. Project timeframe 4.1 Following a meeting with Battle McCarthy, the consultants are currently in the process of developing a detailed timeline which will set-out the critical tasks that need to be completed in order for the project to progress in the quickest manner. It is anticipated that this will be completed and shared with the council at the beginning of January 2013 on order for the project to commence in a timely manner. 5. Background papers 5.1 There are no background papers pertaining to this report.

4 IMPLICATIONS APPENDIX 1 Legal 1. Procurement The procurement is in the nature of a concession arrangement whereby the provider has the right to exploit the work or services provided. Concessions do not require an EU procedure to be carried out, although a works concession requires publication of a notice in the official journal. There is a legal duty to seek competition by advertising appropriately. EU Commission guidance indicates that web-based advertising such as the South East Portal is likely to be sufficient. It is proposed to use the portal for advertising this procurement. 2. Other legal requirements for project Variation of the Tenancy Agreements of those tenants who are willing to participate in the scheme to take account of the solar panel installation on the property will be required.. Linked to the change to tenancy conditions, it will be necessary to decide whether on exercise of the RTB (or other disposal of the dwellings) the lease will be acquired by the purchaser or retained by the council. Building control consent and Secretary of State consent will need to be obtained. There is no reason to believe these will not be obtained, but they should be sought at an early stage. Best consideration for the disposals will need to be considered. The investor will require proof of title to the properties and information about rights for access, to ensure the council has the necessary rights to enter into leases. A lease of air space will be required for each roof and negotiation of its terms will be necessary e.g. regarding rent; to ensure right to buy or other disposals are permitted; to ensure obligations on the council are not unduly onerous; that provisions for recovery of lost tariff by the tenant are fair; that proper maintenance of panels is carried out; that sufficient rights are retained for maintenance of roofs by the council; suitable options for the council in event of insolvency/default by the supplier or investor (e.g. step in rights ). The leases must be excluded from the security of tenure provisions of the Landlord & tenant Act Planning considerations: The Town and Country Planning (General Permitted Development)(Amendment)(England) Order 2011 provides that the installation, alteration or replacement of solar PV or solar thermal equipment on a dwelling, house or block of flats, or on a building situated within the curtilage of a dwelling, house or block of flats does not require planning permission, provided: (a) The equipment would not protrude more than 200 mm beyond the plane of the roof; or (b) It would not be higher than the highest part of the roof (excluding chimney). There are other constraints relating to Listed Buildings, Ancient Monuments, World Heritage Sites and Conservation Areas, but these issues do not apply to the properties referred to in this report.

5 IMPLICATIONS APPENDIX 1 Legal continued There are further conditions as follows: (a) Solar PV equipment shall, so far as practicable, be sited so as to minimise its effect on the external appearance of the building; (b) Solar PV equipment shall, so far as practicable, be sited so as to minimise its effect on the amenity of the area. Finance and Value for Money The council has commissioned Battle McCarthy to undertake the feasibility study of the 614 properties at a cost of 7,500. In addition to this work, Battle McCarthy will also be commissioned to assist with the procurement exercise. Funding for this work has been identified from existing budgets within the Housing Revenue Account. Some costs will be incurred in connection with the grant of leases. These will include land registry fees up to 5,000 together with the cost of any assistance required for the grant of leases, estimated at 9,000. Additional insurance premiums need to be considered as there may be a need to increase insurance costs due to the provision of the panels. Given that a roof rental scheme is the preferred option, it is assumed that the insurance costs would fall to the contractor rather than the Council. This would need to be confirmed during contract negotiations with the chosen provider. If the contractor were to charge the authority for lost income resulting from downtime which resulted from either actions of the tenants or the authority, as landlord, we may be able to insure against this. However, until both these aspects are confirmed and the potential revenue streams quantified, Zurich, the Council s insurer, are unable to provide an indicative insurance premium. Officers will negotiate with Zurich at the appropriate time to ensure the adequate insurance cover is in place. Provision will need to be made for the cost of any downtime for the panels due to works on the roofs etc. This has been minimised as the properties that have been selected are those that have been identified as not requiring significant roof works in the coming years. The council will generatesome income for the rental fee that will be paid by the solar panel provider for the use of the roof space. This income could be used to assist those properties not suitable for solar panel installation with improving the energy efficiency of their property. Any income generated from renting the roof spaces will need to be incorporated into the Authority s VAT partial exemption calculation, which measures how much VATable expenditure relates to exempt supplies. Gravesham currently operates within the 5% limit set by HMRC. Given the level of income expected from renting of roof spaces, it is not Anticipated that this will jeopardise the current position, however, officers will continue to monitor the position and notify Management Team and Members of any concerns. Risk Assessment The council will need to consider the potential for right-to-buy in this project, which will need to be considered in the progression of the project. Should a tenant wish to purchase the property, consideration will need to be given to the remainder of the term of the solar panel project.

6 IMPLICATIONS APPENDIX 1 Equality Impact Assessment Screening for Equality Impacts Question Answer Explanation a. Does the decision being made or recommended through this paper have potential to cause adverse impact or discriminate against different groups in the community? b. Does the decision being made or recommended through this paper make a positive contribution to promoting equality? c. What steps are you taking to mitigate, reduce, avoid or minimise the impacts identified above? Yes Yes The continuation of this project is dependent on the success of the pilot project As a pilot project, the installation of panels will only take place on a limited number of properties. The properties that have been selected are those that are within some of the most income deprived areas within the borough. -- In submitting this report, the Chief Officer doing so is confirming that they have given due regard to the equality impacts of the decision being considered, as noted in the table above Corporate Business Plan Crime and Disorder The outcomes of this project directly impact on the following Ares of Focus within the Corporate Business Plan: Area of Focus 7 delivering a high quality housing service alongside fully engaged tenants Area of Focus 9 meeting the housing needs of vulnerable people within Gravesham There are no crime and disorder issues arising from the progression of this project.