Energy Services Company to be set up

An arms-length organisation was agreed to be set up at Aberdeen City Council’s Full Council today (Weds 17 August) which would manage all of its energy-related activity.

Councillors agreed after a vote the recommendations that an interim informal Working Group led by a project manager will be set up and will take forward the development of a detailed business plan.

The Working Group would include relevant internal energy experts, elected members including two from the administrating and one from opposition, and representatives from ACC’s legal and finance services.

The Energy Services Company (ESCo) would be an arms-length external organisation (ALEO) wholly owned by the Council to manage all energy related activity undertaken by ACC with the option to expand and develop energy related services over time.

Aberdeen City Council Leader Councillor Jenny Laing said: “The Energy Services Company will give help ensure the council becomes a leader in the energy market, and will in turn help attract new expertise to the area.

“It will also help to tackle fuel poverty, while at the same time investing in local clean energy, boosting jobs and growth in the local economy.”

The recommendations in the report before Full Council included a legal structure for the organisation, form a governance structure, identify a priority project list, examine a staff and management structure and job descriptions, examine initial resource and funding requirements, and form an initial business plan for the first three years.

The costs for the business plan are estimated to be in the region of £30,000-£45,000.

In May 2016, the City Council approved Powering Aberdeen – Aberdeen’s Sustainable Energy Action Plan which aims to cut carbon emissions across the city by 31% by 2020 and 50% by 2030.

The plan proposes actions in the areas of energy efficiency, renewable energy, energy from waste, district heating, alleviation of fuel poverty and sustainable transport. In leading the implementation of the plan, the Council needs to be clear and consistent about its priorities, lead by example and foster collaboration with wider stakeholders.

There are already a number of projects underway that are being developed and funded by the Council that support the ambitions of Powering Aberdeen and will make ACC a more significant player in the energy market. These include the development of the Energy from Waste plant at Tullos that will generate heat and power for onward sale, as well as the Anaerobic Digestion plant and energy centre being developed at the AECC that will provide the opportunity to generate excess heat and power for sale beyond the AECC site boundary.

To deliver these projects and the activity envisaged within Powering Aberdeen additional skills and resources are required that are not currently available within the Council. These include metering, billing, customer service, energy trading, delivery and implementation skills such as project management, commercial and transactional capability as well as access to wider funding markets. The establishment of an Energy Services Company will provide a vehicle to manage this activity.

An ESCo can be involved in the generation, transmission, distribution and supply of energy but also supporting services such as energy efficiency, energy savings, renewable/sustainable energy and/or emission reductions.

An ESCo could be a public sector organisation, a private sector organisation or a joint venture between two or more organisations. An ESCo can be established as profit or not for profit.

ESCo structures have existed for a number of years and have been established by a number of authorities in England. A number of Scottish authorities are now examining the potential for such entities with some in active consideration or process of establishment. ESCos have been developed to help tackle the issues of fuel poverty, system resilience, investment in local clean energy while boosting jobs and growth in the local economy.