Strategy

Strengths

Weaknesses

Opportunities

Threats

Open market

The most understood approach – few surprises and well understood compliance with OJEU.

Focus on wholesale power prices – a falling component of the bill. Potentially inflexible and low LA control, lack of innovation, and poor link with renewable credentials

Potential change to procurement rules and regulations in future with Brexit, increasing support for flexibility within frameworks

Volatile wholesale power price and greater within day variation may affect hedging. Falling component of the overall bill.

Corporate PPA (CPPA)

Strong Corporate Social Responsibility (CSR) benefits – green credentials linked to physical assets. Wholesale price stability for both consumer and generator depending on contract, thereby limiting some price risk.

More complex arrangement than traditional supply and potentially harder to tender for. May not be cost comparative to other methods.

Potential link with local co-operative or community asset. Could be used to support LA business case for self-supply. Long term agreement may be beneficial if prices rise.

Long term, fixed price agreement runs risk of overpaying for power.

Procurement timescales would have to be changed or adapted to fit long-term nature of contract

LA ownership

Strong renewable and green credentials. Potentially bring jobs and investment to the community. Potentially lower cost and provides a natural hedge for wholesale power movements.

High risk option – fully exposed to market movements Potentially complex, lengthy and risky development process. A potential lack of council knowledge of the project development process and risk management involved.

Maximising access to cheap capital. Use of underutilised assets like disused land, roof space. Re-opening of Pot 1 technologies (onshore wind, solar) in CfD regime. Use of the local Energy Hub’s knowledge and external advisors. Access reform may mean lower up- front connection costs.

Targeted Charging Review and network charging reform alters the value of embedded benefits and behind the meter supply. Network constraints, planning restrictions. Potential double-counting of renewable credentials.

JV asset development

Supportive partnership. Can lead to a simpler development process compared to self-development – making use of external expertise Owning generation assets provides for some mitigation of price risk or value sharing. Reduce LA time commitment.

Potential lengthy implementation of governance structure. May not wholly support LA capability to deliver future projects. Information/ knowledge asymmetry between parties. Lower profit than self-development – sharing mechanism. Some loss of control.

Using low-cost public money to deliver ongoing revenues for front-line services. Re-opening of Pot 1 technologies (onshore wind, solar) in CfD regime.

Poorly aligned approach/ desires from the collaboration. JV governance arrangement is poorly implemented. Network charging reform damages embedded benefits and/ or behind the meter value.

Purchasing assets

Speed – potentially much faster than developing new assets. Removes planning, development and construction risk. Significant revenues if plant are subsidised – ongoing revenues over lifetime of support. Provides a natural hedge for wholesale power movements.

Potentially lower returns. Potentially lengthy and expensive due diligence and negotiation process.

Potential refurbishing opportunities if near end of operational life. Option to collocate with storage assets at a later time.

Network charging reform. Subsidy-free assets have merchant risk – i.e. exposed to future power prices. Potential for price cannibalisation – low realised prices.

Ongoing market reform and change

Land/ asset leasing options

Potentially a simple method of supplying the estate with renewable energy. Long- term, low risk revenues for the LA. Could support jobs and investment to the

community. Potential to deliver low-cost green power for no upfront investment

Loss of majority of associated low-carbon benefits where not behind the meter.

Potential double-counting of green credentials. Little additional benefit of doing a CPPA with developer on lease vs

un-leased asset.

Better use of LA building and land portfolios. Maintenance for unused land assets. CPPA or direct supply of low-cost energy to LA

Network charging reform lowering the value for behind the meter assets.

Decommissioning of generation assets should be considered from outset