An opportunity to deliver

Submitted commercial in confidence July 2010

Introduction

Introduction

The reversal of the ban preventing local

authorities generating revenue from

renewable electricity is a significant

opportunity for local authorities to secure

beneficial income streams.

The formation of public private

partnerships to deliver local wind farms

will enable design, planning, power

transmission and finance elements to be

undertaken by an experienced

partnership, with the track record and

resources to deliver.

Local Enterprise Partnership

Outline proposals for the formation of

Local Enterprise Partnerships (LEP) have

been requested to be submitted by 6th

September and it is recognised that

collaboration with business in the local

area is crucial to the success of LEP’s.

In addition, the ability to bid into a £1

billion regional growth fund (RGF) for

finance can provide funding for

authorities wishing to take an equity stake

in a renewable scheme. Clear indications

are that the ability to return investment will

show compliance with the intent of the

ban reversal and will be considered

favourably against any RGF bid.

Revenue generation through an

equity stake

The model detailed within this document

is designed to meet the individual

objectives of the local authority whilst

drawing on the specific expertise of each

partner. In doing so the equity stake held

by the authority and the principle partners

can be adjusted to suit the authority’s

objectives whilst providing a model that is

fully replicable.

Project Partners

Land holdings

The model presented is based upon a

public private partnership to

development onshore wind farms

using either local authority or private

land. In both cases the partnership

works in conjunction with British

Telecom.

Suitable sites not within authority

ownership can present viability with

revenues being generated from

power export and through payment

from Renewable Obligation

Certificates or Feed in Tariff

mechanisms.

The ability of the local authority to

provide suitable land presents

additional financial benefits

associated with landowner royalties

and land rights payments, which can

Overview

be used to meet or supplement the

authority’s equity stake.

Ownership Concept

Suitable site’s for the installation of

wind turbines have been identified

across the region by Banks

Developments.

Some of the turbines on a site will be

wholly owned by British Telecom with

the remainder owned by the other

partnership members. This will enable

connection costs to be shared to

increase viability.

Where authority land is used the land

owner royalties will be paid by British

Telecom, which can contribute

towards or even meet the authority’s

equity stake.

Power output

The power generated by the

partnership turbines will be exported

via Npower and can be sleeved to

provide offset to the local authority

whereby the power will be credited

against current grid usage.

The power generated by the British

Telecom turbines will be credited

against BT accounts by Npower.

Income

The authority can expect to generate

savings via the offsetting of electricity

against these current Npower

accounts, whilst also accessing a

proportional share of the income from

any export sales. In addition, when

the wind farm is located on authority

land, land owner royalties can also be

expected.

Local Authority or LEP

The authority will in its collaboration

with the partnership be able to

provide revenue generation from

green energy, whilst also providing

energy security and delivering

protection against future increased

energy costs. In addition the model

presents significant bid potential

through the regional growth fund.

The ability to take a variable stake in

the project and to offset grid derived

power can reduce expenditure and

give the authority resources to help

assist in the financing of follow on

projects.

In addition, the option to gain

community support from areas local

to proposed sites opens up revenue

opportunities to local communities

who could benefit from a share in the

revenue to support local projects.

Carbon Savings

Indications are that carbon savings

resulting from wind farms located

within authority boundaries may be

credited to the authority.

British Telecom

British Telecom has given full support

to the scheme and would look to

take full ownership of a turbine or

turbines on any given site. The turbine

and its generated output would be

used specifically to provide electricity

to BT operations and will be routed via

the existing contract with Npower.

Landowner royalty payments made

to the local authority as landowner

could contribute to an equity

investment by the authority.

Npower

Npower holds accounts with both the

authority and British Telecom are able

through a partnership agreement to

pass the power from the turbine to

the grid providing an offset

arrangement against current grid

derived power accounts.

Npower have significant experience

delivering and facilitating the

distribution of green energy and have

the ability to provide critical energy

services to the scheme, particularly

where power is credited against

areas of fuel deprivation.

Banks Developments

With a track record of achieving

planning consent, engineering and

constructing onshore wind farms,

Banks Developments are one of the

largest and most successful

development teams in the UK.

As the primary developer Banks are

able to provide equity and resource

contributions to build and operate the

wind farms; and have already

undertaken a study of potential sites

across the North East region to identify

potential sites.

UK Sustainable Energy

As a registered Ofgem generator and

engineering support consultant

advising on energy supply contracts,

Newcastle based UKSE provides

engineering and project co-

ordination roles whilst identifying

ongoing development opportunities

for future schemes.

Contact

For further information please

contact:-

Don Lord

ESP Ltd

13 Quay Level

St Peters Basin

Newcastle

Tel 0845 519 5912

don.lord@espprojects.com