Dundee City Council's story
In September 2016 the Capital Governance Group agreed to the approach of procuring an Energy Performance Contract (EnPC) to assist with progress. The advantages of this type of contract include: transferring financial risk to the contractor as they guarantee the savings will be made; allowing a step change in the pace of installation of energy efficiency measures which has been limited by capacity to deliver in house; providing a financial return from the capital invested to reduce revenue costs.
The Scottish Government established the NDEE framework to help public bodies with the procurement of this type of contract. The assistance also extended to consultancy support worth up to £50,000 for each call-off from the framework. The intention is, if this approach continues to be successful, for all council operational properties, except for the smallest to be included in future phases.
To date two phases have been completed and twenty-six properties, including the highest users, Olympia and Dundee Ice Arena, have had a range of energy efficiency measures installed. These are all well proven measures including energy efficient lighting, combined heat and power, energy efficient fans for ventilation systems, variable speed drives, photovoltaic (PV) solar panels, improved building controls and improved thermal insulation.
Another advantage of this type of contract is that an independent consultant was appointed to measure and verify the savings achieved. This exercise is completed a year after the final measures are commissioned. If the savings have not been made then the contractor has to take remedial action and does not get full payment until the guaranteed savings have been met. To date the contractor has achieved the savings they have guaranteed for Dundee City Council.
A third phase is currently out for procurement which will cover another 20 properties with an expected value around £3 million.
Useful learnings from Dundee City Council
Dundee City Council achieved around 50% reduction in carbon emission since 2010 however, we understand that a lot more is needed be done. Therefore, we are working to reduce emissions further to reach our 'Net Zero by 2045 or sooner' target through implementing a range of energy efficiency measures and installing renewables in our estates.
Targeted to energy-intensive non-domestic buildings owned by Dundee City Council, the Non Domestic Energy Efficiency (NDEE) Programme for Dundee is one of our flagship projects which is procured through the Scottish Government's Non Domestic Energy Efficiency Framework. In 2018 Dundee City Council's Energy Management team identified eight of DCC premises which would benefit from energy efficiency upgrades and renewable installations. Then through NDEE framework Vital Energi (www.vitalenergy.co.uk) were selected to identify and implement the best package of measures in these properties. Vital Energi provided an Energy Performance Contract (EnPC) which guaranteed minimal performance across key areas such as carbon reduction and financial savings. This enabled the DCC to transfer most of the technical and financial risks as Vital Energi guaranteed a minimum payback period. Since the beginning of NDEE project in 2018, a total of 46 properties have received various energy efficiency upgrades and renewable installation across city by November 2021.
The NDEE programme has enabled the installation of energy saving measures across DCC estates at scale and pace. This can be replicated across other cities in the UK considering their national and local regulations and guidance.
On a project level Vital energy has kept the disruption on service users at minimum by working outside of core hours or creating “zones” where disruption is kept to a small area. This has enabled the council to keep the services running in these buildings during the project which is really important for a local government as an essential service provider. This working practice can also be replicated in other areas and projects.
Since the Scottish NDEE framework is designed for the non-domestic buildings in public sector in Scotland, this may not be suitable for the residential or private sector or in other UK nations. However, there may be similar procurement frameworks such as UK government's Energy Performance Contract that can be implemented in other sectors and areas. It is worth keeping in mind that the carbon intensity of UK's national electricity grid is reducing steadily in the past few years, which is also reducing carbon emissions savings from NDEE projects; making it difficult for the contractor to aim for higher profit. The short term (i.e. annual) cycle of contract is also an issue which can limit the innovation in these projects.
Overall NDEE Programme for Dundee has been very successful and we hope to continue it in the future. The positives can be carried forward and negetives can be improved in the future!
Dundee City Council's metrics