UK Partnerships Hub – Net Zero panel discussion
Barriers and opportunities pave the road to public/private engagement on Net Zero journey
Last week, we took our place among private and public sector change makers at the UK Partnerships Hub to discuss the way forward for the biggest challenges currently facing infrastructure PPPs.
Edward Thompson, Invesis Project Director, was invited to join a discussion on how local authorities and private finance work together to deliver the Net Zero transition. The panel, made up of experienced private sector stakeholders and the Department for Business, Energy and Industrial Strategy’s Head of Investor Relations, Huw Williams, identified some positive steps to break down some of the existing barriers.
Profit is an acceptable driver
Bearing in mind the targeted (and legally mandated) emissions reductions are simply not possible with public money alone, there is concern that, in some parts of the public sector, there is a notion that making a profit on an investment is a bad thing.
The panel acknowledged that the early days of PFIs may have seen what some consider to be excess profits. But it also pointed out that the market for these types of projects has since evolved enormously so that there is a much greater understanding of how to engineer win/win contracts with a fair return and outcome for everyone involved. Just as importantly, reasonable income earned by companies and individuals is now viewed as part of a virtuous circle, with the taxes generated on revenues and the pension contributions that are funded, driving ongoing, long-term infrastructure investment.
Pro-activity and forward-thinking
There was also recognition that a patchwork of regional jurisdictions, each with the potential to change hands politically within a few years and each broken down into its own departments and services does not necessarily set the best context for joined up thinking. But without it, the consensus was that piecemeal strategies will put off private investment and opportunities to reduce carbon dependencies at a reasonable cost will be missed. Consider, for example, the cost of retrofitting electric vehicle (EV) charging points across a large development approved by a planning department on council land, with no consideration for the transition to EVs.
Early engagement with the private sector
Edward Thompson pointed out that it is private companies that can, “bring in the additional resources to local authorities and work together to produce comprehensive plans that are investible, achievable and realistic in delivering the necessary Net Zero priorities. We can look at the bigger picture and consider the more complex items that will make a big difference over the next 5, 10, or 15 years.”
What’s more, working across say the whole estate of a council or in collaboration with multiple councils, can provide more attractive opportunities for companies like Invesis in terms of scale and scope. This is what really drives the innovative solutions that the private sector can offer for the benefit of all stakeholders.
PFI and PPP hand back opportunity
Working together is clearly the name of the game, and there are already strong precedents established here. There are many long-standing and effective relationships established between the private sector and local authorities as a result of PFI, which, despite its unfortunate and somewhat undeserved reputation, has seen a lot of projects successfully delivered over the years.
We have plenty of experience of this at Invesis, including the type of cooperation that allows private partners to upgrade previously agreed sustainability targets using new technology or additional funding that did not exist at the time of the original contract close.
This has already happened in our 30 year, West Dunbartonshire Schools project which delivered four new-build replacement schools with sustainability goals and continues to provide services to West Dunbartonshire Council. After initial discussions and a feasibility study, Invesis installed PV panels at one of the schools, with the installation being completed in mid-2021. The utility savings of 7% of the school’s annual electricity requirement, equivalent to 17,790 kg Co2, are being passed directly to the council. The council is now looking to install similar systems in two of the other three schools.
Another example is our 30 year, Wharfedale Locality Hospital through which Invesis delivered a 76-bed hospital and a range of ongoing managed services. The trust recently expressed an ambition to install solar panels to meet its electricity usage requirements during the busiest times. After coordinating feasibility studies, design and the relevant legal and approval processes, we expect final sign off from the Trust shortly to allow installation works to begin.
After all, where trust has already been built and expertise demonstrated, it is both the commercially and environmentally responsible thing for both parties to continue to improve the existing assets for the benefit of society.