Decision

RESOLVED:

1. Note the decision made by this Committee to appoint Asset Plus to undertake the Public Sector Decarbonisation Scheme 3b project following their appointment as the Council’s delivery partner through the GLA ReFit Framework.

1. Award a further 2 year contract to deliver the Public Sector Decarbonisation Scheme 3c Sites project to Asset Plus at a value of £28.6m and for the Council to continue to work with Asset Plus across the whole portfolio of Corporate properties.

1. Approve an extension of the PSDS3b contract with Asset Plus (£16.0m contracted under JCT) by £1.6m to include the balance of the PSDS3b contingency (£0.5m) and an additional £1.1m of works funded by additional grants and existing Council Capital budgets.

1. Note that as further projects are developed through the work that will be undertaken to assess the heating systems in other Corporate Buildings, they will be brought back to this Committee, Hackney Procurement Board or approved by officers in line with the Gateway Process and financial scheme of delegation.

Reason(s) For Decision

1. Decarbonisation of Corporate Properties is a vital step in reducing carbon across the Council’s operations identified in both Manifesto commitments and in the forthcoming CAP which is due to be presented for adoption in June 2023.

1. On completion, this project will replace largely end of life gas powered heating equipment in nine buildings with heat pumps displacing 9.9m kWh gas with 2.2m kWh electricity thereby saving in excess of 1,800 tCO2e.

1. The project will also act as a demonstrator that the Council takes decarbonisation seriously and is investing in Climate Change mitigation measures thereby acting as a beacon for other businesses to follow.
2. The project will decarbonise heating through the installation of fifteen High Temperature Air Source Heat Pumps (ASHP) at seventeen properties comprising Hackney Service Centre and Town Hall, Kings Hall Leisure Centre, Median Road Resource Centre, Clissold House, Tomlinson Centre/Queensbridge School and an additional 10 schools.

1. The project will take 2 years to deliver. Completion is expected around March 2025. The main reason for the protracted delivery is that the heat pump installation at Kings Hall needs to be planned alongside the planned refurbishment.

1. The project will cost £28.6m to deliver of which £28.2m will be awarded to Asset Plus to competitively procure, deliver and complete the installations. The remaining £360k will fund Project Management appointed to manage the project working with Asset Plus, the local sites and property management and the Grant Funder, Salix Finance.

1. In developing the Investment Grade Proposal (IGP) project costs have been estimated based on quotes obtained in August 2023 based on concept designs, estimates for grid upgrade and contingency. The Council has included a further contingency to allow for some price movements in the market between the cost estimates used for grant application and the final pricing fixing through procurement stages described below (5.14). The quotes used to establish project costs were obtained after most of the recent construction cost inflation had been incurred in the market.

1. The £12.9m Grants (has been provided by Salix Finance through the Public Sector Decarbonisation Scheme 3c (PSDS) and will be complemented by £15.7m internal capital allocation approved through the Capital Programme.

1. The £1.6m extension of the current £16.0m JCT contract will be represented by £0.5m remaining contingency within the already approved PSDS3b project together with £1.1m funded by existing capital budgets in Education (£216k) Corporate (£80k) Property, Leisure (£500k) and additional grants secured by Leisure from the Swimming Pool Support Fund (SPSF - £330k). These additional works are either required to ensure correct functioning of the site with the heat pump or are additional urgent works where a significant benefit has been identified from integrating work into the PSDS3b project. Details are shown in the table below with the work described in bullets below the table.

Site

Work

Estimated

/Quoted

costs/£

Funded from

Saving from

Combining

work with

PSDS3b

Conting

ency

Other

Budgets

Clissold Leisure

Centre

Replace 3

swimming pool

AHUs

£330k

£330k

(SPSF

£71k

Electrical Incomer

Upgrades

Increased

electrical

capacity

£50.4k

£50.4k

London Fields

Lido

DNO Upgrade

to 800kVA

£775.7k

£275.7k

£500k

Site

Work

Estimated

/Quoted

costs/£

Funded from

Saving from

Combining

work with

PSDS3b

Conting

ency

Other

Budgets

Stoke Newington

Town Hall/Library

Steel supports

for AHUs

£150k est

£150k

Stoke Newington

Town Hall/Library

Replacement

AHU

£80k

£80k

Corporate

£40k

Millfields School

Additional

Radiators,

Central Core

Pipework

£9.6k

£9.6k

£20.6k

Millfields School

Relocation into

Plant Room

£108k

£108k

Education

£18.2k

Millfields School

Temporary Boiler

Relocation into

Plant Room

£79.9k

£79.9k

£20k

Holmleigh School

Leaking roof

skylights

£28.1k

£28.1k

Education

£32k

Homerton Library

Electrical rectifications

£2.4k

£2.4k

£1.6k

Total

£1,614k

£486k

£1,125k

£203.4k

·  Clissold Leisure Centre.

· The electrical infrastructure required an upgrade to support the GSHP installation. This upgrade to 550KVA was negotiated as free of charge for the site provided the Council renewed the lease for the substation which was expiring.

· The three pool Air handling units (AHU) are at end of life and are no longer supported by the manufacturer. Extending the PSDS project will cost £330k compared with £401k as a standalone project.

·  Electrical Incomer Upgrades. Incoming electrical upgrades are required at Holmleigh School, Homerton Library, Millfields School and Queensbridge totalling £50,400.

·  London Fields Lido. The electrical supply needed extension for both the GSHP and the proposed new Training Pool. The new substation required a brick built enclosure by the edge of the park which was due to be funded through the Training Pool project but is now within PSDS as that project is unlikely to proceed in the timescale required for PSDS. The costs of £775.6k are mainly due to additional work to support a larger incoming electrical supply for the Training Pool and the brick built enclosure required to house it. Further costs are incurred by running cabling around the site to ensure that the site is supported in the short term.

·  Stoke Newington Town Hall/Library.

· The roof expected to support the ASHP’s are weak and so a steel frame will be provided to ensure that the weight is transmitted down through the walls. Estimated cost £150k

· The current Air Handling Unit (AHU) requires replacement with an estimated cost of £80k integrated into the existing contract whilst the cost is estimated at £120k as a standalone project. This cost would include connecting the AHU to the heat pump to take advantage of the cooling available from the single heating cycle, effectively providing free cooling for the AHU. This could be extended further for cooling in other parts of the building at additional cost.

·  Millfields School.

· The PSDS project was based around a like for like replacement of pipework and radiators. On site it became apparent that there are many occupied areas which are not heated as a result of space occupation during the expansion from 2.5 to 3 form entry. Upgrading the system as a separate project would cost £38.8k more than extending the current project.

· The school is currently heated by temporary boilers in the playground which need to be moved into the plant room. Completing this work within the PSDS contract will cost £80k compared with an estimate £100k as a standalone project.

· Holmleigh School. Within the PSDS3b project, additional insulation is being added to the roof and during these works it was observed that 2 skylights were leaking and required replacement. Using the existing contractor on site to complete this work cost £28.1k compared with an estimated £60k for a standalone project.

· Homerton Library. During installation of the ASHP, the 3 single phase electrical supplies were upgraded to a 3-phase connection. This required some electrical rectification works which cost £2.4k compared with an estimated £4k as standalone work.

1. As part of their initial appointment, Asset Plus provides a cost and savings performance guarantee. Costs are guaranteed after the final contractor procurement stage described below (5.14) whilst savings in kWh are guaranteed at a 90% of predicted performance level adjusted for weather, site use variations etc. The guarantees will operate at a project portfolio level rather than at a site specific level and will be subject to the Council reporting significant changes of use within the buildings.

1. The project will be delivered in stages with a design phase followed by procurement through Asset Plus’ established supply chain. These contractors have a track record of delivery of this type of equipment. At least 3 quotes for each site will be gathered by Asset Plus with the award being made to the most economically advantageous offer. The selection will be by Asset Plus within the Re:Fit Framework working with Council Officers with judgements made on price, quality, programme and social value. If possible, local contractors or those using local subcontractors will be favoured but it should be noted that these installations involve specialised technical equipment and experience in successful delivery must be paramount.

1. Grid upgrades are expected only on one site (Kings Hall Leisure Centre) and will be coordinated with the refurbishment to minimise cost and site disruption. The project teams have been coordinating for the last 9 months on this approach. All sites will be reviewed with the Distribution Network Operator, UK Power Networks (UKPN) and, where required for capacity or for technical reasons such as harmonics, the supply will be upgraded. As the local statutory monopoly supplier, these upgrade contracts will be awarded to UKPN under their terms and conditions including pre-payment. Provisional sums have been included in costs for each site but upgrades will not be required at every site and the sums allowed will be concentrated to cover the specific costs.

1. Following the installations, the Council is required to monitor and report on savings to the Funder with a more detailed International Performance Measurement and Verification Protocol (IPMVP) based process available from Asset Plus at extra cost should this be required. This level of detail is not required by Salix as the funder.

Alternative Options (Considered and Rejected)

1. Alternative options considered include:

·  Do nothing. All of the buildings identified have fossil fuel heating systems that are at or nearing their end of life and will need replacing. The schools selected for the new heating systems have old, failing and obsolete boilers and in most cases pipework that is more than 50 years old. Doing nothing is not considered a viable option.

·  Like for Like Replacement. Replacement of boilers would not cost substantially less overall, would not attract external funding and would not achieve carbon savings of any magnitude. Given the impact of the grant where the Council contribution is largely defined by the like for life replacement costs, the grant makes the like for like replacement cost more than the full Low Carbon project recommended.

·  Re-procure a different principal contractor. Asset Plus were appointed following a procurement exercise within the terms of the Re:Fit Framework which therefore meets the regulatory and governance requirements.

1. Insourcing was not considered a viable option due to the specialised nature of the equipment to be installed. As the market matures and more qualified and experienced staff become available in the market this option may be able to be reconsidered for maintenance and for future installations and replacements.