Decision

1. 1

The Committee considered the report of the Executive Director, City Futures which sought approval to commission operations and maintenance (O&M) services for the solar photovoltaic (solar PV) installations delivered through the Solar on Schools Phase 1 programme, and to enter into individual Power Purchase Agreements with participating maintained schools. 

The proposed decision would support the increase of renewable electricity generation, reduce electricity costs for participating schools and general a long-term income stream for the Council which would be used to cover the ongoing servicing, monitoring and maintenance of the solar PV installations and repay the Sheffield Climate Investment. 

1. 2

RESOLVED UNANIMOUSLY:- That the Transport, Regeneration and Climate Policy Committee:

(a)  approves the commissioning of a contract for the operation and maintenance of solar PV installations delivered through the Solar on Schools programme, for a period of up to 25 years, with an estimate value of up to £1,433,004, and

(b)  approves the Council entering into individual 25-year Power Purchase Agreements with participating maintained schools for the purchase of electricity generated by the Council-owned solar PV installations, on terms consistent with the approved Final Business Case.

1. 3

Reasons for Decision

1. 3.1

The Solar on Schools programme provides an opportunity for Sheffield City Council to increase renewable electricity generation, reduce electricity costs for participating maintained schools and generate a long-term income stream from Council-owned solar PV assets.

1. 3.2

A separate O&M arrangement is required to ensure that the solar installations remain operational and productive.

1. 3.3

The PPAs are necessary to enable the Council to supply electricity generated by the solar installations to participating maintained schools and receive payment for that electricity to fund the O&M and the repayment of the Sheffield Climate Investment.

1. 4

Alternatives Considered and Rejected

1. 4.1

Alternative Option 1: Do not enter into the O&M contract

Under this option, the Council would not enter into the proposed O&M contract and would need to make alternative arrangements for the operation and management of the solar PV installations.

The O&M service is essential to the proposed revenue model. In addition to maintaining and monitoring the installations, the service includes collecting and managing electricity generation and school consumption data required to calculate and bill the individual school PPAs. Without this service, the Council would not have the information required to accurately invoice schools for the electricity they consume and therefore would be unable to generate the forecast PPA income.

There would also be significant operational and financial risks if the installations were not appropriately maintained. Poor maintenance could result in reduced generation and therefore lower income, increased equipment failure and degradation, failure to meet warranty or regulatory requirements, and potentially prolonged periods where systems are unavailable. The Council would also retain responsibility for managing the assets and associated risks without the specialist O&M arrangements proposed.

For these reasons, this option is not recommended as it would put the operation of the solar assets and the ability to generate the forecast income at significant risk.

1. 4.2

Alternative Option 2: Procure separate O&M arrangements after installation

Under this option, the Council could decide not to enter into a proposed O&M contract and instead procure maintenance and operational arrangements separately at a later date.

This is not recommended because the solar installer is best placed to provide the ongoing Operations and Maintenance (O&M) service for the photovoltaic (PV) installation due to their comprehensive understanding of the system's design, specification, installation methodology, and commissioning requirements.

As the original installer, they possess detailed knowledge of all project documentation, equipment configurations, performance parameters, and site-specific considerations. This familiarity enables them to diagnose faults more efficiently, minimise system downtime, and implement corrective actions without the need for extensive system familiarisation by a third party.

The installer also maintains direct relationships with the equipment manufacturers and suppliers, allowing them to manage warranty claims and technical support matters more effectively. This reduces risk to the asset owner and helps ensure that any defects are resolved promptly while maintaining warranty compliance.

Appointing the installer for O&M provides continuity of service from installation through to operation, creating clear accountability for system performance and reducing the potential for disputes regarding the cause of any faults or performance issues. It also ensures that maintenance activities are undertaken in accordance with the original design intent and manufacturer recommendations.

Furthermore, utilising the installer for O&M is likely to represent best value, as they can mobilise existing project knowledge, records, and monitoring systems without incurring the additional costs associated with onboarding and familiarising an alternative provider.

1. 4.3

Alternative Option 3 – Do not enter into the Power Purchase Agreements with schools

Under this option, the Council would install and retain ownership of the solar PV assets but would not enter into the proposed PPAs with participating schools. The schools would therefore receive the benefit of using the solar-generated electricity without making payments to the Council for the electricity they consume, resulting in greater electricity savings for the schools.

This option is not recommended because the PPA income is a fundamental part of the financial model for the scheme. Without PPA income, the Council would still be responsible for the costs of operating and maintaining the solar installations and would need to meet the costs associated with repaying the Sheffield Climate Investment from an alternative source.

On the basis of the current Final Business Case, the Council would need to identify alternative General Fund resources to meet the ongoing O&M costs of approximately £1.433 million over 25 years, as well as the £1 million capital investment to repay the Sheffield Climate Investment. The additional General Fund requirement has not been included in the approved financial model and has not been approved or otherwise identified within existing budgets.

The option would therefore transfer the financial benefit of the solar generation from being split between the Schools and the Council to being totally in the schools benefit while transferring the associated financial liability to the Council's General Fund. Although schools would achieve greater electricity savings, this would come at a significant additional cost to the Council and would remove the income stream that enables the solar scheme to fund its own ongoing costs.

For these reasons, this option is not recommended. The proposed PPAs provide a mechanism for sharing the benefits of the solar installations between the Council and participating schools while generating the income required to support the long-term financial sustainability of the scheme.