Content

RESOLVED:
 

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.

 

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.

 

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.

 

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
 

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.

 

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.

 

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.
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.

 

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.

 

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.

 

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.

 

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.

 

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.
 

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.

 

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.

 

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.

 
13. 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)
 

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.
 

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.