Content

DECLARATIONS OF
INTEREST FOR THIS ITEM:
 
There were none.
 
RESOLVED
 
It was recommended that the Cabinet Member for
Placemaking and Local Economy:
 
Approved the commencement of a mixed
procurement strategy (i.e. works, supply and services) and direct
negotiations with the district heat network, Lee Valley Heat
Network Operating Company Limited (company number: 09763702)
concerning the connection, supply and potential management/
maintenance agreements for 40 years for the Selby Urban Village
scheme. The potential agreements are as set down in Section 5.14
and 5.15.
 
Reasons for
decision
 
Cabinet approved the overall design
concept and sustainability aims behind
the Selby Urban Village Project on the 19 September 2023 Cabinet
Report: ‘Contract award to KCA for design and architectural
services for the Selby Urban Village masterplan’. Section 8,
‘Carbon and Climate Change’ of that report sets out
that the energy strategy of the detailed Planning Applications
would be developed in line with the energy policies of the London
Plan, LBH and LBE, to achieve a zero-carbon target, and in
accordance with the London Plan’s energy hierarchy. These
policies and the project’s planning approvals require
connecting to a District Energy Network.
 
In the subsequent Cabinet Member Signing
Report ‘Gateway 0 Report - Phase 2, Selby Urban Village, N17
– Bruce Castle Ward’ on 19 June 2024, para 8.12 notes
“A communal heating system is the preferred solution, with
connection to the local District Energy Network. Further work would
be undertaken to establish if this was the best option for the
Council and its residents”. Work undertaken since that
decision, confirmed that due to the nature of the scheme and policy
requirements, the best option remained to connect to the
Energetik network operating in LB
Enfield. Further detail on this could be seen in para 5.1 and
Section 6.
 
Given the strong rationale to approach
Energetik, officers had investigated
the Procurement, Legal and Other issues and recommended a way
forward based upon the overall context.
 
The proposed Procurement Strategy was set out
in this paper and required Cabinet Member approval based on CSO
2.01(b).
 
The proposal was for a mixed procurement
covering the connection and supply arrangements for both the
housing and non-residential elements of the development. A mixed
procurement means the procurement is for works/ services/ goods. It
was also a mixed procurement made up of public contracts and
utility contracts (the housing elements are utility contracts by
virtue of the Procurement Act 2023 Schedule 4, Para 1a). Further
detail on the mixed procurement approach and rationale is set out
in the exempt report.
 
The nature of the mixed procurement means this
procurement was exempt from procurement regulations requiring
competitive processes. The rule for mixed procurement (where it is
not realistic to separate it out) is to apply the rules from the
largest element of the procurement to the entire contract. The
largest element of this mixed procurement was the utility services
element. In reviewing the utility services parts of the contract
and considering the exemptions in Schedule 2 of the Procurement Act
2023, the utility contracts were covered by exemption 31.
 
Hence the entire procurement was exempt from
the procurement regulations and there was no requirement to run a
competitive process/publish contract notices. Note that Haringey’s internal
contract standing orders still applied,
but did not require a competitive process unless procurement
regulations require one.
 
It was important this this procurement process
is commenced shortly and completed to align with the timetable for
the Selby Urban Village main works contractor onboarding (March
– April 2026). This would be to ensure that Energetik could provide necessary oversight over
Stage 4 technical design work undertaken by the main works
contractor, relating to the heat supply infrastructure.
 
The expectation, assuming favourable
negotiations with Energetik, is that a
report would return to the Lead Member, Section 151 Officer and
Corporate Director for award of contract, which will contain
information on the final negotiated terms and conditions for the
various contract types for heat supply arrangements. Should a
different approach be required, following those negotiations, the
decision on an alternative energy strategy will return to Cabinet
for approval. Further detail is found in the exempt report under
the risks and mitigation.
 
Work was being undertaken to mitigate against
potential risks associated with the connection to the District
Energy Network and further detail on risks and mitigation can be
found in the exempt report.
 
Alternative options
considered
 
Progress with a different heating solution and
not a district heat network: The GLA’s London Plan included a
hierarchy that was applied to how new developments are heated. The
London Plan policies showed a clear preference for connecting to
existing heat networks such as Energetik where it was viable to do so. Both
Haringey and Enfield’s planning policies had similar
requirements. As part of the earlier design development process
other options were reviewed however, given planning policy
requirements, connecting to the most local Heat Network, i.e.
Energetik, was chosen as preference.
This approach was embedded into the Planning Applications to LB
Enfield and Haringey and subsequent approval from the 2 authorities
and was part of the planning referral to the GLA. However, to
mitigate against the risk of a non-connection to the district heat
network, the council is still exploring alternative options for the
heat supply to ensure these are fully understood as a fall back option.
 
Investigate connecting to a different District
Heat Network supplier:
As outlined above Planning policy directs us
to connecting to a District Energy Network such as Energetik. While there were other similar
suppliers/ operational systems in London, the capital costs (which
would fall to LBH) and feasibility of running pipework the
distances required from these other locations (e.g. Stratford,
Brent) to Selby Urban Village site render them unviable.
 
Procure the connection to and supply from heat
network separately: it was considered whether the mixed procurement
could/should be disaggregated. There were robust commercial reasons
for negotiating the connection and supply arrangements for the site
as a whole and simultaneously, as set out in the exempt report.
 
Procure connection to Energetik heat network, but do not procure service
agreement (management and maintenance) from Energetik (e.g. management of heat supply to be by
Haringey Council or another): It was considered whether the council
should choose to directly operate the secondary network for the
residential portion of the scheme. Technical advice received notes
that this would not currently be the preferred option,
predominantly due to financial implications: with supply and
maintenance being more cost effective than supply and separate
in-house maintenance. This will continue to be explored and tested
during the negotiation period.
 
Run a competitive tender process for the
district heat network connection and supply: it was considered
whether the council needed to run a competitive process for
connection, despite not being required to by the Procurement Act.
It was concluded that this was unlikely to generate an interest
beyond Energetik and generate
significant risk to programme and funding. Given the planning
context and the commercial reality of connection charges and
distances, Energetik were the only
likely supplier.