The Isle of Wight council (IWC) executive will next week be considering plans to invest in a local energy company with the aim to increase revenue for the council, as well as offer a more sustainable energy system and financial benefits for residents.
Papers for next week’s Executive meeting explain the IWC has been investigating how it can become involved in the provision of energy services to residents and business.
Several other local authorities – such as Cheshire East Council, Peterborough City Council, Nottingham City Council and Bristol City Council – have already set up local energy supply companies.
Possible joint venture
The council has received a proposal from Reenergise Ltd “to establish a local energy company as a joint venture”.
The organisation already holds gas and electricity supply licences and according to the paper (see below) has the systems in place to comply with the licence requirements.
Initial appraisals predict the local energy company (IOWEnergyCo) could bring in over £300,000 per year from year five onwards.
Executive members will be asked to confirmed the terms for a joint investment (£208,250) with Community Energy Exchange Holdings Ltd in the local energy company as well as, potentially, a further investment of £200,000 in the Community Energy Exchange (CX) – which could see a call centre and support office being set up on the Island.
Summary of the terms
Full details can be found in the paper below, but a summary of the terms read:
- An investment from the council of £208,250.
- A shareholding in IOWEnergyCo of 49 per cent.
- Isle of Wight Council to have two seats on the board of directors out of a total of four. Board approvals with a simple majority.
- IOWEnergyCo to be an approved agent of CX.
- IoWEnergyCo or Isle of Wight Council may enter into power purchase agreements (PPAs) with local energy generators to supply energy onto the grid for consumption on the Isle of Wight.
- When appropriate, to expand its activities possibly to include heat supply, water supply, internet and telephone supply, demand side response services (including time of use tariffs), energy storage, energy efficiency measures, electric vehicle service and other suitable services.
- An annual dividend will be payable provided that the payments do not exceed cumulative profit and allow for sufficient cash to be retained in the business to ensure the annual cycle can be covered.
- Once the business is operating profitability both parties can consider offering a proportion of their shareholding for community investment.
Officers state the investment will be subject to “full due diligence and the preparation of a business case”.
Click on the full screen icon to see larger version.