Agenda item

Report of the Director of People and Facilities Management

Cabinet considered a report of the Director of People and Facilities Management on the Council’s gas requirements and proposed gas contract renewal.

Coventry’s Climate Change Strategy (2024-2030) set out the Council’s decarbonisation ambitions, which included increasing clean energy supply and increasing the energy efficiency of the estate, alongside helping to facilitate partners to do the same. A significant amount of work had gone into decarbonising the Council’s estate over the last decade. Over 40 buildings had been upgraded which included increasing renewable energy generation through installation of solar pv, decarbonisation of heat through installation of heat pumps and connecting a number of the Council’s buildings to the district heat network, alongside improving insulation, glazing etc. The Council had also appointed E.ON as its Strategic Energy Partner (SEP) over the next 15 years, to help increase the scale and pace of decarbonisation across the city. One of the first activities the SEP completed was production of the Coventry Energy Plan, which looked at how the city could decarbonise energy infrastructure over the next 15 years. This included moving away from gas and creating more locally produced electricity. At present, the Council were in a transition phase and the purchase of gas was an unavoidable activity that had in recent years had increasing financial implications for the Council. Since 2021 the annual gas spend for both corporate and independent sites had varied between £1.6m and £3.3m per year due to significant global events that had impacted the gas markets. The corporate contract currently covered over 60 Council gas supplies but also supported more than 80 related 3rd party gas supplies including schools and community centres.

The Council’s current gas contract was not set to expire until 31 March 2027, but by engaging early, the chosen supplier would have a longer period over which to buy gas ahead of the contract start date. This approach was widely used and was known as “flexible procurement”. It involved purchasing blocks of gas over time when the cost was lower which reduced the risk of being subject to shock price increases.

The Council had been using the flexible procurement approach to gas since 2009. This approach had been successful in mitigating the impact on the Council from the unprecedented volatility in the gas market.

The report sets out the Council’s gas requirements as well as the anticipated financial implications on Council budgets. It was important to note that the proposed gas contract allowed flexibility to reduce gas demand during the contract period, which was anticipated as energy efficiency improvements were made to more buildings across the city.

RESOLVED that Cabinet:

1)  Approves the proposal to enter into a Gas Framework up to £6.3million for the supply of gas up to 31 March 2031.

2)  Delegates authority to the Director of People and Facilities Management, following consultation with the Director of Finance and Resources and the Director of Law and Governance, to finalise the legal due diligence and terms and conditions of the Gas Framework and any other legal agreements required to facilitate delivery of the gas supply and its ancillary services.

3)  Delegates authority to the Head of Energy Services, following consultation with the Director of People and Facilities Management, to oversee the ongoing management of the wholesale purchasing strategy during the term of the contract.