Agenda item

Report of the Corporate Director of Environment and Resident Experience. To be presented by the Cabinet Member for Climate Action, Environment & Transport

The Cabinet Member for Climate Action, Environment and Transport introduced the report. It was stressed that the global economic landscape had shifted dramatically since the Council first embarked on its journey to deliver strategic heat networks across Haringey and that the realities of the cost-of-living crisis, inflation, and uncertainties in global energy markets forced the Council to make difficult but necessary decisions. It was recognised that the Council’s financial responsibilities to residents required prudent management during these challenging times. It was explained that the decision to scale back the original ambition of becoming both a major infrastructure developer and energy provider demonstrated a commitment to responsible governance amid economic turbulence.

It was stressed that, throughout this process, the Council’s team built a formidable body of knowledge regarding district energy and heat networks. This expertise represented valuable intellectual capital for the borough. It was firmly believed that this knowledge should be harnessed and leveraged so that Haringey could maintain its position as a regional leader in decarbonisation, while also retaining influence over the borough’s energy future. This strategic repositioning presented an opportunity to explore a range of delivery models that could fulfil the Council’s climate ambitions without placing unsustainable financial burdens on its resources. The path forward required careful consideration of how to protect public assets while enabling crucial infrastructure development, position Haringey within the emerging regional heat network landscape, and respond effectively to government and GLA expectations—while safeguarding local interests. This was not merely a tactical retreat but a thoughtful recalibration of how the Council might achieve its goals through different means.

The Lead Member explained that the team committed to returning to Cabinet in the autumn 2025 with a clear set of options, enabling the administration to make informed decisions about the future direction of heat network delivery across the borough. This pause in the original strategy was not a retreat from climate ambitions, but rather a pragmatic recalibration in challenging circumstances

In response to comments and questions from Cllr Emery, the following information was shared:

• It was explained that the Council was in close discussions with the government on the decision, and stressed that the government was supportive in finding a collaborative solution to the issue. The Council was reviewing all options with the Greater London Authority and central government.
  
  
• It was noted by officers that there was a significant risk to Council of establishing a Council Funded Decentralised Energy Network, and that the proposals in the report sought to reduce this risk as much as possible, but delivering via another model.

RESOLVED:

That Cabinet:

1. Agreed that the Council would no longer work to deliver the strategic heat network projects as originally envisaged in the approved Outline Business Cases (OBCs) and agreed in December 2021 (Cabinet report entitled “Decentralised Energy Networks (DEN) Outline Business Case (OBC)”). Specifically, this meant the Council undertook no further work on delivering an energy company to construct and manage heat networks in an Energy Services Company (ESCO), nor on developing a Full Business Case (FBC) for Council investment in respect of Tottenham Hale and Wood Green.
   
   
2. Agreed that the Council would revisit the Tottenham Hale and Wood Green OBCs, as referred to in (1), to determine a new way forward.
   
   
3. Agreed that, in considering a new way forward, the Council would proactively engage with the Heat Networks Investment Programme (HNIP), managed by Triple Point on behalf of the Department for Energy Security & Net Zero. This engagement was to take place over the summer to identify options for the best course of action regarding the funding allocated to the Council for this project.
   
   
4. Agreed that, once options had been explored with HNIP / Triple Point, officers would report back to Cabinet on the next steps and a recommended course of action. This was expected to take place in early Autumn 2025

Reasons for Decision

In December 2021, the Council was awarded £12.6 million in grants and £15.2 million in low-cost loans to deliver strategic heat networks in Tottenham Hale and Wood Green. Of this, £2.05 million was allocated for commercialisation and approximately £25.8 million for construction.

As agreed in the award, the Council spent part of the commercialisation grant on progressing a Full Business Case (FBC) as originally envisaged, and part of the construction grant on early works required to safeguard the scheme. In addition, the Council began repaying some of the loans. At the time of reporting, £8.6 million of grant funding remained (of which £0.75 million was for commercialisation), along with £14.8 million in loans.

In late 2023, an in-flight review of the Council’s Strategic Heat Network proposals for Tottenham Hale and Wood Green was undertaken in light of major changes in the macroeconomic environment and the Council’s financial position. The outcome of that review concluded that, although the projects remained viable, they carried considerable risk that the Council was not in a position to bear. The Council’s borrowing capacity had also been significantly reduced, and the allocated capital budget for the project was removed from the capital programme in 2024.

Due to the scale of financial and economic changes since 2022, the Council determined that the risk and cost of delivering heat networks as previously planned were too severe to proceed.

As a result, the Council needed to decide how to proceed. It committed to engaging with government funders to explore next steps and potential options for future heat network delivery before reporting back to Cabinet with a recommended course of action.

Alternative Options Considered

Council fulfils both Sponsor and Delivery Roles as originally agreed in 2021

Under this option, officers would have continued developing a Full Business Case (FBC) for strategic heat networks in Tottenham Hale and Wood Green, to be delivered by a wholly owned Council subsidiary, HESCO, as per the original Outline Business Cases agreed in December 2021.

This option was rejected due to the level of risk involved and the Council’s financial circumstances, as outlined in the report. It was not considered further.

The Council decides how to use the funding secured on other decarbonisation projects

Under this option, the Council would have used the remaining commercialisation grant to identify and deliver other decarbonisation projects within the borough.

However, repurposing government funding from the Heat Networks Investment Programme (HNIP) for other decarbonisation projects was not permitted under the funding agreement. HNIP funding was specifically designated for the development and delivery of heat network projects. This option was therefore rejected.

Any change in approach or use of funding would first have required agreement from the Government before the Council could consider or approve any expenditure.