Minutes:
The Director of Property and Projects submitted for the Committee’s consideration the undernoted report:
“1 Relevant Background Information
1.1 Members will be aware that the Council has previously agreed that the development of the North Foreshore should comprise an Environmental Resource Park to create an innovative “Cleantech Environmental Technology Business Cluster” for Belfast which would encourage investment and job creation. The development of a renewable energy hub within the park will also demonstrate the Council’s leadership in building the City’s resilience and promoting renewable energy in an era of growing energy insecurity, increasing energy cost and fuel poverty.
1.2 The development of the North Foreshore Environmental Resource Park is included in the Council’s Investment Programme 2012 – 2015. Members will be aware that the Council has submitted a £8 million European Regional Development Fund Application to develop the infrastructure for this environmental resource park. Invest NI and DETI are currently assessing the application, and the Council expects a decision at the end of 2013.
1.3 The Council has already commenced the regeneration of the North Foreshore with the completion of a waste transfer station, substation, and a landfill gas electricity generation power plant. The electricity substation currently generates 3mw of renewable electricity which is exported to the local grid network and is sufficient to power up to 3,500 homes. The substation does, however have sufficient spare export capacity of 7 mw to the local grid network, which provides the opportunity to encourage the further development of renewable energy facilities to create a sustainable energy hub at the North Foreshore
1.4 Within the area reserved for the environmental business park, the SP&R Committee, on 25 January 2013, approved the release of a Marketing Prospectus for the disposal of a 3 acre site for a Cleantech Biogas renewable energy facility
2 Key Issues
2.1 The Council publicly advertised the Cleantech Renewable Energy development opportunity in the local paper, Council website and in the EU Journal in March 2013. The closing date for development bids for the site was 30 May 2013. Developers were required to provide a detailed submission setting out details of their financial bid for the site, development proposals, proposed programme, funding sources, project team and experience.
2.2 An Evaluation Panel was established comprising of representatives from Estates, Legal Services and Corporate Services, to undertake the assessment of any Development Submissions received prior to the closing date. The Evaluation Panel used the following assessment criteria outlined in the Marketing Prospectus:
I. Financial offer for the heat and power easement fees.
II. Company background, financial viability of the project and the financial capability of the operator to fund, deliver, operate and possibly expand the facility.
III. Experience of the Developer and project Development Team to deliver and operate similar cleantech biogas renewable energy facilities.
IV. Quality of the design proposal to contribute to enhancing the image of the “Cleantech Environmental Technology Business Sector” and the socio economic benefits.
V. Delivery of the project within a reasonable timescale.
2.3 The Evaluation Panel are of the view that a submission received from the company Tamar Energy Ltd meets the criteria as set out in the Development Brief in terms of funding and delivering a commercially robust cleantech biogas renewable energy project.
2.4 Tamar Energy Ltd are proposing to develop an Anaerobic Digester facility that would process commercial organic food waste to produce biogas to power up to 3 Mw of renewable electricity and heat. This could be sufficient to power up to 3,500 homes. It will also contribute towards the 40% renewable energy target established by the NI Executive. Anaerobic Digestion (AD) is a cleantech technology that is a modern and clean facility that processes organic waste in the absence of oxygen, producing a biogas that can be used to generate electricity and heat. The AD operation takes place in an enclosed building under slight negative pressure and sealed containers to contain the odour. Tamar Energy Ltd has indicated that they will invest £12 million from private equity investors, to develop the AD Facility.
2.5 Tamar Energy Ltd is proposing to create a number of permanent full time jobs, and have indicated they are committed to make every effort to recruit locally for the positions. There will also be additional construction jobs created by the project.
2.6 The NI Executive is promoting the development of AD facilities to generate renewable energy to reduce our dependence on imported fossil fuels and to improve our security of energy supply. The Executive has imposed targets that 40% of our energy production is to come from renewable sources by 2020. Currently, NI is producing c12% of its energy from renewable sources. It is worth highlighting that in 2009 the Council’s landfill gas electricity generation power plant at the North Foreshore was producing 5mw which accounted for 1% of the 12% renewable target established by the Executive for 2012.
2.7 In addition, the NI Executive has also established targets to divert waste away from landfill and has established a recycling target of 60% by 2020. The Tamar Energy Ltd AD proposal will help to divert organic food waste away from landfill and contribute towards the 60% recycling target.
3 Resource Implications
3.1 Financial
The Council will receive a financial return for the site based on a ground rental (reviewable every 5 years) and a further return based on the amount of electricity generated from the facility and on the amount of any heat exported from the facility. The return from electricity and heat is based on an agreed (unconditional) price per mw hour. The total return will be dependent upon the amount of electricity and heat generated but setting aside any potential return from the export of heat (which is less certain given that there are currently no end users on this site), the estimated return to the Council is circa £154,000 per annum.
In order to enable development and comply with planning and NIEA requirements and for the protection of human health, the site will however require capping works (including an active gas abstraction system) to be undertaken. The cost of the capping work for this 3 acre site is approximately £735,000, which will require to be met from the Capital Programme. A further report is being brought to the Strategic Policy & Resources Committee in September in relation to the Capital Programme and it will include further details on this. It is worth noting however that in the absence of development the Council may still have to provide a basic capping system.
Taking into account the proposed financial return from the site, the payback period for this capital outlay is approximately 4.8 years. This represents a very good return on investment particularly given that a 25 year lease is proposed with the rent reviewable on a regular basis. In addition, the development of this facility should act as an important anchor tenant and encourage other developers in the cleantech and renewable sectors to locate at the North Foreshore.
The proposed investment by Tamar Energy Ltd is £12 million. In addition to job creation for the City, this facility will also add to the City’s rate base.
3.2 Assets
The development of this site represents an important regeneration opportunity for Belfast and has the potential to create significant economic, social and environmental benefits.
The development of this facility is important in firmly positioning the North Foreshore Environmental Resource Park and acting as an anchor tenant to encourage further development from this renewable energy and cleantech sector.
3.3 Human Resources
Staff resource, primarily from Property & Projects and Legal Services.
4 Equality and Good Relations Considerations
4.1 None at this time
5 Recommendations
5.1 It is recommended that Members give approval to grant Tamar Energy Ltd preferred developer status and to enter into negotiations to complete a Site Options Agreement and Agreement to Lease for the disposal (by way of lease) of a site at the North Foreshore, as detailed above, and subject to detailed terms to be agreed by the Estates Manager and Legal Services, and also subject to the further report to be brought to SP&R Committee in September on the Capital Programme.”
The Committee adopted the recommendation and agreed that the North Foreshore Working Group receive a presentation from the preferred developer in relation to the proposals for the site.