Decision details

Offtake Arrangements for Power from the Energy from Waste Plant - SEPT15/CMDN/79

Decision Maker: Cabinet Member for Waste and Street Scene

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: Yes


The Cabinet Member:


1.    authorised the Corporate Director, Resources in consultation with the Director of Governance to agree variations to the contract awarded to Viridor Peterborough Limited (Viridor)  to   make short term arrangements for Viridor to sell the electricity and/or heat from the energy recovery facility (ERF) for the period up to 31 March 2016;


2.    authorised the Corporate Director, Resources in consultation with the Director of Governance to negotiate and enter into short or longer term offtake arrangements for the Council to sell the electricity and/or heat from the ERF for the period after 31 March 2016;   


3.    authorised the Corporate Director, Resources to act as ‘Superuser’ on behalf of the Council and to have the legal capacity to make any declaration required by Ofgem for the Council to participate in Ofgem’s Renewables and CHP Certificate Registry IT system;


4.    authorised the Corporate Director, Resources in consultation with the Director of Governance, to  accept delegations from one or more waste disposal authorities to allow waste to be accepted from those waste disposal authorities for treatment at the ERF under Section 9EA of the Local Government Act 2000 and Regulation 5 of the Local Authorities (Arrangements for the Discharge of Functions) (England) Regulations 2012; and


5.    authorised the Corporate Director, Resources in consultation with the Director of Governance to enter into delegation agreements with other waste disposal authorities.


Reasons for the decision:

The Viridor Contract and Production of Electricity and/or Heat


While the Council structured the contract with Viridor to allow itself flexibility in the way in which it manages the electricity and/or heat produced by the ERF, the recommendations contained within this report aim to enable the Council to increase that flexibility to derive maximum potential benefit now.


Furthermore, in order to generate the maximum benefit, the Council has identified the possibility of an additional source of waste by means of a delegation from one or more Waste Disposal Authorities (WDA) which would allow the ERF to operate closer to its maximum capacity and increase the financial benefit which the Council could derive from the ERF’s activities. 


Essentially, there are 3 proposed changes to the Viridor Contract which are for: Viridor to sell the electricity produced through its arrangements with Viridor Waste Management Limited and its partner Smartest from the start of the commissioning phase up to 31 March 2016, to give the Council the flexibility to change ownership of the electricity, if it so chooses when selling the electricity, and to allow waste from other waste disposal authorities to be treated at the ERF. 


Offtake Arrangements in Respect of Electricity and/or Heat Generated by the ERF


The electricity supply market is subject to continual change and in order for the Council to continue to ensure it delivers best value in respect of income received from electricity produced by the activities of the ERF it needs to develop a flexible offtake strategy.  It may not be able to do this effectively through a long term deal so needs to develop a methodology to monitor the value to be achieved from electricity and/or heat in the longer term.


The Corporate Director, Resources requires the ability to respond quickly to energy market developments and to enter into such contractual arrangements as may benefit the Council from time to time. 


In respect of the electricity market, these arrangements may require a registration to be held with Ofgem and operated by the Council’s authorised representative.


Advisers to the Council


In the development of its offtake arrangements strategy the Council has sought the advice of its external legal, financial and technical advisers and will continue to consult as required to ensure compliance with legal, financial and other regulatory requirements in this complex area.  Further details of the advice received by the Council is set out in paragraph 9 of the report.

Alternative options considered:

The following options were considered:




Reason for Rejection


Do nothing

This is not an option as the Council is obligated to make arrangements for the offtake of electricity and/or heat from the ERF facility in order to both comply with the contract it holds with Viridor and to ensure realisation of the energy’s value in the interests of its residents.  Also the uncontrolled delivery of electricity to the transmission grid is not compliant with the Electricity Act 1989 where all supplies must be registered and regulated so as to ensure efficient and stable electricity supplies.


Give Away Energy

The Council could be seen to be negligent in not endeavouring to make adequate provision for the best income available from the market at a particular time and therefore giving away the energy is not acceptable and may also place it in breach of State Aid rules. 


Set up a Company to Sell Power

The Council made provision to develop its own company, Blue Sky Peterborough, with part of its function being to deal with the sale of power from the ERF development. There are costs associated with such an undertaking and it is possible to avoid these costs by selling the energy directly as a Council and not through this company, so in the interests of best value we should avoid this unnecessary expense.


Interests and Nature of Interests Declared:


Background Documents:

Local Government Act 2000; and


Local Authorities (Arrangements for the Discharge of Functions) (England) Regulations 2012.


Publication date: 23/09/2015

Date of decision: 23/09/2015

Effective from: 29/09/2015

Accompanying Documents: