Month: March 2019

This time last year we were busy working with a school on the initial stages of a low-carbon district heating project, that would have seen the entire school estate coming off oil. The scheme was set to save the school about £3 million over the next 20 years. But it didn’t happen in the end because it was relying on conventional lease-financing and the Governing Body, quite understandably, did not want to risk taking on extra debt.

That set us thinking about how we could arrange the financing of a project so that no capital outlay would be required and instant annual savings would be achieved, but there would be no annual lease repayments. The result was the SLCP. This is in essence a heat purchase agreement, but the key break with previous versions seen in the education sector is that the agreement will be run open-book and operate within agreed profit limits. These features will achieve a level of trust in the partnership between provider and school which in our view is essential if the scheme is to flourish.

We launched the SLCP in December. The first school going through is a large boarding school in the South of England. The whole school estate is currently on oil, with an annual heating bill of over £300,000, and some 20 plantrooms serving the main building, boarding houses and other buildings. The proposed low-carbon scheme will be based on a ground source heat pump district scheme of some 3MW in capacity. At this relatively early stage in the step-by-step risk reduction process preceding final commitment, we anticipate that the scheme will achieve a reduction in heating costs in the first year of 15-20%, and savings over 20 years of several £millions. The RHI is worth more than £10million over 20 years, based on a CPI of 2%.

As we get further along in the development we will be able to refine that estimate, so that before both sides of the partnership finally commit to the installation we will know the risks and benefits in enough detail. The key point for the school is that the primary risk lies with us, not the school. In our view this is the fairest scheme a school could ask for if it does not want to commit its own capital.

Number 10. Prime Minister’s Office. 17^th February 2019.

Prime Minister at her desk, prepping for PMQs. Enter Private Secretary.

PS. Prime Minister, the children are going on strike.

PM. Which ones? Labour or our lot?

PS. No, no Prime Minister, the school children. They’re going on strike.

PM. Oh for goodness sake! Isn’t there already enough to be worrying about? What are they going on strike for?

PS. They’re having a day of strike action in protest at the lack of action on climate change.

PM. Are they allowed to do that?

PS. Well, strictly speaking no Prime Minister. But it’s difficult. If we ignore it then we’ll be seen as out of touch. If we register it and condemn it then we’ll be seen as reactionary and out of touch. And if we condone it then we’ll be seen as out of touch and over-reacting by the teaching establishment, who’ll accuse us of not appreciating the pressures they are already under and demand a review of the curriculum and resourcing.

PM. What do you suggest?

PS. I think it’s a one-liner from you to point out that the best way to prepare for the future is to study hard, and then send in Perry with a statement about how the UK is leading the world on intent and action.

PM. How can we be leading a lack of action? Isn’t that an oxymoron?

PS. Well strictly speaking it is Prime Minister. But to be fair, there is mileage in being seen to be doing not enough less slowly than everyone else. At the same time we could leak the latest overspend on the carrier budget to the Mail as a diversion and…

PM. Is there an overspend on the carrier budget?

PS. Well strictly speaking no Prime Minister. The ships are on budget, after strippages and adjustment by the Treasury. But there is a lack of provision for any aircraft.

PM. Banging head on desk. Oh goodness, goodness me!

PS. Well it’s not that serious Prime Minister. We can get some on eBay I’m sure.

PM. I’ve got an idea.

PS. Yes, Prime Minister?

PM. Isn’t it the case that sea levels are going to rise as a result of climate change?

PS. Massively, Prime Minister. Whole communities could be wiped out. South Thanet is looking particularly vulnerable.

PM. That’s a safe Tory seat.

PS. Indeed Prime Minister.

PM. This is more serious than I thought. How about this? Transfer the budget for the carriers from the MOD to BEIS and re-role them as climate change relief ships. That way they could operate usefully all around the world and won’t need any fast jets. And it would teach young Williamson a lesson for being so lippy with the Chinese.

PS. Yes Prime Minister. Inspired.