Council set to sell off borough's district heat network

Energetik has cost tens of millions in taxpayer cash so far but still needs many millions more of investment, reports Joe Ives, Local Democracy Reporter

This week's cabinet meeting (credit Joe Ives/LDRS) and (inset) Energetik — This week’s cabinet meeting (credit Joe Ives/LDRS) and (inset) Energetik

Enfield Council has agreed “in principle” to sell off its district heating network to a private partner.

The decision to flog the costly Energetik project was made at the council’s cabinet meeting on Wednesday (24th), the first since the new minority Conservative administration took charge of the civic centre last month following the local election.

Using underground pipes Energetik transfers heat from a variety of sources, including the Edmonton incinerator, to warm people’s homes. Some recently-built estates in Enfield are now plugged into the network, although it remains under construction.

A report last October confirmed the total cost of delivering Energetik was set to eventually reach £114million, via a combination of council loans and external grants. It also warned that, excluding one-off connection fees, the business would not make a surplus until 2038.

However, Tim Leaver, who was deputy leader of the Labour administration in charge at the time, claimed the company was currently “profitable” had a “strong long-term outlook” under the council’s control.

The new Conservative administration does not see things the same way.

Edward Smith, the council’s cabinet member for council assets and culture, said this week the company had “moved beyond its initial delivery stage” and that now was the right time for the council to assess sale options.

This, he argued, was especially prudent given the next stages of expanding the network “would involve significant investment and specialist capability beyond what the council can sustainably provide as a sole shareholder”.

Following discussion of a strategic review of the company, cabinet members agreed to an in-principle decision to sell the company while retaining a stake through a ‘golden share’ arrangement.

This would see the local authority retain a decisive say on certain aspects of the company after any potential sale.

Stipulations for the public-private deal could include preventing the future operator from creating subsidiaries or selling infrastructure.

Speaking at the meeting, council leader Alessandro Georgiou said the golden share arrangement would mean the council has a “good financial interest in the scheme moving forward, which should, in theory, provide a good financial return for the taxpayers of Enfield” if the private partner is successful.

Much of the finer detail of Energetik’s finances and potential sale options have not been made public, however.

These were set to be discussed in the second part of Wednesday’s cabinet meeting, which was closed to the press and members of the public.

Officially, the council plans to have finalised its choice of private sector partner by March next year, but Cllr Smith admitted this was a “tight timetable” and “more of an aspiration” than an absolute deadline.

“It is a target – and we are going to try and reach it,” he added.

The cabinet report prepared by officers ahead of the meeting explained that a more detailed strategy for the decision would be set out in the future “once market testing, commercial analysis and legal due diligence have been completed”.

This will include final advice from Hermetica Black, a company that specialises “in the funding, development and asset management of sustainable and decentralised energy projects”.

The local authority will also make use of legal advice from Womble Bond Dickinson, a self-described “straight-talking” law firm with “entrepreneurial lawyers and technical specialists”.

In summarising his hopes for the sell-off, Cllr Georgiou said: “I think there is an understanding that this administration will be a wonderful partner to whoever does proceed with buying Energetik and we will work collaboratively with them and they will have a stable administration to work with in their financial interests, and ours.”

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