Dale McKean On the Reliability of Projected Income from Solar Energy at America Farm

crystal_ball17:15 Monday 24th February 2014
BBC Radio Cambridgeshire

[P]ETER SWAN: We’re hearing about Peterborough City Council and their plans to build a wind farm and a solar farm in order to both provide power of course and indeed to help their budget situation as well. The only downside is Marco Cereste very keen, unfortunately his own Scrutiny Commission for Rural Communities believe the figures aren’t strong enough to justify the huge expense of setting the farms up, or that the revenue they generate once they’re up and running will be big enough. Dale McKean is from the Committee. Let’s hear from him now. Earlier he expressed his concerns to me and his disappointment that their advice had been ignored.
DALE MCKEAN: November 12, and three meetings after that, officers have come along and presented the financial risk assessments for the solar energy parks in and around Eye and Thorney. September last year there was a full presentation of all the latest financials. However it wasn’t detailed enough, so we asked officers to come back with more detail. In December when they did come back, America Farm turned out to be zero benefit when investing something like £27 million. The others were in for some investment and some benefit, but America Farm came back as zero. So after that meeting in December, the Rural Commission voted to refer it to Cabinet to stop the project for solar farms at America Farm.
PETER SWAN: So the numbers that you’ve got here, basically what you’re saying is the numbers that you’ve been presented with don’t present you with a compelling argument to go ahead.
DALE MCKEAN: That was the case in December. Yes. And Council officers and all the financial representatives presented that to the Commission, and that was their decision. So it’s been presented to Cabinet today. The thing is that since December they’ve remodelled all the financials. They’ve reduced some of the costs for the capital expenditure, and the maintenance costs. What is concerning is they’ve reduced the contingency costs from £2 million to only £250,000, based on the fact that they’ve now done some more remodelling. What was presented to Cabinet today was a benefit and return of profit on America Farm over 25 years of £5 million. Now on today’s value, that would equate to something like £100,000 BI value(?) per year for the next 25 years for that investment of £25 million, which really still is not very good benefit. What’s even more concerning is if it’s called in by the Secretary of State, that BI value(?) each year will only be £85,000, due to the delay.
PETER SWAN: So the first set of figures that you had weren’t terribly favourable. The second set of figures aren’t amazing either. How reliable would you say the figures are? Because I would say part of the difficulty here is this is just a projection, isn’t it? Nobody can be completely certain.
DALE MCKEAN: Exactly. And they’ve obviously had, what, eighteen months now to get to these figures, and they’d already had fifteen months in December, and they should have had these accurate in December. The fact that they’re now changed again, and all of a sudden it’s gone from zero benefit to a £5 million benefit over 25 years does concern me. I will see what the other members of Rural Scrutiny decide they want to do about the situation.
PETER SWAN: Is there any precedent for this in terms of other councils in other parts of the country that you can use as a basis of other councils manage to make this kind of project work?
DALE MCKEAN: No, I don’t think there is, from what we’re hearing. There are other projects going on, but we certainly feel it’s about the risk we’re taking with Council ratepayers’ money. And that’s the role of Scrutiny Commissions, to make sure that the risk is OK.
PETER SWAN: So that’s Dale McKean then, talking about Peterborough City Council’s decision to press ahead with developments at America Farm. We should just say that plans for two other sites at Morris Fen and Newborough have been put on hold while the Council continues to talk with resident farmers and other affected parties. And there will be more on this story with Mr Paul Stainton on Breakfast from six o’clock tomorrow morning.