This report seeks updated approval for a project to carry out the decarbonisation and energy savings measures at Maidstone House and the Link, including a replacement low carbon heating system, replacement glazing, full external insulation of the building, upgrading of the lights to LED, installation of solar PV on the Link / Business Terrace roof and refurbishment of the 4th Floor. The project is a key component of the Council’s Biodiversity and Climate Change Programme.

That

1. Capital expenditure of £5.85 million for the decarbonisation project, comprising Salix grant funding of £3.13 million and a Council contribution of £2.72 million be approved;

2. £300,000 to complete 4th floor refit works, funded by the South East Local Enterprise Partnership be approved;

3. Further reports be received as the project progresses; and

4. The Director of Finance, Resources and Business Improvement be delegated authority to select and appoint contractors for applicable services as necessary.

As part of the Council’s Biodiversity and Climate Change Action Plan, officers have sought external funding for decarbonisation works at the Council’s own properties. Of these, Maidstone House and the Link Building is the second largest emissions source for the council, accounting for 17.6% of total emissions in 2022-23.

The Government has supported initiatives by the public sector to reduce carbon emissions, in line with the strategy set out in the Energy White Paper 2020 (see https://www.gov.uk/government/publications/energywhite-paper-powering-our-net-zero-future ). It has done this through the Public Sector Decarbonisation Scheme (PSDS). Details of recent schemes funded by the PSDS can be found at: https://assets.publishing.service.gov.uk/media/656451ce0c7ec8001195be5 a/psds-phase-3b-summary-report.pdf .

In November 2023 officers submitted a bid for Phase 3c of the PSDS amounting to £3,126,536 to retrofit Maidstone House. It was estimated that this project would generate annual savings to the council of £51,875 and a carbon reduction of 361.8 tCO2e per year, reducing the Council’s total carbon footprint by a 5th and being a role model for commercial buildings in the town centre of Maidstone. The successful completion of this proposed project would set the standard for many more grant funded building improvements across the council’s portfolio.

We received confirmation in February 2024 that this bid was successful. Approval was obtained from the Leader for council funding of £648,664 to complement the external grant funding and to ensure eligibility for the funding, based on an estimate by our consultants APSE of total project costs of £3,775,200.

Note that it is a condition of the PSDS Salix grant that the money be spent by 31st March 2025.

The main elements of the project are as follows:

·  Heating: Designs/tendering and ordering air source heat pumps that are capable of simultaneous heating and cooling all 6 floors of Maidstone House and 4 floors of the Link Building. To be housed in a new plant room installed in the roof with upgraded venting to distribute fresh air throughout the buildings.

·  Insulation: Architectural detailed drawings and planning permission, for insulating the external walls, insulation under the floors and the under croft. Appointing contractors to insulate the building in conjunction with glazing being replaced.

·  Glazing: Upgrading the glazing across the full building (except reception area which has already been re-fitted) to ensure better heat retention in winter and a cooler environment in summer- particularly on the south facing side.

·  Solar PV: Design and structural appraisal of the Link building roof, and installation for a 55kWp solar PV panel array comprising 122 no. 385W panels, while maintaining and enhancing the existing green roof on the Business Terrace.

At the same time as the council bid for decarbonisation funding, it also bid successfully for £300,000 of funding from the South East Local Enterprise Partnership (SELEP) under the government’s ‘Getting Building Funding’ to provide grow-on business space for new businesses on the 4th floor of Maidstone House. This would complement space that has already been refurbished at the council’s own expense on the 2nd floor and is designed to provide suitable accommodation for businesses graduating from the council’s Business Terrace for new start-ups (although it would be available to other growing businesses as well).

It is intended to take advantage of the decarbonisation work to carry out refurbishment of the 4th floor as part of the same overall project, thereby minimising procurement and project management overheads.

The Council has instructed Calford Seaden, under an existing framework contract, to provide project support. This has allowed the initial APSE Energy cost estimates for the project to be refined, based on current prices, and for key design decisions to be addressed.

CalfordSeaden’s initial cost estimate was for a project cost of £5.32 million, as compared to the APSE estimate of £3.775 million. The increased budget is due to changes in materials specification and costs and is based on more detailed technical advice. At this stage cost estimates are based on updated assessments of the pricing used by APSE. In order to obtain a more accurate estimate, detailed survey work is required and estimates of materials costs based on the preferred design options. Accordingly, it is considered prudent to add a 10% contingency to the £5.32 million, giving an updated cost for the decarbonisation project of £5.85 million. This would increase the council’s contribution from £648,664 to £2,723,000.

An investment of £2,723,000 would give a notional return, assuming the savings quoted of £51,875, of 1.9%. This is less than the council’s current target rate of return in its capital strategy of 5%. However, members may conclude that the project offers strategic benefits to the council that justify the implicit revenue subsidy arising for the project.

CalfordSeaden have also highlighted different potential approaches to insulating the building, broadly internal wall insulation (IWI) versus external wall insulation (EWI). Costs of the two alternatives are judged to be broadly similar, but the options appraisal highlights strong practical and aesthetic arguments in favour of EWI.

A number of options are available for EWI. The initial proposals from APSE envisaged rendering the exterior. However, on further investigation it has been concluded that a sheet cladding system would be preferable. Cladding is lighter, quicker to install and requires less maintenance year-on-year and has a better whole-life cycle. Rendering is cheaper but presents issues with water and bird strike staining, meaning more maintenance would be required. This is reflected in the Calford Seaden cost estimate above.

The Council could choose not to proceed with the decarbonisation project at this time, do not utilise Salix grant funding of £3.1m and reconsider the project from possible future Public Sector Decarbonisation funding schemes. However there are overriding strategic benefits from pursuing the decarbonisation project which offset the sub-optimal financial return.