Tees Valley Mayor Ben Houchen has revealed a remarkable plan to help tackle the cost of living crisis - creating Teesside's own energy from a vast £50million solar farm and selling it cheaply to schools and hospitals, and eventually households.
The Tees Valley Combined Authorty is talking to the UK Infrastructure Bank, which has already given more than £100m to build the new quay at Teesworks, about putting solar panels alongside the runway at Teesside Airport. For safety reasons the land can't be used for buildings, but it can for low-level work.
The energy would then be sold to large local users, which could include Local Authorities, NHS Trusts and local schools at a cheaper rate than other energy providers. There is also the potential to expand the scheme to further sites across the region.
Read more: New UK Infrastructure Bank to invest £107million in Teesworks’ South Bank Quay
The Mayor told us: "The Combined Authority now owns quite a lot of land, so especially with the cost of living crisis, we looked at whether that was something we could intervene in, by trying to reduce bills.
"We're not signing off a specific project yet, we're basically saying we want an agreement from the Combined Authority to develop a full business plan to set up our own energy company.
"You might have seen local authorities that have tried it, and it's gone bust. In effect, the way that they did it is they'll go to the market, and they'll buy energy, and they'll sell it. They're basically a reseller and a middleman.
"Whereas, because of all we've learned, the way that you could avoid putting yourself into a position where you buy energy, and then the market turns against you, is you own the energy asset. Because if you own the thing that generates the energy, you can't really lose money."
The scheme will be phased over two to three years, with delivery of the first phase set to begin by spring next year.
Ben Houchen told The Northern Echo: "If we were to build a £50million solar farm, it might cost us five or six pence a kilowatt hour to produce that energy. So to build it pay out the capital, pay the interest on the loan, that's what we need to make back.
"We can go to the Grid, and the Grid will pay eight or nine pence a kilowatt hour. So you're guaranteed with a guaranteed offtake to buy all of your energy. So you can't lose money, because you own the asset. But of course the plan is we don't want to sell it to the Grid - that's a backstop, because it protects us from the downside.
"What we want to do is then go to local NHS Trust or schools and say, well, you're paying a fortune for energy. It's only costing us this the money to produce the market prices up here, we'll charge you this."
The move to business or residential customers will be a little further down the line, but may still be possible nearer 2028.
"Phase one is to reduce bills for local authorities, hospitals, and local schools. The ambition, which in all honesty is probably five or six years away, assuming everything worked really well would be to then go to retail, and basically say to people across the Tees Valley, you can have your energy from the Tees Valley Energy Company.
"That comes with additional regulation, and you would never want people to sign up for their energy bills with us on day one, because we've got to make sure it works. and we get all the teething problems out."
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