Birmingham City Council is set to launch a tender that could lead to £1.3 billion of green retrofit work for 200,000 local homes and commercial buildings.
The council claimed it would become the leading council for the government’s Green Deal, with a retrofit programme in which it would initially arrange £100 million in funding on private sector housing work, partly by borrowing £75m.
It is set to tender for its main contractor in the deal with an OJEU notice before the end of July.
A further £300m will be released through private finance if this first stage is successful, while the total programme could see £1.3bn spent on refurbishing 200,000 homes by 2026.
Commentators said that by giving banks and financial institutions confidence in the Green Deal market, local government backing of the kind Birmingham is proposing could unleash billions of pounds of retrofit work, and other councils would be likely to follow the model.
“We are looking to become the first local authority Green Deal provider,” said David Allport, programme manager of Birmingham Energy Savers, the council unit managing the project.
“We are planning for the Green Deal go-live in autumn 2012. During July, we will go out to the market to start the process to find our delivery partner.”
The key to getting Green Deal funding flowing through the construction supply chain is getting the financial institutions interested, said Willmott Dixon head of carbon and energy David Adams (pictured).
“The local authority model [is] the vehicle for creating sufficient scale for [financial] markets to start to be interested. I think this is a very interesting model indeed and one that is very exciting.
“Financial institutions like working with large numbers, [so Birmingham] is the intermediary to take property-sized sums and convert them to the hundreds of millions,” said Mr Adams. “I think that a range of local authorities will be looking very carefully how this progresses with Birmingham.”
The council will go to market with a competitive dialogue tender process, which encourages the contractors to come forward with new solutions to changing client requirements.
The council’s assistant director of corporate procurement Nigel Kletz said: “We want the market to help inform us of the best way to do it. It’s not a standard commodity.
“There is complex financing around this, and it’s all about having the finance partners supporting it. We don’t know yet what the final answer will be, so the competitive dialogue process will allow us to engage in the market in a much more creative way to help us determine the optimal solution at minimal cost.”