When the sun rises over the Vale of York, Warrington basks in its rays.
It’s not because the clever councillors of Warrington have learnt to bend light. It’s because the local authority owns three solar farms, one in Easingwold, 12 miles north of York, another near Hull and a third in Cirencester.
In many ways the solar farms are a textbook example of how local authorities can help combat climate change while also generating an income. But Warrington Council’s commitment to renewable energy is bound up with a number of other risky investments, past and present, that mean there are clouds in the sunny sky.
The York solar farm, built and run by sustainable energy company Gridserve, was handed over to the council in 2019 and sells energy into the national grid. The subsequent Hull solar farm, the first in the UK to use bifacial solar panels that generate heat on both sides, provides energy for the council’s own buildings and operations.
By 2021, the Local Government Association said they were already exceeding expectations for performance and financial returns, “showcasing the financial viability of renewable investments”.
Gridserve completed Warrington’s third solar farm on 88 acres in Cirencester in 2022, using 43,000 bifacial solar panels and battery storage in what the energy company claimed is one of the world’s most technically advanced such facilities.
The council had declared a climate emergency in 2019 and aims to be net zero by 2030. With Cirencester due to be supplying energy for Warrington’s fleet of all-electric buses due later this year, the council claims to be the first local authority in the UK to produce all its own electricity – and now the solar farms are generating profits for the council.
“It’s unsurprising, if the government’s embarked on a programme of austerity and money’s been taken out of councils, that they’re having to look at opportunities to seek alternative funding to top up their coffers,” says Tom Lloyd Goodwin, director of policy and practice at local economies think-tank CLES. “They are going to be looking round for other investments.
“It’s good that Warrington has sought to do that in ways that address issues like climate emergency and the cost of energy. That’s really encouraging.”
Inspection and £1.8bn debt
The downside is that austerity has forced Warrington Council into other innovative investments too, not all of which have glowed like solar farms. And with the council not always willing to show its workings, last month the government made it resit its exams.
The Department for Levelling Up, Housing and Communities has forced a best value inspection on Warrington, concerned about the £1.8 billion in debt it has run up – the second highest sum for a unitary authority in England.
The details are laid out in the department’s review, commissioned from the Chartered Institute of Public Finance and Accountancy (CIPFA), which calls the Warrington investment portfolio so “large and uniquely complex’ that it seems to have defeated previous review teams. It is “concerned with the scale of commercial activity and associated debt”.
The largest chunk of the debt is in loans to housing associations. CIPFA believes they will be able to renegotiate these with other borrowing providers at lower interest rates in coming years – and thus council income will fall.
The council has invested in property acquisitions and holdings, such as Birchwood Park, and regeneration assets in the town centre, which it has financed through borrowing. It’s a “bold approach”, says the CIPFA report, bringing increased risks that need to be “carefully managed and monitored”.
Other investments by the council, whose chief executive is former North West Regional Development Agency head Steven Broomhead, stand out as arguably bolder.
In 2017, the council bought a 33 per cent stake in new Warrington-based “challenger bank” Redwood for £30.9 million, which by 2023 was valued at only £6.7 million. CIPFA warns that banks of this sort are “highly illiquid” and a short-term exit may not be possible without further losses. The council acknowledged the “areas for improvement” recommended by an auditors report.
Cirencester hybrid solar farm
Redwood is associated with Monaco-based financier Lee Robinson, to which the Financial Times has linked Warrington investments totalling £120 million, including some to property firm M7, for which he describes himself as an “introducer”.
The council also agreed a loan facility of £202 million to Matthew Moulding, the founder of ecommerce company THG, a large employer in the borough. “The council will need to manage this loan well,” notes the CIPFA report drily.
And Warrington Council has sailed too close to the sun with energy investments before. It bought a 50 per cent stake in supplier Together Energy, which went into administration in 2022 when it was one of many companies caught out by the sudden hike in wholesale prices.
The council was owed £18.85 million in loans at that point, had £18 million in shares and also potentially a guarantee to energy multinational Orsted for £29.32 million. Administrators told the council it should get all the loan back and the Osted guarantee will not be enforced – but the council has still had to make provision for losing nearly £9 million of the equity.
The CIPFA report acknowledges Warrington’s investments were consistent with the “entrepreneurial thrust” of government policy at a time when ministers had slashed funding for local authorities. But as public bodies, councils can’t be as entrepreneurial as entrepreneurs, writing off one investment if others come off. Action against climate change gets caught up in the uncertainty.
The Financial Times also reported that the council’s auditor Grant Thornton has complained its client refused to hand over important information about its books, including £87 million of loans to its solar farms. Describing the lack of disclosure as a “major challenge”, the accountancy firm has reportedly requested to step down as its auditor.
The council insists it was only withholding the information while it finalised its draft accounts for 2023/24 and will be fully co-operating with the government’s best value inspector.
An action plan
In a statement to The Warrington Lead, a council spokesperson said it already has an action plan to implement the Levelling-Up Department’s recommendations, to be presented to the council cabinet later this month and the audit and governance committee next month.
The CIPFA report warns that Warrington’s York solar farm is in a “very volatile and uncertain market” but volatility has largely been upwards since the investment. The council has benefited from rising energy prices and, although they have recently been coming down, the council spokesperson said it reviews exit strategies “on an ongoing basis”.
For the moment, the solar farms have now generated a £2.4 million dividend, brought a return on loans to them, and yielded 46,000 tonnes in carbon savings, according to the spokesperson.
In 2020, a report by sustainable energy consultancy Regen highlighted the important role local authorities can play in increasing renewable generation, not only as planning authorities but in a more direct way, as landowners and developers. Poppy Maltby, Regen’s head of local energy, says local authorities are continuing to develop successfully since then.
Alongside Warrington, pioneers include Forest Heath District Council, which is enjoying profits from its solar farm. Wolverhampton Council has joined with the Royal Wolverhampton NHS Trust on a solar farm on disused land to power the hospital site. And Oldham Council is inviting tenders for a solar farm in Failsworth intended to supply energy either for council operations or to supply local businesses.
Maltby says the big change since Regen’s original report has been the rise in electricity prices, giving councils the opportunity to simultaneously cuts costs while increasing revenue. But she warns: “As with the rest of us, they are facing interest rate rises. Councils are facing higher borrowing costs to invest in these projects.”
Another problem is the lack of capacity in the grid to accept new renewables generators. Regen has pointed out that it can take more than 15 years to connect low-carbon generation projects to the grid. “That is a big limiting factor,” she says.
Even where councils want to invest in renewable energy, they may lack the resources to do so, says Lloyd Goodwin.
“It’s very challenging to keep hold of the skills and the expertise that are needed to drive these kind of schemes forward. That double whammy of austerity has meant not only that councils have less money to fund essential public services but that they have less capacity across the board to do this kind of innovative work. And it’s this kind of work we need at a local level to address climate emergency.
“With many councils having declared a climate emergency there is an argument to say it is at the local level that we need to find these innovations but councils need the resource to be able to do that properly.”
Will future chancellor Rachel Reeves loosen the Treasury’s notoriously tight pursestrings to give local authorities a fair funding settlement that would allow councils to put this on a more secure, less entrepreneurial footing?
“Labour have said they’ve got a plan for growth and that’s good,” says Lloyd Goodwin. "But they’ve said funding for public services is going to be contingent on that.
“Are we going to able to wait that long? And also, we can’t just rely on the kind of exclusive growth we’ve had for the last 30 years because that creates problems of inequality.
“Again, lots of councils are innovating in this space but Westminster is saying we just want the growth. The rush for growth can end up incentivising shortcuts, which prevents some people from benefiting.
“It means you bring skills in from other areas to fulfill the jobs rather than taking the time to upskill the residents who really might need those jobs. Who would most benefit from the growth and whose problems might be solved by the growth in terms of poverty, deprivation and inequality?
“We need to connect the growth we’re aspiring to to those people. Without that we’ll just make the problem worse.”
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