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Invitation to tender business cases for energy innovation zones in the West Midlands

Over the next 15 years the West Midlands expects to secure more than £40bn of investment in transport, industry and housing. This will include the arrival of HS2 and associated transport infrastructure (e.g., metro connections between Birmingham and the Black Country) major investments by Jaguar Land Rover in manufacturing facilities in Coventry, Solihull and Wolverhampton; a new multi-mode transport interchange at the NEC/Birmingham Airport (UKCentral) investment in the National Battery Manufacturing Facility; regeneration of the city centres of Birmingham and Coventry and construction of over 200,000 new homes.

Competitive, clean energy is more critical than ever to the success of all these investments, particularly given the advent of electric vehicles at scale, the reliance of the region on relatively energy intense manufacturing, and the high incidence of fuel poverty in Birmingham in particular. The right infrastructure to support competitive energy markets and economic development will be critical to the future economic success of the region.

However, there are two challenges the West Midlands sees in securing an appropriate energy infrastructure for its future needs:

  1. The pace and scale of investment in the region is much faster, more substantial, and more integrated than existing national energy infrastructure programmes are designed to support: we are worried that our strategic investment programme might be held back by the inefficiencies of existing energy market processes and specifically by a paucity of mechanisms to support private infrastructure finance and efficient local integrated infrastructure planning.
  2. Global energy systems are changing rapidly (particularly in response to large numbers of electric vehicles, the climate change imperative, lower cost energy storage and digital technologies) creating an increased risk of stranded assets and/or excessive costs imposed on our industries and innovators, holding back competitiveness.

Our response to these challenges is to propose the establishment of a number of Energy Innovation Zones (EIZs) in the region, geographically focused on our major strategic investment sites.

We anticipate that these EIZs will be given (defined) freedom by central government to flex energy market and local planning regulations in ways which meet local strategic needs and attract global energy infrastructure investors. They will provide a flexible, bounded context for managed risk-taking in energy systems investment and enable the region to mitigate the two key risks identified above while simultaneously placing the West Midlands at the forefront of the global energy revolution (giving us a competitive advantage in a $3trn p.a. global market).

EIZs are intended to be analogous to Enterprise Zones and Regeneration Areas, and likely to be financed over time by use of local value capture mechanisms agreed with government and specific to energy systems (see for an example of this approach applied more broadly.

This brief seeks a consultancy (or consortium with the relevant skills) able to articulate and quantify the economic cases for the government to support the establishment of EIZs (with appropriate value capture mechanisms) in four indicative locations in the West Midlands:

  • South Coventry (concentrated industrial and housing development at scale, constrained electricity network capacity)
  • UK Central – Solihull (home to a number of key strategic assets including world class and leading edge integrated transport hub development, with manufacturing, retail, leisure, housing and high-quality business parks)
  • Birmingham City Centre, including Tyseley Energy Park (over £1bn of urban regeneration alongside a new HS2 terminal and innovative energy park; constrained electricity network)
  • i54 and Phoenix Enterprise Zone in the Black Country (diverse manufacturing and industrial developments – relatively large numbers of SM enterprises in automotive and aerospace supply chains)

The Mayor of the West Midlands, Andy Street, recognizss the importance of this agenda and has established a Regional Energy Policy Commission, chaired by Professor Sir David King, to report back to him and government by the end of March 2018 on the potential viability of EIZs and to propose some indicative powers and regulations which might be devolved to the region. The Commission includes senior representatives from OFGEM, BEIS and national and local electricity system operators. The appointed consultants will be given access to the work of this Commission and will be expected to work with the Commission secretariat to ensure findings are complementary.

The findings will also feed into the development of a local industrial strategy.

Invitation to Tender

Tenders are invited for the provision of the Service as specified in the enclosed document for an agreed period to be confirmed.

Submission of Tender

The response must set out the following:

  • ORGANISATIONAL DETAILS AND PRICING (see appendix I and please use the tables provided)
  • Name and experience of The person or people that will be carrying out the work.
  • Evidence that you appreciate the challenges and constraints of the project
  • Details of methodology to be adopted
  • A Provisional project plan and timetable
  • Total Fixed Cost
  • Provision of two references

Closing Date

The Tenders must be submitted electronically to no later than 5pm on FRIDAY 12 January. We expect to notify the winning tenderer by Friday 19 January and the project will start w/c 22 January 2018.

>>Download the full Tender Document here<<

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