Energy bills at City Hall have more than doubled as council energy bosses admitted they “managed to time it perfectly wrong”.
Bristol City Council’s annual energy bill jumped in the last financial year to £14.5 million, up from £6.2 million the year before.
Long term contracts ran out last autumn, just as wholesale prices began to rise, but the council chose to extend these and ended up paying far more this year.
Now Bristol is trying to use an innovative new approach, where the energy generated at council-owned wind turbines and solar panels in Avonmouth would effectively be sent to large public sector buildings like City Hall and schools, saving millions on energy bills.
Steve Ransom, head of energy services, said: “Our strategy for buying energy once every two years worked perfectly well. Then we started to see in summer last year the markets increasing to unprecedented levels.
“That was when our existing contracts started to run out, and we started getting prices back that were absolutely crazy, or in many cases we couldn’t get suppliers to give prices at all. So we were forced into short term extensions from our existing contracts.
“We thought at the time ‘we’ll weather the storm, get through it and recontract on the other side’. Hindsight is a wonderful thing. Knowing what I know now, I would have recontracted back then, but we couldn’t possibly know what was going to happen in Ukraine.
“And of course the prices have gone completely crazy ever since. So we have had to completely change the way we procure electricity and gas to counteract the extreme volatility.”
Previously the council bought energy on contracts lasting 18 months or two years, at a fixed price.
This worked well when the market was stable, but would prove very expensive since wholesale energy prices shot up following the invasion of Ukraine earlier this year, as the council could get “stranded paying a high price” after costs come down in the future.
David Gray, energy supply programme manager, told the growth and regeneration scrutiny commission about how the cost to Bristol tax payers has shot up.
He also explained how using energy the council generates itself could protect from skyrocketing prices in the future, with huge plans for new energy generation in the pipework.
Mr Gray said: “We managed to time it perfectly wrong. We thought we could get past it and things would be fine after Christmas, but as it turns out, they weren’t. We found it was increasingly difficult to get any new suppliers to take on any new business, so we found ourselves boxed into a corner and the only supplier who would give us a quote was our existing supplier.”
Two council-owned turbines in Avonmouth generate 2.5 megawatts of electricity each, and a solar farm also generates 1.8 megawatts. At the moment this is sold onto the national grid. With a new approach called ‘sleeving’, the council would not have to pay for consuming the same amount of electricity. But legal issues means this new set up has faced long delays.
Mr Gray added: “At the moment the council owns two wind turbines and a solar farm. We sell the power from that to the grid, and the way the market currently works is you buy it back again at a higher price.
“But at the wholesale level, [sleeving] would be cost neutral. We were geared up to go out to the market in summer 2021 but we ran into some legal issues.
“It delayed the process, and by the time we had sorted it out and issued a tender, a week later the Russians invaded Ukraine.”
Over the next few years, a huge investment in council-owned generators is planned, with new solar and wind turbines increasing the electricity generation by 182 megawatts, as part of the City Leap deal on climate action.
This could be put in a pool of cheap energy for the council to use, as well as local hospitals and schools, cutting bills across the public sector in Bristol.