This document sets out a high-level approach to the consideration, development and opportunity of Joint Ventures (JV) for public/private partnerships in energy projects. Developing a mutually beneficial relationship between the public and private sector working on energy-related projects is expected to become increasingly critical. Local Authorities are setting ambitious carbon reduction targets and local and regional economies developing Clean Growth plans can take advantage of the economic, social and environmental advantages decarbonisation can bring.
A core part of this decarbonisation work is changing the way we generate, distribute, consume and supply energy and the efficiency with which we use it. Local Authorities are also increasingly participating in what is termed ‘municipal entrepreneurship’ in a variety of areas, including energy. The basis of this is to increase, maximise and retain value within the local authority area, shaping and creating markets and addressing market failures. Commercial thinking within Local Authorities can apply directly to energy services and projects, many of which can have profound positive effects on outcomes for local people and businesses. A change in thinking and culture, as well as internal capacity, is required to realise the benefits of municipal entrepreneurialism; this can include working with Joint Ventures1 and other commercial and partnership models.
This guide is intended to act as a starting point; providing prompts, processes and signposting, to assist Local Authorities who are looking at this new approach to delivering clean growth through energy projects. There are several options available to local authorities with regards to the vehicle and forms of partnership (if any) to deliver projects. One approach is to engage with the private sector through partnerships of varying degrees of legal and structural formality; this guide is ultimately focussed on exploring a form of partnership known as a Joint Venture (JV). This is due to the potential for this type of formal partnership, as seen in other local authority service areas and public sector working, to deliver projects and investment at a scale consistent with the challenge ahead, and for the demands of key stakeholders.
This document will provide an outline of the steps required and questions to consider as to whether a Joint Venture is an appropriate approach to take. It is important to evaluate the option of a Joint Venture against existing ambitions (i.e. broader corporate aims) and to use this to inform what criteria can be used with a procurement framework. A decision to form a Joint Venture can be at the start or at different stages of a project. Equal consideration needs to be given to both delivery and ongoing performance management.
This document provides an outline that can be accessed and utilised where appropriate, reducing duplication of effort and learning lessons from other public sector bodies. Joint Ventures are one of many forms of approach a local authority can take in approaches to achieving commercial and energy objectives, particularly in partnership with other organisations. It may not be the best fit for all six projects, and expectations have to be managed.
This guide will help position the role of JVs within this context so that early identification of priorities and approaches can be made. Every organisation starts from a different place, in a different context, and this needs to be considered. It is worth reflecting on the individual context from the outset and the requirements of a set project or partnership.