Issue - meetings

Due to the large file size Appendix 2 can be found here: democracy.cambridge.gov.uk/documents/s72045/Outline Business Case.pdf

The Cabinet Member for Climate Action and Environment introduced the report.

The report referred to the development of an outline Business Case for a Cambridge City Centre Heat Network. The Detailed Project Development (DPD) proposed a network using air source and river source heat pumps supported by a transition to electric boilers from gas boilers to generate energy. A Memorandum of Agreement had been jointly signed with Cambridgeshire County Council and 19 Academic institutions with significant heating demand in the city centre.

In response to questions from Cabinet Members and those Councillors present, the Cabinet Member for Climate Action and Environment said:

      i.         Noted the Cabinet’s enthusiasm for the project, noting its strong potential to deliver significant benefits for Cambridge if it proceeded and highlighting the environmental benefits of slightly cooling the river and the potential to create new, varied habitats through the way water and welcomed the progress of the project.

    ii.         Welcomed the comment that the project offered a meaningful way to address the climate crisis and could also deliver long‑term financial savings. The project represented the Council as a community leader, bringing together numerous colleges typically not known for collaboration. The project would enable heritage buildings to be preserved while being decarbonised.

   iii.         Noted the comments of the Chair of the Performance, Assets and Strategy Overview and Scrutiny Committee:

·      Governance: the need to establish robust arrangements, provide updates when the Green Heat Network Grant was confirmed, and consider governance models involving elected councillors.

·      Partnership working: close coordination with partners, including South Cambridgeshire, particularly as the business case moved forward.

·      Costs and technology: monitoring project costs, clarifying the planned reduction in gas‑boiler use against expected financial benefits, coordinating with utilities, and keeping future expansion options under review.

·      Risk management: considering consequences of not proceeding, reviewing assumptions such as the net‑present‑value hurdle rate, managing risks linked to utility trenching, local government reorganisation, grid capacity, potential cost overruns, and licensing requirements for river extraction.

·      Communications: ensuring clear communication to residents about the project’s benefits, learning from similar schemes elsewhere, and coordinating utility works during the build‑out stage. Ongoing engagement with elected councillors was also requested.

·      The Committee was broadly supportive of the recommendations, subject to Scrutiny comments.

  iv.         Confirmed the Cabinet report had been edited to reflect the comments made by the Scrutiny Committee and had noted all comments particularly those relating to t the later stages of the project.

    v.         A group of Council representatives (Councillors and Officers), partners, and colleagues from other UK authorities working on district heat networks had been invited by the Danish Embassy to visit established schemes in Denmark. The delegation would travel in April to learn lessons from these projects as learning from other schemes was vital.

  vi.         The Council had been successful to date in securing government funding to support feasibility and earlier project stages, and continued government support was considered essential for progressing the scheme.

 vii.         A significant benefit would be improved energy security. The scheme would enable the city centre, and potentially wider areas to generate its own energy in future. At present, energy costs were tied to gas prices, but hoped that this would change, potentially allowing the district heat network to deliver financial savings as well as environmental benefits.

Cabinet unanimously resolved to:

      i.         Agree to support the next steps in this transformative project to decarbonise a significant portfolio of Council and Academic estates in the city centre of Cambridge.

    ii.         Agree to support the Draw down of £0.6m from the Council’s Climate Change Fund to fund pre-commercialisation activities

   iii.         Agree to delegated authority to the Assistant Director, Development in consultation with the Director of Economy & Place and the Chief Finance Officer to submit a bid to the Green Heat Network Fund (GHNF) in 2026 to bring forward a City Centre Heat Network. This will require the council to: 

1.    Enter into an updated Memorandum of Agreement with Academic Partners and County Council.

2.    Appoint a Specialist delivery Contractor to undertake design and commercialisation plans 1.4

That Cabinet unanimously noted:

      i.         subject to the additional project development a final decision on whether to proceed would be brought to Cabinet and then to Full Council no later than March 2028

    ii.         Connecting a heat network to Council assets would enable budgetary savings and carbon benefits for the Civic Quarter project compared to the business case estimates presented to Cabinet in September 2025.

   iii.         At this outline stage the estimated project cost could be up to £121m, with the council share of £4m equity, £4.2m connection fees and a £18.4m loan at a rate compliant with Subsidy control.

  iv.         With planned Local Government Reorganisation (LGR), and conditions arising from a Structural Changes Order (SCO), it is recognised that this final decision to proceed or not will need scrutiny and agreement from the Shadow Authority.

    v.         Feedback to Cabinet from the Performance, Assets and Strategy Overview and Scrutiny Committee meeting of 3rd March 2026 will be issued separately.

The meeting broke for 10 minutes at the conclusion of this item.