APPENDIX 1 Leicestershire County Council Business Case Street Lighting Transformation Project

46 Pages·2014·0.44 MB·English

315
Leicestershire County Council Business Case
Status: Final Template

APPENDIX 1

Leicestershire County Council

Business Case

Street Lighting Transformation
Project
Status: Final Template

Prepared by: Engineering Design Group
Version v1.4
Date November 2014

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Contents
1. DOCUMENT CONTROL 3
1.1 Control Details 3
1.2 Document Amendment Record 3
1.3 Document Review Record 3
1.4 Document Sign-off 3
2. MANAGEMENT SUMMARY 4
2.1 Introduction 7
2.2 Outcomes and Benefits 9
2.3 Scope 10
2.4 Preferred Option 10
2.5 Implementation Strategy Overview 11
2.6 Costs, Savings and Funding 13
2.7 Key risks Error! Bookmark not defined.
2.8 Conclusion and Recommendations 16
3. INTRODUCTION 17
3.1 Background 18
3.2 Project Mandate 19
3.3 Aims and Objectives 19
3.4 Outcomes and Benefits 20
3.5 Related work to date 21
4. OPTIONS APPRAISAL 23
4.1 Baseline (Do Nothing) 23
4.2 Option 1 25
4.3 Option 2 28
4.4 Option 3 29
4.5 Option 4 29
4.6 Options Summary 31
5. IMPLEMENTATION STRATEGY FOR THE PREFERRED OPTION 32
5.1 Implementation Approach 32
5.2 Procurement Approach 32
5.3 Assumptions, Dependencies and Risk Appraisal 32
5.4 Implementation Impact Analysis 35
5.5 Implementation Plan 37
5.6 Resource Plan 38
5.7 Key Stakeholders 39
5.8 Governance 39
5.9 Costs, Savings and Funding Summary 40
6. CONCLUSIONS AND RECOMMENDATIONS 41
7. APPENDIX 1 – FINANCIAL ASSUMPTIONS AND ANALYSIS 42
7.1 Financial Assumptions 42
7.2 Investment Analysis 42
7.3 Full Sensitivity Analysis 43
8. APPENDIX 2 – PROJECT PRIORITISATION ASSESSMENT CRITERIA 44
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1.Document Control
1.1 Control Details
Document F:\Change Management\0 Template Documents\CMU Document
Location: Templates\CIS\CMU_Business_Case_Template.doc
Production Microsoft Word 2007
Software:
Author: Tony Bull, Environment and Transport, Engineering Design Group
Owner: Mark Stevens, Assistant Director (Highways), Environment and Transport
1.2 Document Amendment Record
Issue Amendment Detail Author Date Approved
V1.0 Tony Bull 19.09.14
V1.1 Project management detail added Karen Notman 22.09.14
V1.2 Document review and updated data & text Mark Stevens 09.10.14
V1.3 Figures updated, checked and other minor Ravi Lakhani 10.10.14
changes to text & Nick Wash
V1.4 Final document review/updating data & text Mark Stevens 13.10.14
1.3 Document Review Record

Service Name Date
Department
Director
Finance
HR
S&IT
Commercial &
Procurement
Communication
1.4 Document Sign-off
Project Manager:

Signature: …………………………………………………………….

Printed Name: …………………………………………………………….

Position: …………………………………………………………….

Date: …………………………………………………………….

Project Sponsor:

Signature: …………………………………………………………….

Printed Name: …………………………………………………………….

Position: …………………………………………………………….

Date: …………………………………………………………….
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2. Management Summary
This document constitutes the Business Case for the Street Lighting Transformation Project. This
management summary is an overview of the benefits, costs and risks from implementing this project.
Leicestershire County Council’s (LCC) 2014 Medium Term Financial Strategy (MTFS) was approved
at the meeting of the County Council on 19th February 2014 and identifies that there will be a service
reduction (S46) associated with part-night lighting, switching off and dimming of Leicestershire’s street
lighting, along with a more radical approach to street lighting energy reductions. The service reduction
is valued at £245k in 2014/15, rising to £1.245m from 2017/18.
The £245k relates to the completion of the part-night lighting, switching off and dimming programme
for street lighting, as approved by the Cabinet on 15th December 2009. The ‘Energy Reduction for
Street Lighting Project’ commenced in 2010/11 and is set to be completed during this financial year,
2014/15. This Business Case primarily summarises how the additional £1m service reduction might be
achieved within the 2014 MTFS period.
The anticipated outturns for energy consumption (evaluated at 27 million kilowatt hours) for the
2014/15 revenue budgets for illuminated signs and street lighting are £227k and £2.415m respectively.
– a combined total of £2.642m. With the completion of the Energy Reduction for Street Lighting Project
in 2014/15, the street lighting expenditure in 2015/16 would be expected to decrease to £2.15m
(subject to any in-year energy price rises during 2014/15).
If the Council does not make further changes to its street lighting and illuminated signs stock, there is
every expectation that the trend from previous years would continue – i.e. the total cost of electricity to
the County Council will increase. According to the Department for Energy and Climate Change, the
price of non-domestic electricity rose by 3.7% over the 2013/14 financial year. This was a relatively
small annual increase given that the illuminated street furniture energy cost in 2005/6 was just £1.53m.
The inclusion of Street Lighting as one of the Council’s 24 Transformation Projects, with the aim of
reducing the cost of street lighting though the use of new technology, alternative delivery models and
partnership delivery arrangements, alongside the wider need to continue to reduce revenue
expenditure, has been done with these continued cost pressures in mind.
The Council’s specific objectives for any investment in its street lighting include:
• Reducing carbon emissions;
• Reducing the future burden of energy bills and other associated costs;
• Meeting current commitments and demands relating to embedding of sustainable practices
in the Council’s activities;
• Being better prepared for future regulatory and monitoring requirements;
• Raising the environmental profile of the Council.
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A Street Lighting Project Board has been established, drawing resource from the Highway Design and
Street Lighting Teams, as well as the Business Change Group and the Departmental Finance
Business Partner. In the event that the Street Lighting Transformation Project proceeds into an
implementation phase, the constitution of the Project Team is likely to change. However, the current
Project Board has identified a long list of technical options from which the following shortlist of options
was selected for further analysis against a ‘Do Nothing’ scenario. The ‘Minimal Changes’ option is a
slight variation on the ‘Do Nothing’ option below to reflect a longer-term strategy.
Table 1: The Range of Options

Option Description

A Base Case Option which broadly represents continuation of the

current asset strategy. This essentially entails using the current £1m

Do Nothing capital programme allocation to replace around 1650 lighting

columns and high-pressure sodium lanterns each year on a like-for-

like basis (reflecting a 40-year column life).

To extend the de-illumination of traffic signs and bollards in line with
De-illumination of road
the changes proposed for the Traffic Signs Regulations and General
traffic signs on bollards
Directions 2015.

Limited scope for savings but recommended to pursue, subject to site

specific risk assessment and consultation where considered
Further switch-off and
appropriate. This is already being absorbed into the Energy Reduction
removal of street lights
for Street Lighting project and thus does not warrant further

consideration due to the small-scale nature of change.

There is limited scope for savings associated with how maintenance is

undertaken but recommended to pursue, subject to site specific risk

assessment and consultation where considered appropriate. 2014/15
Minimal changes to the

current maintenance has been used as a trial year for combining the street lighting column

regime (i.e. combine replacement programme with a replacement of the high-pressure
switchover to LED
sodium lanterns for LEDs. To maintain the required column
lighting only as part of

column replacement replacement rate of 1,650 columns per year, the annual capital

programme) programme cost must increase by 30% but it will take 40 years to

achieve an entire LED lighting stock and accrue the full energy savings

potential

Converting all
Accelerated replacement of all existing lighting stock with the
remaining street lighting

stock to LED with a introduction of a Central Management System (CMS) to control

Central Management trimming, dimming and part-night operation.
System

This would eliminate all street lighting maintenance and energy costs

as well as eradicate the need for street lighting column replacement. It

Permanently turn off all would require the removal of all 67,112 operational columns from the
street lights
highway network (as they would otherwise constitute highway
obstructions) but this is regarded as a socially unacceptable option.
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Results
The quantitative and qualitative impacts of the options were assessed and the results are summarised
within the Table below:
Table 2.
Category Resource Forecast Annual
Implication Savings
Financial:
De-illumination of traffic signs on bollards £1.57m £123k
Conversion to LED lighting with a CMS (with energy costs £23.072m £1.953m
based on 3.7% p.a. price increases)

£0.465m
Project management costs
Energy Efficiency:
Decrease in annual energy consumption Upwards of 60%
Tonnes of carbon saved 5,132T
Benefits Significant benefits
arise including a
>60% decrease in
carbon emissions
and reduced
electricity
consumption as
quantified above.
Marginally positive
benefits are
realised in relation
to visual impact
and light pollution
and central
overhead savings.
Risks Provides maximum protection to
the Council regarding future energy
cost rises.
Lighting technology is developing
at a rapid rate and more efficient
luminaires could be just around the
corner.
Dimming and trimming could have
a marginally negative impact on
vehicle and pedestrian safety.
The replacement of all LCC’s
lighting stock over a short period
could lead to a costly replacement
programme within the next 15 to 20
years.

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Whilst progression of the de-illumination of traffic signs on bollards is warranted, the analysis indicates
that complete replacement of the lighting stock with LEDs and the introduction of CMS technology is
the most appropriate technical solution to achieve the £1m a year savings and Table 3 summarises
how it meets the Council’s objectives for a street lighting investment:

Table 3.
LCC Objective Comments
Conversion to LED lighting without CMS technology
reduces street lighting carbon emissions from a base
case projection of 10,646T to 5,514 (48%). With CMS
Reduce carbon emissions
technology implemented, carbon emissions can be
brought down a further 165T (3%) by trimming and a
further variable percent, dependent on dimming regimes
Reduce the future impact of The total predicted savings based on current energy and
energy costs and other carbon costs indicates the benefits of such an investment
associated costs against predicted rising energy costs.
The investment includes the introduction of a CMS
which will allow the Council to monitor the real time
Better prepared for future
performance of its street lighting networks, both in
regulatory and future monitoring
performance terms and also in energy consumption
requirements
terms. This will assist LCC to respond to future
regulatory and monitoring requirements.

The effect of part-night lighting on the fear of crime is well
documented but actual crimes have not increased across
the county as a whole since the introduction of part-night
lighting. The capability to switch lights back on/off
Safer Communities Priorities
remotely using a CMS system should the police request it
(e.g. to perhaps help locate a missing person) could go
some way to re-assure the public of LCC’s commitment
to safety.

There are risks associated relating to the LED cost base including both forecast improvements in LED
efficiency and forecast decrease in costs. As with any investment project, these risks would require to
be monitored and managed in the procurement of the LEDs and CMS for the Street Lighting
Transformation Project.
2.1 Introduction
The current financial year is the concluding year of the Council’s Energy Reduction for Street Lighting
Project which, in its totality, will deliver an annual saving of £800k to the Authority (based upon
current electricity energy prices) and has reduced the County Council’s carbon emissions. Initial
monitoring has shown that there has been no increase in either crime levels or road traffic accidents
associated with this project across Leicestershire. However, the Council will still be spending £2.15m
on street lighting energy at the beginning of 2015/16 as well as £680k on revenue maintenance and
£1m capital expenditure in providing its street lighting function.
This level of expenditure needs to be considered in the context of the Council’s overall financial
position within both the current MTFS and the roll-forward of the MTFS to 2018/19 which is likely to
mean that there will be a requirement to look again at all areas of activity to determine whether further
savings can be achieved.

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From April 2010, the County Council commenced a four-year programme to reduce the level of street
lighting across the County, with three aims of:
• Reducing carbon emissions;
• Saving money;
• Reducing levels of night-time light pollution in urban and rural areas;
This project included introductions of part-night lighting, dimming and lamp switch-offs following
controlled consultation with local parish councils and the like, rather than consulting everyone in
affected communities. In addition, during the last year, the use of LED lighting was introduced as a
more expansive one year trial when installing a new street light or undertaking lantern replacements
on existing street lights. This has proven useful in obtaining a better understanding of what would
need to be procured for a more expansive roll-out. Due to the additional costs of LEDs above sodium
lamps, an additional capital allocation would be necessary for a permanent implementation of the
trial. Significant reductions in removing illumination from signs and some bollards were undertaken,
whilst still ensuring the Council complies with government regulations.
The current extent of assets related to ‘illuminated street furniture’ in Leicestershire is as follows:
(a) 9,281 illuminated signs;
(b) 2,930 illuminated bollards;
(c) 177 belisha beacons;
(d) 262 subway lighting units;
(e) 67,336 street lighting columns, of which 224 are switched off but not yet removed – leaving
67,112 operational columns.
A report on the County Council’s Strategic Plan and Transformation Programme was presented to the
th
Cabinet on 6 May 2014. The Strategic Plan and Transformation Programme have been developed
alongside and in support of the 2014 Medium Term Financial Strategy. The implementation of the
Transformation Programme will aim to achieve £40m of savings across the Council, required to ensure
delivery of part of the MTFS. Street Lighting is one of the Programme’s 24 transformation projects and
falls under one of five overall objectives, specifically ‘Working the Leicestershire Pound’. It has the aim
of reducing the cost of street lighting through the use of new technology, alternative delivery models
and partnership delivery arrangements.
In essence, the 2014 MTFS and Street Lighting Transformation Project identifies that £1,000,000 in
savings is to be made from ‘street lighting’ by 2017/18, over and above the final savings of £245,000
being realised from the completion of the Energy Reduction from Street Lighting project.
The objective of the business case is to assess the energy saving potential of LED street lights with a
Central Management System and their ability to deliver efficiencies that benefit LCC in the long term
and result in an acceptable payback on the initial investment.
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2.2 Outcomes and Benefits
2.2.1 Climate Change
Climate change is described as one of the biggest challenges mankind has ever faced, and carbon
dioxide is one of its main causes. As an energy user and a community leader, Leicestershire County
Council has an important role to play, by reducing its own carbon emissions and by setting an
example for others to follow.
The UK Government has set targets for Green House Gases (GHG) reduction in the Carbon Plan that
states the UK will reduce carbon emissions by 34% by 2020 compared to levels in 1990. Central
government has and continues to develop the policy framework to meet this target. For instance they
have created fiscal incentives such as the Feed-in-Tariff (FiT), the Renewable Heat Incentive (RHI),
the Green Deal and Energy Company Obligation, as well as new regulations such as energy efficiency
requirements for vehicles and products.
Sustainable development, including carbon reduction, is now a key strategic priority for LCC, reflected
in all levels of work, from strategic plans to practical activities. According to the Department of Energy
and Climate Change’s Total Emissions 2012 release, the total figure for Leicestershire’s “CO2
emissions within the scope of influence of Local Authorities” was 4228.5 kilotonnes.
The Carbon Reduction Target for Leicestershire is to reduce emissions by 23% between 2005 and
2020, as measured by the Department of Energy and Climate Change.
The current emissions for street lighting are based on the following information:
• 67,112 operational street lights;
• In 2010/11, street lighting carbon emissions amounted to 17,675 tonnes CO2
The Council’s Street Lighting Team has taken forward initiatives including energy-efficient control gear
in new lanterns, part-night lighting and, as set out in Section 2.1 above, all future bulk column
replacements could include LED conversion. In the short-term, street lighting measures will continue to
be implemented.

2.2.2 Energy Savings
In essence, the 2014 MTFS and Street Lighting Transformation Project identifies that £1m in savings
is to be made from ‘street lighting’ by 2017/18. In terms of future energy costs, one could use the
3.7% figure for 2013/14 for any future evaluations. In this scenario, by 2018/19, the cost of energy for
street lighting and illuminated signs would rise from its 2014/15 value of £2.642m to £3.055m.
However, given the overall historic trend of electrical energy price growth, it may be that an average
increase of 3.7% understates energy price inflation over the medium term. It is therefore essential to
identify the means by which this sum can be reduced so as to better protect the ongoing delivery of
other services.
In reality, it has recently been announced that energy supply companies will be charging electricity at
different rates during the 24-hour period. The most expensive period will be the ‘black time band’
shown in Table 4 below, followed by the ‘yellow time band’ with the ‘green time band’ being the
cheapest. This means that there is likely to be scope to achieve additional savings potential if energy
consumption during the more expensive times can be reduced/curtailed.

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Table 4.

Time Bands for Half-Hourly Unmetered Properties
Black Time Yellow Time Green Time
Band Band Band
Monday – Friday 07:30 to 15:00 00:00 to 07:30
15:00 to 19:00
Nov - Feb 19:00 to 21:00 21:00 to 24:00
Monday – Friday 07:30 to 21:00 00:00 to 07:30
Mar - Oct 21:00 to 24:00
Weekends 00:00 to 24:00
Notes All the above times are in UK clock time

2.2.3 Light Pollution
LCC’s existing ageing stock of low pressure sodium (‘SOX’) lights (approximately 11,000 in total) has
very broad light distribution. A lot of the light goes above the horizontal, resulting in an orange sky
glow over villages and towns. LED lighting is much more directional with no direct light being
distributed above the horizontal, leading to less light pollution. Equally, LED lighting is far more
controllable in that it is more easily directed onto the road and pavement surfaces with little light being
directed towards property beyond the highway boundary. In addition to this, when the lights are
connected to a CMS system, it will be possible to dim individual lamps remotely thus further reducing
light trespass into people’s windows.

2.3 Scope
The Street Lighting Transformation Project seeks to implement a modern system of street lighting with
complete control functionality over every single lamp. LED lighting with a CMS system would enable
this whilst providing an accurate energy usage meter so that LCC only pays for what it uses, a step
away from historic unmetered supplies. A further aspect of the project aims to also remove
unnecessary lighting from internally illuminated bollards, thus reducing the maintenance budget and
energy use.

2.4 Preferred Option
A number of options exist to achieve the desired £1m savings and have been considered in terms of
their deliverability and acceptability. Detailed consideration of these options and conclusions is
summarised in Table 5 below. These options were presented to the Environment and Transport
th
Overview and Scrutiny Committee on 4 September 2014 with the Committee concluding:

‘That in order to meet the savings requirements as part of the County Council’s Medium Term
Financial Strategy and Transformation Programme, this Committee:

(a) Supports the submission of a detailed business case in October 2014 to the Cabinet by officers
for:-
i) De-illumination of road traffic signs and billboards; and
ii) Converting all of the remaining street lighting stock to LED with a centrally managed system.

(b) Notes the limited scope for additional savings also considered by officers, as outlined in the report’

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