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Council’s chosen firm for decarbonising the energy network sued in similar US deal

The company was sued for $2.2 million, but even though the case was thrown out due to a technicality, concerns are being raised about financial risks to the council.

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The company chosen to decarbonise Bristol’s energy system in a £424-million project was sued after “misleading” American schools in a similar deal.

Bristol City Council chose Ameresco after years of bidding to lead on its major City Leap deal, a public-private partnership to cut carbon emissions from Bristol’s energy network. But a few years ago the company was mired in controversy in Illinois, leading to a lawsuit.

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Two former members of the Bell-Chatham school board in Illinois sued Ameresco for $2.2 million after they claimed the firm misled the board on key details of a major multi-million dollar contract. They claimed the company secretly removed any financial guarantees shortly before the schools signed the contract.

Ameresco has previously denied these allegations, and the case was later thrown out, due to a complex state law which limits who can sue companies under the False Claims Act, essentially as the controversy was already public knowledge.

But the case still raises important questions about how much due diligence council chiefs carried out before signing off the City Leap deal, and any financial risks potentially faced by Bristol City Council in future.

Funding decarbonisation in the age of austerity

On June 8, mayor Marvin Rees admitted during a press conference that the City Leap deal created a risk to the council. But he said private funding was needed to cut carbon emissions from the city’s energy network.

He said: “There’s no deal without risks. They are a private company, so there has to be a return otherwise it won’t happen. We’re not going to decarbonise just with public sector money.”

The money will be invested in low carbon energy infrastructure, such as heat networks, renewable energy, heat pumps, energy efficiency and electric vehicle charging stations. Ameresco and the council said the project will save about 140,000 tonnes of carbon emissions in five years and generate 182 megawatts of zero-carbon energy.

The city council approved its City Deal project in April 2019, effectively outsourcing the huge works needed to decarbonise Bristol’s energy system, and began searching for a company who would invest up to £1 billion. Then in April this year, council chiefs signed off on choosing Ameresco to lead the project, and the company promised to invest £424 million.

The deal follows Bristol becoming the first council in the UK to declare a ‘climate emergency’ in November 2018, when it committed to cut the city’s carbon emissions to net zero by 2030, with many councils across the country following shortly after. But after years of austerity and huge cuts to council budgets, Bristol didn’t have the funding to pay for these works itself.

Due diligence by the council

Councillor Mark Weston, the council’s Conservative group leader, said: “Considering the volatility with the energy market and our previous experience with Bristol Energy, we’re nervous that there could be a hidden price tag which we’re not aware of. We don’t seem to be putting a huge amount in. The opportunity to decarbonise Bristol’s economy is a worthy goal, but we’re worried that down the line there’ll be a bill for the taxpayer.”

A key risk the council faces in the deal, according to cabinet papers from April, is “not realising the financial benefits, or incurring additional costs” from future City Leap projects, which would mean the council losing money. The risk is rated as “unlikely” and the council will fund several officers to monitor projects and Ameresco’s performance.

A Bristol City Council spokesperson said: “The council is an equal partner in the City Leap joint venture with Ameresco, which was appointed following a stringent procurement process spanning 20 months, from August 2020.

“Two bidders submitted tenders to become the City Leap strategic partner, which were evaluated over the course of January and February 2022. This was a process that involved 16 evaluators, 15 internal subject-matter experts and five external subject-matter experts, as well as independent verification of the social value and carbon savings proposed in each bid.

“Due diligence was conducted on bidders as part of the procurement process. The decision to appoint Ameresco was endorsed by the council’s cabinet on April 5 and the parties are now working towards mobilisation of the partnership.

“The scale of investment that is needed to decarbonise our city is in the billions. As a local authority, we are unable to fund this level of investment, nor should we be taking on this level of financial risk, and we cannot wait for government to take action any longer. This is why we have identified strategic partnerships as a route to delivering a cleaner, greener and healthier city.

“Ameresco, alongside other private sector partners, will contribute capital funding including £424 million over the first five years of the partnership. The City Leap model ensures the financial risk is on the private sector partner and not the council.”

Ameresco was asked to comment for this article.

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