Decarbonising the public sector through multi-organisation renewable energy collaboration

The Welsh Government has set an ambitious target of achieving a net zero Public Sector by 2030. This target is currently set against a backdrop of a cost-of-living crisis, huge holes in Local Government budgets and stretched resources with competing priorities. Despite these challenges, the Public Sector has made great steps forward in decarbonising its estate. However, to meet Net Zero, wider investment and delivery resource than is currently available is likely to be required. Collaborating with other organisations (across public, private, community sectors), in addition to developing purely in-house public sector decarbonisation initiatives, can help accelerate public sector decarbonisation by overcoming a range of barriers that could be holding up your project. 

The Welsh Government Energy Service is available to support with all forms of collaborative renewable electricity projects that lead to public sector decarbonisation, whereby a public sector body acts as the electricity offtaker (or purchaser) and the renewable electricity generator is connected to a public sector electricity load behind the meter or via a private wire. For other types of projects, such as sleeved supply, the Service would endeavour to sign post project developers to other sources of support that are available. 

This guidance seeks to provide information on how successful collaboration can be achieved. 

Cross-organisational collaboration on developing renewable energy projects to achieve public sector decarbonisation can overcome barriers and maximise project benefits. Partnering with community organisations, in particular, can enable wider public sector objectives to be achieved, and lasting impact, beyond decarbonisation alone, to be made. 

Collaboration can:

• accelerate decarbonisation timelines, by increasing delivery resource and investment availability
• increase decarbonisation potential, via access to larger sites for renewable energy generation (e.g. on neighbouring landowners’ properties)
• deliver on wider objectives, including the Well-Being of Future Generations Act goals and strategic collaboration objectives established in Local Area Energy Plans and other wider policy documents
• unlock additional funding streams, e.g. revenue and capital grant funding only available to social enterprises
• enable access to relevant expertise and experience, by partnering with organisations that have delivered similar projects previously
• facilitate public engagement and education in renewable energy and climate change, through collaborations with local community-based organisations
• build local wealth, through community investment opportunities, local ownership and provision of local net zero jobs
• increase public, community and locally owned generation; supporting Welsh Government’s wider local energy ownership targets.

Collaborative projects can enable:

• lower cost public sector energy bills with favourable power purchase agreements
• public sector investment, through joint venture arrangements 
• project delivery models that can be re-used to deliver on further opportunities.

All local authorities in Wales have developed Local Area Energy Plans (LAEPs), setting out pathways to area wide decarbonisation (Energy Systems Catapult (2024) Supporting Wales’ decarbonisation journey. Available at: https://es.catapult.org.uk/project/supporting-wales-decarbonisation-journey/ (Accessed: 30 December 2025)). Councils are now exploring partnerships, funding mechanisms, and technical solutions to turn their plans into tangible actions. The wide scope of LAEPs enables the aggregation and scaling of projects in ways that can make them attractive to investors, further increasing decarbonisation potential. Identifying renewable energy collaboration opportunities with other organisations in your Local Area is key to supporting and accelerating the delivery of these plans.

Deciding on who to collaborate with depends on the project, situation and what you, as an organisation, are looking to achieve through the collaboration:

• Are you pursuing a complex project that would benefit from previous project delivery experience? 
• Are you looking to engage the local community in your project? 
• Do you want to achieve wider social benefits through the project? 
• Does your potential partner have access to a specific project opportunity? 
• Does your potential partner have access to the required funding? 
• Do you want to ensure that the project benefits are retained locally by engaging with a local organisation, rather than national?
• Has your potential partner already initiated project development/operation? 

Three key forms of cross-organisational collaboration that achieve public sector decarbonisation via renewable energy projects:

1. Offtaker-only with the public sector organisation acting purely as an offtaker (or purchaser) of the renewable electricity generated
2. Offtaker and landlord with the public sector offtaker also hosting the renewable energy generation asset on their land/buildings (potentially for a rental income or more favourable power purchase agreement)
3. Joint venture with the public sector offtaker entering into a formal Joint Venture arrangement with the partner organisation. Both organisations share risks and responsibilities associated with the project’s development and ongoing operation. In this arrangement, whilst the public sector offtaker bears increased risk, they also:

• have greater control over how the asset (and any revenues generated) are managed
• have greater exposure to the project and delivery partners, allowing for more lessons learnt to be gathered and deployed in future in-house projects

Tip: Consider early-on what your project drivers and priorities and what delivery models will be most likely to achieve these. 

The Welsh Government Energy Service are available to facilitate internal stakeholder workshops designed to establish project drivers, objectives, constraints, and risks to determine the most suitable project delivery model; including in-house delivery, joint-venture delivery and third party delivery.

The exact steps required to achieve successful cross-organisational collaboration will depend on:

• How the project is identified? Has the potential partner organisation proactively approached the public sector offtaker? Or has the public sector offtaker identified a particular project and are looking to procure a delivery partner?
• Whether the generation asset will be located on the public sector offtaker’s land
• If a formal Joint Venture company / contractual instrument is going to be set-up.

The initial step of any renewable energy project is to undertake a feasibility assessment to confirm that the project is:

• Technically feasible (Can it be constructed and maintained? Is there sufficient resource?)
• Regulation compliant (Is the project considered likely to comply with local and national consenting requirements (following further onsite assessments)?)
• Financially viable (Is the project expected to provide sufficient returns to cover any investment and ongoing cost requirements?)

Tip: Early-stage energy modelling (comparing simulated project electricity generation data to historical building demand data) estimates the expected level of generation that would be consumed by the public-sector organisation’s estate. The results of this inform early-stage financial modelling and begin to indicate the electricity tariffs required to enable third party investment in and ownership of the proposed asset. A sufficient match between electricity generation and demand is required to enable a collaboration project to progress. 

The Welsh Government Energy Service are available to complete feasibility studies (and associated energy / financial modelling) to inform initial decision-making regarding project collaboration potential.

A potential partner may pro-actively approach a public-sector organisation with a project opportunity, or the public-sector organisation may independently seek a partner for a project they have identified. 

If the partner organisations are both public-sector organisations a formal procurement exercise will not be required. However, if the public-sector organisation is looking to partner with a private organisation or social enterprise a procurement process is needed to meet Procurement Rules. The public sector organisation’s procurement department should be engaged with, to understand the level of procurement required; this will, in part, depend on the expected value of the contract, informed by the energy and financial modelling undertaken during feasibility. 

When drafting the partner procurement documents, consider what you are looking to achieve through the partnership and structure the requirements and scoring accordingly:

• Is there a specific timescale that the project needs to be delivered by? 
• Are you looking to secure additional delivery capacity or experience? 
• Are their wider social and environmental objectives that you are looking to achieve? (e.g. ongoing educational benefits, biodiversity improvements, local job provision)
• Are you looking for this project / partnership to support delivery of further projects? (e.g. through the project profits or by using the partnership directly to deliver further similar future projects)
• Are you looking to engage the local community in the project? 
• Do you want ongoing control and influence over the project’s development and operation? 
• Do you want the opportunity to invest in the project? 
• Are electricity cost savings a key project driver? 
• Are emissions reductions a key project driver?
• Is sourcing alternative sources of funding an important part of the procurement exercise?
• Do you want to ensure benefits are maximised locally?

Tip: For all projects, the public sector recipient organisation should review their current energy supply agreement to ensure no agreement terms will be breached or penalties incurred (e.g. due to a reduction in supply as it is offset by the direct electricity supply through the proposed project). 

The Welsh Government Energy Service are available to support with drafting procurement documentation.

Regardless of the form of collaboration, legal and financial advice is needed to ensure risks and responsibilities are properly understood. Depending on the nature of the collaboration and complexity of the project in-house financial advice may be sufficient. Whilst in-house legal advice will be helpful, it is likely that specialist renewable energy project legal advice will be required. 

Agreements that may be required to support the project:

Non-legally binding: 

1. Memorandum of Understanding (MoU): Whilst not a legally binding agreement (except for potential clauses like confidentiality), an MoU is useful at project initiation to set out the preliminary, high-level agreement between the two parties. It establishes the principles behind the partnership, individual roles and overall objectives. 
2. Heads of Terms (HoTs): HoTs are another mostly non-legally binding agreement (some clauses such as confidentiality and exclusivity may be binding) used to guide detailed drafting of future legally binding agreements. They provide a summary of the key commercial and legal principles agreed between the two parties, and ensure all parties agree on the main collaboration points, before investing time and cost in detailed legal drafting. 

Legally binding: 

3. Non-disclosure agreement (NDA): A legal contract that is used to protect sensitive information that one or more parties want to keep confidential. Renewable energy projects can be sensitive in nature, therefore as well as any commercial arrangements, the developer organisation may wish to keep details associated with the project itself confidential for a certain time period during the early development. 
4. Power Purchase Agreement (PPA): A PPA sets out the terms of contract between an electricity generator and an offtaker for the sale and purchase of electricity. The agreement will set out the requirements of both parties including any responsibility for infrastructure maintenance and the commercial arrangements relating to how the electricity price is set across the term of the agreement (e.g. the price may fluctuate with inflation and may involve a set ceiling and floor price) and any minimum consumption / supply requirements. 
5. Lease agreement: A lease agreement sets out the terms of contract between a landowner and a project developer granting the developer the right to use the land for building and operating renewable energy infrastructure for a specified period, with exclusive possession. For some projects (e.g. roof mounted solar projects and projects with no/a peppercorn rent), the lease and power purchase arrangements may be covered in a single document for simplicity. For larger projects, it may be more appropriate to have two separate agreements, which cross-reference each other. 
6. Easement: An easement differs from a lease agreement, as it provides the right to use land for a limited specific purpose, e.g. access or cabling. As such it tends to be more simplistic than a lease agreement.
7. Joint-venture documents: Depending on the nature of the joint-venture pursued (to be advised upon by a specialist legal consultant), different legal documents will be required (Joint ventures in the clean energy sector: Forms of joint venture):
   1. Special Purpose Vehicle constitutional documents for joint venture companies limited by shares, e.g. Articles of Association and a Shareholders Agreement: A company’s Articles of Association are a public, legal document setting out the rules governing the company’s structure, management, rights and shareholders’ requirements. A Shareholder’s Agreement sits alongside the Articles of Association with a similar purpose but is a private contract between the parties and therefore can contain more sensitive commercial arrangements than are explicitly stated in the Articles of Association.
   2. Limited Liability Partnership (LLP) agreements: An LLP is a separate legal entity to either of the partner organisations with each partner’s liability limited to the amount that they have contributed to the LLP. The LLP agreement will set out how the business will operate including profit sharing, decision-making, conflict resolution, and member responsibilities. The agreement is a private agreement. 
   3. Contractual joint venture agreements: It is possible to pursue a contractual joint venture, which avoids setting up a new entity. This option may be favourable if the partner organisations want to maintain full control over their respective assets/employees rather than transferring them to a new entity. 

Tip: Do not underestimate the time and resource required to form the key legal agreements required for any form of collaboration. Use MoU and HoTs documents to help confirm key elements of the agreements, before engaging legal consultants. Ensure key decision makers are fully engaged throughout the project development and negotiation process (both internally and externally).

The Welsh Government Energy Service are available to support with drafting MoUs and HoTs, as well as procurement documentation for specialist legal and financial advice. 

In addition to completing commercial negotiations and entering legal agreements, ongoing partnership working is required throughout development and delivery, regardless of the form of collaboration. 

• Up-to-date accurate onsite electrical and physical infrastructure as-built design information will need to be provided to the developer organisation, to ensure that the project design is fit for purpose. Design information should be verified onsite early in the project development.
• Suitable access will need to be provided for onsite assessments (for both offtaker and generation locations) during development, construction activities, and ongoing maintenance through project operation. Processes and points of contact should be established to manage this efficiently and effectively. 
• Regular meetings should be held between the partnership organisations to report on progress, raise any issues and work collaboratively to find solutions. 
• During operation, the form of collaboration will dictate the level of ongoing communication / reporting required. Suitable governance arrangements will have been set out in the legal agreements, but key contact points within both organisations should be kept up-to-date through development, delivery and operation. 

Tip: Ensure the Public Sector offtaker organisation factors in sufficient time and resource to support the design, construction and connection of any private wire connections, and that all key decision-makers attend regular update meetings. 

The Welsh Government Energy Service are available to support with attending partnership meetings to ensure shared understanding between the parties. 

Collaboration can take place at any time from concept to operation. The right time to initiate collaboration may depend on how the project is initiated and who the initial driver is. 

• For new projects, the public sector offtaker is likely to be required at project outset to provide a viable business model for project development. 
• However, operational projects, located near to public sector buildings, could look to enhance their existing business models by collaborating with the public sector organisation, and integrating a private wire into the existing infrastructure. 

As with other collaboration options, the Welsh Government Energy Service can support with completing energy and financial modelling to understand the potential viability of connecting to operational projects, as well as supporting with other steps such as liaison with the distribution network operator regarding the new electrical set-up, and any procurement requirements.

• Where the public sector offtaker is the primary or initial project driver, they may develop the project themselves through to financial close or operation and then reach out to potential collaboration partners, either for investment, or outright sale. 

Tip: If the intention is to collaborate at a later stage of development, it is recommended that early-stage soft market testing is undertaken to gauge market appetite, and understand potential engagement terms. Another option is for the public sector organisation to set up a new social enterprise (separate to the public sector organisation) to own the project long-term. A benefit of this approach is that the social enterprise can be established to deliver on the public sector organisation’s specific project aims.

The Welsh Government Energy Service can help manage soft market testing exercises and navigate the process of establishing a new social enterprise.  

Whilst there are less small-scale examples of collaborative heat decarbonisation projects, collaboration is common in larger heat network projects. Many heat networks have been developed collaboratively by the public and private sector, to decarbonise large public sector buildings and wider urban estates. Whilst there are limited community heat network examples there has been a lot of interest in this area within the community sector: The Community Heat Development Unit.

To meet Welsh Government’s 2030 Public Sector Net Zero target, large-scale heat decarbonisation of public sector buildings will be required alongside electricity decarbonisation. As such, there may be growing interest in collaboration on heat decarbonisation projects of all scales (from individual building level to large heat networks). The form of these collaborations could be similar to renewable electricity projects but would need to consider additional elements such as the energy source feeding the heat production (e.g. electricity). 

The Welsh Government Energy Service are currently only able to support public sector-led heat projects; however we can look to signpost to other potential sources of support for collaborative public sector heating projects where there is interest to pursue this.

Developer

Rhondda Cynon Taf County Borough Council (RCTCBC)

Off-taker 

Cwm Taf University Health Board (Royal Glamorgan Hospital)

Steps to collaboration 

In 2025, RCTCBC successfully commissioned their 6 MW solar farm, which is located north of Ynysmaerdy, on an ex-coal tip. The council developed the project from its initial concept and now own the operational asset. 

The solar farm is split into two parts 

• one exporting electricity (up to 5 MW) to the local electricity network 
• the second exporting (up to 1 MW) electricity to CTUHB’s Royal Glamorgan Hospital, approximately 3 km to the south of the site. 

The Council identified the health board as a potential electricity offtaker, when road works to the A4119, which runs between the solar farm and hospital provided the opportunity for more cost-effective private wire cabling to be laid. Early-stage energy modelling was completed, by the Welsh Government Energy Service, to confirm the potential for complementary energy generation and demand between the two sites, before the two organisations entered commercial negotiations and legal discussions. 

The council are responsible for the total length of the private wire connecting the solar farm to the hospital. This includes the route that crosses hospital land. Construction of this element of the route required careful collaborative planning between the two parties, due to the sensitive nature of the site (with the route passing the entrance to the hospital’s Accident and Emergency department). 

Legal agreements required

• A long-term Power Purchase Agreement is in place between the two organisations governing the commercial terms of the power sale. 
• An easement is in place for the private wire route which crosses the hospital site. 
• Easements and licenses are also in place for a section of the private wire route which crosses Welsh Government land.

Public sector decarbonisation success

The project is expected to meet up to 15% of the hospital’s annual electricity demand.

Developer 

Egni Solar Coop

Off-takers

Numerous public and community sector organisations, including Pembrokeshire County Council. 

Steps to collaboration

In 2023, Pembrokeshire County Council ran a tender on Sell2Wales for the installation of solar PV on approximately 20 building including schools and leisure centres. Pembrokeshire’s tender gave a 60% weighting to the Quality and Education aspects of the tender and a 40% weighting to the kWp price. The tender was won by community energy organisation, Egni, who use their profits to fund their education programme; enabling them to tailor activities for the benefit of Pembrokeshire’s schools. 

The Social Partnership and Public Procurement (Wales) Act (2023) requires public procurement to be socially responsible and so may be relevant to any future procurement exercises like this.

The Energy Service supported Egni with

• strategic financial modelling,
• portfolio analysis, and
• preparing funding applications for ongoing solar installations

Legal agreements required

• A long-term Power Purchase Agreement is in place between the two organisations governing the commercial terms of the power sale 
• A lease agreement details the arrangements regarding the siting of the solar panels on the council buildings (including construction, access for maintenance and any potential needs for remedial works). 

Public sector decarbonisation success

The project is estimated to “prevent the emission of approximately 200 tonnes of carbon dioxide per year and should save the schools and leisure centres £180,000 per year in energy costs”: Pembrokeshire County Council and Egni Co-op work together to tackle climate change | PembrokeshireCC News.

Developer 

Initially developed by a South Wales local authority, now fully owned and operated by a local community benefit society.

Off-takers

360kW of solar PV installed across nine local authority-owned schools, and one care home. 

Steps to collaboration

The local authority initiated and led the project’s development, which is now managed independently of the local authority by the community benefit society, which the local authority helped to establish. The local authority’s project-aims were 

• to use community-owned solar energy to help regenerate deprived wards in their area
• to use profits from the scheme to support local projects focused on developing skills, enterprise, economic growth and job creation.  

Prior to the establishment of the community benefit society, the local authority explored a range of different collaboration models and introduced the project to local stakeholders through dedicated engagement events. These events helped to introduce the project to future board members and provided them with relevant project background. 

The project was initially financed via a bridging loan which was replaced by a successful community share offer, with two-thirds of investors coming from the local authority area. 

The Welsh Government Local Energy Service (which preceded the Welsh Government Energy Service) supported the community benefit society with:

• recruitment of board members, 
• compiling and reviewing technical information, 
• engaging with capital funding bodies and providing general support, and
• grant funding for initial structural survey and legal work.

Legal agreements required

• A long-term Power Purchase Agreement is in place between the buildings’ landlord and the offtaker tenants. 
• A lease agreement is in place covering the terms of the ongoing operation and maintenance of the panels. 

Public sector decarbonisation success

The generated electricity is used by the building offtakers (including nine schools) with any surplus exported to the grid. Details of the electricity generation are used as an education resource.

• Contractual template: draft LLP Membership Agreement · Local Energy Scotland (note that this is a template documentation for use in Scotland and will require legal review before using in Wales).
• Power offtaker options: Briefing note
• Best Practice Note on Private Wires
• Joint ventures in the clean energy sector: Forms of joint venture
• Establishing public-private Joint Ventures and partnerships for investment in and delivery of energy schemes - Net Zero Go
• Seeing is Believing and local authority matchmaking webinar (North East Yorkshire Region) - YouTube