How to establish a local authority Energy Services Company
Produced in partnership with Stephen Cirell of Stephen Cirell Consultancy Ltd
How to establish a local authority Energy Services Company

The following Energy practice note Produced in partnership with Stephen Cirell of Stephen Cirell Consultancy Ltd provides comprehensive and up to date legal information covering:

  • How to establish a local authority Energy Services Company
  • Why establish an Energy Service Company (ESCo)?
  • Choice of vehicle—wholly owned or joint venture?
  • Types of ESCo
  • A Fully Licenced Supply Company
  • A White Label Energy Offering
  • Licence Lite
  • Choosing the type of ESCo required
  • Legal structures for ESCos

Why establish an Energy Service Company (ESCo)?

Prior to establishing an ESCo, it is necessary to identify what purpose the ESCo will fulfil and whether such a special purpose vehicle is needed in the circumstances. For more information generally on what ESCOs are and why local authorities may be attracted to them, see Practice Note: ESCo’s: their role in local authority projects.

For example, a local authority engaging in renewable energy generation, such as from solar PV, may not need a company to undertake this activity. It may often be better to simply build and operate the asset on the local authority’s own balance sheet. The same goes for a local authority selling its power from renewable sources via private wire agreements.

But of the three elements in the energy paradigm (generation, distribution and supply), it is the latter that normally results in the strongest need for the establishment of a separate legal entity. Where a local authority is looking to supply heat, electricity and/or gas to customers, then an ESCo will be necessary.

Choice of vehicle—wholly owned or joint venture?

When establishing an ESCo, a local authority will need to decide whether to develop a wholly owned company or opt for some form of joint venture with a partner from the public or private sectors.

Undertaking the venture as a wholly owned company leaves the local authority with all

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