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.
Two former members of an Illinois school board 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.
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While the lawsuit was ultimately thrown out on a technicality, 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. The council said private sector funding was needed for decarbonisation, extensive due diligence was carried out, and any financial risk is borne by the private sector, not the council. Ameresco was asked to comment for this article.
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.”
In November 2018, Bristol became the first council in the UK to declare a ‘climate emergency’, committing to cut the city’s carbon emissions to net zero by 2030, and many councils across the country followed shortly after. But after several years of austerity and huge cuts to council budgets, Bristol didn’t have the funding to pay for these works itself.
So in April 2019, the city council approved its City Deal project, 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.
That 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.
But Ameresco faced legal challenges in a similar deal with the Ball-Chatham school board, which administers six schools in Illinois. According to local media reports and court documents, two former members of the school board claimed that Ameresco initially guaranteed energy savings would pay for work performed to reduce energy costs by improving school buildings—but then removed these guarantees at the last minute.
The claimants argued that the school board was not shown key documents before signing the contract, and were unaware that the guarantees had been removed. They sued Ameresco in an attempt to get the company to repay $2.2 million to the school board. The company denied the allegations. 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.
Bristol Mayor Marvin Rees admitted the City Leap deal created a risk to the council, during a press conference on Wednesday, June 8. 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. If you’re aware of any huge public sector funding pots that are going to cover the costs of UK core cities decarbonisation plus London, then please let me know.
“But we’re not aware of it, and we have to get private sector money in there. To mobilise private sector money, there has to be a return in there. We could wait for a pure approach, but then we’ll be way past 2030 if we do so. So that’s what we have to do.”
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.
In a statement, the council said due diligence was conducted on all the companies bidding for the City Leap project, including Ameresco, and said the public-private partnership model means the private sector faces the risk, not the council.
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. After an initial selection stage, three bidders were shortlisted for the strategic partnership. From November 2020, over 150 hours were spent with the bidders to discuss a wide range of issues, including the opportunities for low carbon energy infrastructure projects on the council’s estate, community energy, local job creation, social value and legal matters.
“Bristol’s vibrant local energy community has made a significant contribution to the procurement; engaging with the bidders, enabling an understanding of Bristol’s diverse community organisations and the opportunities that working in partnership with them could create. Many other organisations in Bristol also engaged with the bidders as part of the process. Later, 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 partnership 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.”
