Contents

1 · Executive summary

South Kesteven District Council seeks £2,802,360 of Phase 4 PSDS grant funding to fully decarbonise the heating system at Grantham Meres Leisure Centre. The proposal removes the existing twin end-of-life gas boilers (commissioned 2009 and 2011, both >10 years at the point of decommissioning) and replaces them with a Leisure Energy Net Zero Pod® — a packaged, factory-built plant room using R744 (CO₂) refrigerant at sCOP 4+, designed off-site at LE's Technology Centre in Kidderminster, serving pool, DHW and space heating loads from a single integrated unit. Whole-building energy efficiency measures — pool covers, LED relighting, AHU controls, microfiltration upgrade — are bundled to reduce post-electrification load and accelerate payback.

Project shape

Microfiltration and LED are self-funded by the applicant to keep the grant carbon cost within tier 1 (top 30%). Both have strong standalone business cases but increase £/tCO₂ if grant-funded.

Sector positioning & targeted allocation

Application is classified under the Other sector soft cap (leisure centre operated by a Local Authority, per Phase 4 Guidance Notes §2.1.3). Calculated grant carbon cost of £323 / tCO₂e LT is comfortably within the £510 cap and projects an upper-tier placement (top 30% by carbon cost effectiveness) on Salix's targeted allocation model.

2 · Applicant eligibility & subsidy control

Aligned to Phase 4 PSDS Guidance Notes §4.1 — public authority definition, additionality, subsidy control rules.

2.1 Public authority status

South Kesteven District Council is a local authority within the meaning of the Procurement Act 2023, §1 (Public Authority). The applicant is wholly publicly funded and subject to public authority oversight; both tests under the Act are met. No alternative evidence is required for local authorities.

2.2 Building ownership & persistence factor

Grantham Meres Leisure Centre is held freehold by South Kesteven District Council. Operation is contracted to 1Life Management Solutions under a leisure management contract; the council retains the responsibility for the building's mechanical & electrical plant and operates / maintains the building services. The building is therefore eligible (Guidance Notes §4.1.1). No persistence-factor cap applies.

2.3 Additionality

The applicant confirms (counter-fraud declaration, Appendix to be signed by S151 officer) that:

• The measures concerned are not required by law. Boilers are operational; no statutory replacement obligation exists at submission date.
• Installation has not begun; no orders placed, no contractors instructed.
• The project would not proceed on the current capital programme cycle without grant funding — a like-for-like gas boiler replacement is the council's funded fallback at <£385k.
• No alternative public-sector grant funding is being pursued for the same measures (UK Infrastructure Bank loan position reviewed and not engaged — see §9).

2.4 Subsidy control assessment

Reviewed against UK Subsidy Control Act 2022. Grantham Meres is publicly owned and operated as a leisure facility; building energy bills are paid directly by the council. The leisure management contractor (1Life) does not pay any portion of building utilities and therefore does not constitute an indirect subsidy beneficiary under §7(1). No MFA threshold is triggered. Subsidy control declaration to be confirmed at portal step 5, section 8.

2.5 Bookkeeping & financial controls

SKDC's S151 officer (Chief Finance Officer) confirms the council's accounting practice complies with CIPFA Prudential Code and the council holds adequate matched funding within the approved 2025/26 capital programme. See §11 (Counter-fraud & additionality declarations).

4 · End-of-life fossil-fuel plant evidence

Aligned to Phase 4 PSDS Guidance Notes §4.2.1. Each existing fossil-fuel heating plant being replaced is evidenced as >10 years from commissioning to decommissioning.

4.1 Boiler inventory · existing

4.2 Nameplate photographs (sample · full set Appendix A)

4.3 Decommissioning programme

Both existing boilers and the DHW calorifier are to be fully removed by the project completion date of 31 March 2028, in line with Phase 4 Guidance Notes §4.2.1. A temporary heating arrangement during cutover (estimated 14 days at change-over) is included in the project programme (§11) and the costs are within the recipient-contribution scope (not grant-funded). All plant will be physically removed; pipework cut and capped.

4.4 No alternative fuel back-up retained

The site is not on the NHS / prison / contractually-protected list under Phase 4 §4.2.8 and therefore no fossil-fuel back-up plant is retained. Operational resilience is provided by the LE Net Zero Pod® internal architecture (factory-integrated N+1 compressor configuration) and a planned thermal store (4 m³, included in §6 sizing).

7 · Grant carbon cost (£/tCO₂e LT)

Calculated per Phase 4 Guidance §2.2.1. Measures ranked by measure carbon cost ascending; sequencing determined automatically by the Salix portal carbon-cost calculator.

7.1 Measure carbon-cost ranking (most → least efficient)

7.2 Application's grant carbon cost

7.3 Carbon-cost curve

10 · Risk register & mitigation

LE Standard PSDS Pre-Construction Risk Schedule, populated per Salix Phase 4 application requirements. Scored S (severity) × L (likelihood) on 1–4 scales.

10.1 Top-quartile risks & ownership confirmation

Risk R02 (DNO capacity) is the dominant project risk and is currently red-rated. A DNO surgery slot has been booked for 22 April 2026; should the capacity quote materially differ from feasibility-stage assumption (525 kVA headroom), the proposal will revert to a smaller pod configuration (425 kW) plus a 4 m³ thermal store, requiring a like-for-like cost recalculation and potential reduction in grant request. Owner confirmation provided by LE on behalf of SKDC.

Contents

2 · Executive summary

2.1 Buildings & existing condition

2.2 Proposed technical solution

2.3 Carbon savings & timeline

2.4 Issues, dependencies, sign-off

No listed-building or conservation-area issues. Dependencies: (i) successful PSDS Phase 4 application (carbon cost £323 / tCO₂e LT projected — top tier), (ii) DNO confirmation of available capacity (525 kVA assumed; surgery booked Apr 2026), (iii) Cabinet capital approval of the 12% match (£382,140), tabled 02 Jun 2026 — approved.

15 · Key challenges

This section articulates the barriers SKDC faces in delivering the heat decarbonisation pathway and the support / partnership arrangements identified to address each.

15.1 Internal governance & business-case requirements

SKDC's capital business-case process (constitution s.4.6.5) requires net-present-value analysis on a 20-year horizon and treats carbon as a non-monetised side effect. This creates a structural bias against heat-pump investment, where the central NPV calculation typically returns a worse result than like-for-like gas boiler replacement. Mitigation: this HDP is itself accepted by Cabinet (02 Jun 2026) as the strategic justification, and capital approval is anchored to the carbon and PSDS leverage rather than NPV alone. Update to capital framework requested for FY26/27.

15.2 Technical & supply-chain

15.3 Financial

The 12% recipient contribution of £382k requires capital release from SKDC's 2026/27 budget. The £250k microfiltration line item is treated as a separate revenue-funded item via 1Life's leisure-management contract; this requires contract variation, signed by both parties (in progress at HDP submission).

15.4 Partnerships

• 1Life Management Solutions — leisure operator; contract variation in progress for microfiltration capex recovery via service-charge model.
• National Grid (NPg) — DNO; surgery booked Apr 2026; ANM (Active Network Management) curtailment offered as backstop option.
• Anglian Water — water supplier; backwash savings to be evidenced post-microfiltration.
• UK Leisure Framework / SCAPE — procurement vehicle for Net Zero Pod® delivery and tie-in works.
• LeisureEnergy — principal contractor; design, install, M&V; risk-share on commissioning performance.

15.5 Supply-chain & lead times

Net Zero Pod® factory lead times (Q1 2026): LE Technology Centre slot allocation 10–14 weeks; on-site delivery and tie-in 5 weeks. Total programme allows 20 weeks from order to commissioning, with critical-path slack of 4 weeks. Supply-chain risk reviewed quarterly via direct relationship with LE production. Should LE factory capacity deteriorate, a smaller pod configuration (425 kW + thermal store) is pre-approved as fallback.