Decarbonisation in practice: five key themes for authorities and tenderers

The Act moves focus from “most economically advantageous tender” to “most advantageous tender” and sets out that “public benefit” can include environmental outcomes. In practical terms, that gives authorities a clearer basis to weigh environmental outcomes alongside price and quality.²

Decarbonisation cannot simply be used as a broad aspiration. Criteria still need to be linked to the contract, proportionate, measurable and capable of being explained if challenged. For authorities, the question is not only “can we ask for this?” but “can we evidence why it matters and how we assessed it?” For tenderers, the question is whether the commitment can genuinely be priced and delivered.

Both contracting authorities and tenderers should keep in mind the following when developing and delivering net zero commitments:

• For public contracts over £5 million, authorities must set and publish at least three KPIs and publish information on performance against them³

• Carbon and emissions commitments need to be capable of being measured, managed and, if necessary, enforced and

• Over-ambitious or unclear commitments can create audit, contract management and reputational risk

This matters for all sides. Authorities need commitments they can manage during the life of the contract. Tenderers need to be careful about promises that depend on assumptions outside their control, or which have not been reflected in pricing, programme or risk allocation.

The route to decarbonisation often depends as much on funding and delivery constraints as on the technology itself:

• Retrofit and estate works can be a direct route to reducing energy use and costs, but still raise issues around capital funding, performance risk, asset ownership and maintenance

• On-site generation, including solar and battery storage, can improve resilience and price certainty, but depends on planning, grid connection, ownership and income structure

• Off-site PPAs can support larger-scale renewable generation and long-term pricing, but bring volume risk, approval, accounting, treasury and governance issues. Frameworks and aggregation routes may help procurement, but they do not remove those underlying questions

• Heat projects can deliver significant emissions reductions over gas, but often involve high capital costs, land right complexity and more involved ownership and operational models, and may soon have to navigate Heat Zoning; and

• EV charging infrastructure is often driven by private sector finance and user demand. Tariffs, utilisation, contract length and grid availability all shape whether a concession-style model is viable

For authorities and utilities, that means working through who pays, who controls the asset and where the risk sits. For tenderers, it means turning the carbon objective into a structure that is commercially viable, fundable and deliverable.

The procurement route matters, but it cannot compensate for a model that has not been properly tested. If the structure does not work commercially, legally or operationally, the procurement process is unlikely to fix it.

In practice, authorities are often choosing between familiar models:

• ESCO or energy service models, which can unlock delivery where upfront capital is limited, but may mean long-term commitments and less control over operation

• Concessions, often used where a user pay model is viable, such as EV charging and heat networks, but only where demand and revenue assumptions support the case

• Joint ventures and partnerships, which can give greater control over place-based or complex programmes, but could bring governance, financial exposure, procurement and subsidy control challenges

Challenges tend to arise where the route is chosen before the commercial model has been properly tested: for example, an EV concession in a location with uncertain demand, a PPA that works on price but not governance, or a retrofit programme where the financing model does not reflect operational reality.

That is why legal, procurement and commercial input is usually most valuable while the model is still being shaped, rather than once the invitation to tender is ready to issue.

The common barriers rarely arise in isolation. Grid constraints, planning delays, stakeholder alignment, political change and funding deadlines can all affect whether a programme can be delivered as intended. A well-run procurement process helps, but it will not save a project if the delivery assumptions are wrong.

The key issue is not simply whether carbon can be considered in procurement. It is whether the outcomes being sought can be evidenced, procured and delivered in a coherent way. That requires early thinking about cost, control, risk, auditability and contract management.

For authorities and tenderers alike, the task is to turn the decarbonisation objective into a project that is credible, fundable and capable of being delivered.