The Government has agreed a deal that will use a £300m energy from waste (EfW) plant currently being built in Teeside to generate electricity that will then be bought via the Government Procurement Service.
The 20-year fixed price energy contract with renewables company Air Products will cover two percent of the Government’s energy spend, and is expected to cut its energy bill by almost £100m per annum. The waste facility will have the capacity to process up to 450,000 tonnes of municipal waste per year.
Gaynor Hartnell, Renewable Energy Association – “The generator gets the benefit of a long-term power purchase agreement (PPA), which coupled with Renewable Obligation certificates, provides a steady income stream”
Chief executive of the Renewable Energy Association, Gaynor Hartnell, has welcomed the deal, noting that it shows evidence of government realising the benefits of contracting directly with renewable generators.
She said: “The generator gets the benefit of a long-term power purchase agreement (PPA), which coupled with Renewable Obligation certificates, provides a steady income stream. The purchaser gets certainty over its future electricity costs. We hope more such agreements are finalised.
“Sadly, however, this kind of arrangement won’t make sense when Contracts for Difference replaces the Renewable Obligation. It won’t be possible for both generator and purchaser to achieve the stable prices they seek.”
Minister for the Cabinet Office, Francis Maude, said: “This is the beginning of a pioneering approach to how government uses its collective buying power and long term demand to buy energy. Not only have we secured savings for taxpayers by signing a new, low cost energy deal with Air Products, but we’re also helping the UK compete in the global race by investing in growth and creating hundreds of new jobs through the construction of a new energy from waste plant.”
Business manager at Air Products, Lisa Jordan, said: “We are delighted that the Cabinet Office has agreed to purchase the power which we expect to produce at a new Tees Valley Renewable Energy facility. By buying the electricity we produce, the Cabinet Office will help Air Products divert up to 350,000 tonnes of non-recyclable waste from landfill every year, which we will turn into reliable, controllable, renewable energy.”