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Government to Save £97m in Electricity Bills

23 Jul 2013

The government will save around £97m in electricity bills over the next 20 years under a new long term agreement with Air Products.

Under the new green electricity supply deal, Air Products will invest £300m in a new 37MW ‘energy from waste’ plant in Teesside which will produce the new energy. The deal will deliver savings by avoiding the need to buy electricity through short-term wholesale markets where prices fluctuate.

Earlier this year, Cabinet Office Minister 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 £84m of 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. This is about changing the way we work to not only get the best out of our suppliers, but the best out of the UK.”

A spokesperson at Air Products said the new Teesside plant is still subject to approvals and Gaynor Hartnell, Chief Executive of the Renewable Energy Association (REA), welcomed the deal but warned changes in energy policy may remove the incentive for similar future deals. “This kind of arrangement won’t make sense when Contracts for Difference replace the Renewables Obligation,” she said. “It won’t be possible for both generator and purchaser to achieve the stable prices they seek.”

The new deal is scheduled to commence in 2016 and is worth around 2% of the governments overall energy spend.