UK government concludes renewable energy contract with Air Products

The government of UK has concluded a long term agreement with chemicals company Air Products to procure clean energy to the country for a period of 20 years, thereby saving the government exchequer £97m.

To meet the terms of the agreement, the developer is intending to invest £300m to build a 37MW energy-from-waste facility in Teesside to supply the electricity.

When the agreement was signed earlier in April 2013 by Cabinet Office and Air Products, the government estimated that it would save nearly £84m over the life of the contract.

However, the latest calculations have calculated the savings to be around £97m through the period of contract.

Accounting to 2% of the government’s total energy spending, the agreement is expected to narrow down the cost government pays for energy, besides supporting the creation of hundreds of local jobs.

Reacting to the agreement conclusion, industry body Renewable Energy Association (REA) stated that the government is realising the benefits of collaborating directly with the renewable power developers.

REA chief executive Gaynor Hartnell said that the group is delighted to see the commercial arm of the government seeking direct alliance with renewable generators.

"The generator gets the benefit of a long-term PPA, which coupled with ROCs provides a steady income stream. The purchaser gets certainty over its future electricity costs. We hope more such agreements are finalized," added Hartnell.

"Sadly however, this kind of arrangement won’t make sense when Contracts for Difference replace the Renewables Obligation. It won’t be possible for both generator and purchaser to achieve the stable prices they seek."