Cabinet Office minister Francis Maude has announced an investment scheme worth £25m a year to buy energy direct from renewables generators, including energy from waste (EfW) operators.
Under a pilot programme set to start in the New Year, the Government Procurement Service (GPS) will open up 2% of its demand to renewable generators.
The ‘Energy for Growth’ pilot is the first GPS scheme to offer contracts directly to renewable generators, and is targeted at continuous sources of energy such as EfW.
Maude, left, said: “Energy for Growth will use the Government’s clout as the biggest energy customer to shape the market for the good of the country.
“This pilot will take us a step further towards our goal of hedging more of our energy needs against future price fluctuations - protecting the taxpayer. And because we will be increasing competition in the energy market there could be a downward pressure on everyone’s bills as well.”
The contracts will be for a proportion of the generators’ capacity for up to 25 years and the Cabinet Office estimated that the pilot would save £155m over 15 years by agreeing a good price for renewable energy in return for financial security to attract investment.
It said: “This will appeal to new projects which can bank on the guaranteed business to attract investment. We are aware of at least 150 projects which are currently stalled and may need finance.
“A small 10MW generator is estimated to return £5m a year to the local economy as well as creating jobs in the energy and construction industries.”
Depending on the pilot, GPS, which buys around 75% of the public sector’s electricity and gas, could diversify half of its annual £750m portfolio with renewables over the next five years.
Contracts for the Energy for Growth pilot will be published on the Official Journal of the European Union (OJEU) early in the New Year.