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Energy for growth: long term energy deal project announced

The government has announced the second Energy for Growth project that will save money and support UK economic growth.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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The government plans to use its buying power to save taxpayers’ money, support jobs and boost the UK energy industry.

We will soon invite electricity generators to bid for a new contract in the second phase of the Cabinet Office’s ‘Energy for Growth’ scheme.

The pilot: electricity

In last year’s pilot Energy for Growth project, the government agreed a 20 year deal with Air Products to buy electricity at a fixed price from 2016. This will protect against rising prices, saving taxpayers an estimated £97 million and helping to create 750 jobs in Teesside.

The deal secured with Air Products also ensured the company’s investment in the energy-from-waste ‘Tees Valley 2’ plant in Stockton on Tees, which is worth an estimated £320 million.

Second project: renewable electricity generators

For this second project, we will invite bids for a similar deal for up to 15 years with renewable electricity generators. We estimate that this will result in comparable savings and could help unlock further investment in the renewable energy market.

The government’s Crown Commercial Service — the UK’s largest energy customer — spends £1.6 billion on gas and electricity every year. It buys energy for approximately 75% of the entire public sector which accounts for 3% of total UK energy demand.

On a visit to the Energy for Growth project in Teeside, Francis Maude said:

We are reforming Whitehall to get the best possible value for hardworking taxpayers, saving £10 billion in 2012 to 2013 alone. Before the last general election, government failed to leverage its huge buying potential to negotiate a good price and support the UK energy industry. Energy for Growth ensures the security of our energy infrastructure — it’s good for the industry, good for taxpayers, and supports this government’s long-term plan for a stronger economy.

Procurement will open for the second project soon. Find out more here.

Background to Energy for Growth

Energy for Growth uses government’s combined buying power, entering contracts directly with generators to supply electricity over the long term and at a set price. This is part of the government’s broader energy strategy to increase energy efficiency and create the right conditions for investment in diverse, secure and sustainable UK energy production.

Published 25 April 2014