Government commits to renewable energy use

energy from waste silo

The government has today (10 December) commited to purchasing up to two per cent of its energy from green sources in a new Energy for Growth initiative.

In the New Year, the Government Procurement Service (GPS), the UK’s largest energy customer, will open a pilot to buy 2 per cent of its demand from renewable energy sources, representing £25 million per year.

If the project is successful, GPS will then diversify up to half its entire energy portfolio, currently worth £750 million, over the next five years.

The pilot, for non-intermittent power such as biomass and energy from waste, will mean that for the first time GPS will offer contracts to renewable generators for a set segment of their capacity for up to 25 years.

The Cabinet Office hopes that the pilot will save taxpayers about £155 million over 15 years. It aims to do this by securing the best deals and by diversifying suppliers, contract duration and pricing mechanisms in order to avoid unstable prices.

It is thought that the initiative will appeal to new projects that will be able to rely on the guaranteed business to attract investment.

Francis MaudeMinister for the Cabinet Office, Francis Maude, announced the initiative today, saying: “Energy for Growth will use the government's clout as the biggest energy customer to shape the market for the good of the country. The UK is in a global race and that's why we are working to attract investment into our energy industry to create jobs, develop technology and secure clean and diverse supplies for the future.

"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.

"My department's Efficiency and Reform Group is striving to make sure every taxpayer pound works as hard as it can. It’s not glamorous work but Energy for Growth shows the huge impact it can have."

Following the announcement of the Cabinet Office’s Energy for Growth initiative, Chief Executive of the Renewable Energy Association, Gaynor Hartnell, said:  “This is an excellent initiative. The first phase is to sign around 75 megawatts of non-intermittent renewable energy projects – and expand later into wind and solar. The Government Procurement Service will behave as a commercial entity. Government’s commercial arm will effectively be a customer of the Government’s policy arm. If renewables policy is not helpful from a business perspective, the GPS should be in a great place to comment.”

According to the Cabinet Office, in 2010 central government departments saved £51 million by joining together to source energy through GPS. Similarly, the Cabinet Office reports that by acting as one customer buying IT, travel, property, energy and other commodities, central government saved £357 million in 2010-11 and £422 million in 2011-12.

GPS is part of the Cabinet Office Efficiency and Reform Group and currently spends £1.5 billion a year on gas and electricity. It buys energy for 75 per cent of the whole public sector, which accounts for 3 per cent of total UK energy demand. Although other parts of the public sector including NHS Trusts and Local Authorities are not obliged to purchase through GPS a significant amount choose to.

The Energy for Growth initiative is part of the Government’s wider strategy which aims to increase energy efficiency and investment in ‘diverse, secure and sustainable’ energy production in the UK.

Contracts for the Energy for Growth pilot will be published on the Official Journal of the European Union early in the New Year.

Read more about Energy for Growth.