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FT: Long contracts boost renewables investment


Green energy companies are to be awarded long-term contracts worth £25m a year to supply the government, under a scheme to boost investment in renewables.


The Cabinet Office initiative will offer renewable generators a deal for up to 25 years to hand over a set proportion of their capacity. The initial focus will be on biomass and energy from waste.


The strategy will harness the buying clout of the Government Procurement Service which, as the UK’s largest energy customer, spends £1.5bn a year on gas and electricity. The pilot programme aims to secure 2 per cent of this demand from renewable sources, starting in January. If the trial succeeds, the proportion of contracts arranged direct with green suppliers could be extended to 50 per cent over the next five years.


Francis Maude, Cabinet Office minister, believes that the plan will save taxpayers about £155m over 15 years by negotiating a favourable price from companies in return for financial security.


“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,” Mr Maude said before the announcement.


“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,” the minister added. “And because we will be increasing competition in the energy market there could be a downward pressure on everyone’s bills as well.”