Air Products is to build a second 350,000 tonne per year waste to energy plasma gasification facility on Teesside following the signing of a 20 year power purchase agreement with the UK government's Cabinet Office.
According to the government the deal is worth 2% of government’s energy spend and is expected to deliver £84 million in savings over the life of the contract through a fixed agreement that will provide stability in what the public sector pays for energy.
As part of the deal, the government said that Air Products expects to invest an amount similar to that of its first plant, around £300 million, to build a second waste to energy facility in Tees Valley, Teesside to supply the agreed 37 MW.
The government said that the agreement means that through its Government Procurement Service (GPS) it will buy a portion of its energy directly from a UK-based generator at a low fixed price, rather than buying entirely through short-term wholesale markets which are subject to unpredictable price fluctuations.
New model for government procurement
"This is the beginning of a pioneering approach to how government uses its collective buying power and long term demand to buy energy," said the Minister for the Cabinet Office, Francis Maude.
"Not only have we secured £84 million of savings for taxpayers by signing a new, low cost energy deal with Air Products, but we’re also helping the UK compete in the global race by investing in growth and creating hundreds of new jobs through the construction of a new ‘energy from waste’ plant," he added.
Lisa Jordan, Air Products’ business manager for Bio-Energy Europe, commented: "By buying the electricity we produce, the Cabinet Office will help Air Products divert up to 350,000 tonnes of non-recyclable waste from landfill every year, which we will turn into reliable, controllable, renewable energy."
According to the Cabinet Office said that the new approach will lead to more engagement with the energy industry to assess opportunities for further energy procurements over the next five years.
The government claimed that this could mean a significant increase in generating capacity in the UK and help drive down bills for everyone through increased competition.
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