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THE UK government has agreed a novel longterm contract to buy electricity from a gasification plant being built by Air Products as it seeks to avoid the unpredictable price fluctuations of the short-term wholesale energy market.

Air Products has declined to disclose the value of the 20-year supply contract until the approval process for the £300m (US$459m) waste-to-energy facility in Teesside is finalised later this year.

“This is the beginning of a pioneering approach to how government uses its collective buying power and long-term demand to buy energy,” says Cabinet Office minister Francis Maude. It’s estimated that £84m will be saved over the life of the deal.

The deal relates to 2% of the government’s total energy use. Similar contracts will be considered over the coming five years and if agreed could lead a significant increase in generating capacity and competition, which would help drive down energy prices, the government says.

The 49 MW facility will gasify raw waste collected from local businesses and burn the syngas produced to generate electricity.

The facility will be the second of its kind built by Air Products in Tees Valley with the first set to begin operation next year.

“Our aspiration is to develop world-leading, exportable technology, and the new state-of-the-art site in Teesside will help the UK become a centre of renewable technology,” Maude adds.