The government is trialling a scheme to use its energy buying power to unlock hundreds of millions of pounds’ worth of investment in biomass and energy-from-waste builds, and is considering taking equity stakes in generator projects.
Cabinet Office minister Francis Maude is launching a pilot to offer £25m of government energy funding through 25-year contracts to kick-start stalled biomass and energy-from-waste projects.
CN understands that the move, dubbed Energy for Growth, could eventually attract between £500m and £800m of extra investment, and that the government may even take stakes in projects.
“[The boost to projects] could be by us taking equity stakes in projects if needed,” the minister told CN.
A cabinet office insider told CN there was “nothing off the table” in terms of the involvement government could take.
Francis Maude told CN the scheme “has been a long time in developing”.
He said: “There are a lot of projects that are ready to go – I made the case [for green generation] very strongly.”
The pilot will aim to source 50 MW of installed capacity, and the government will look at expanding the programme on a rolling basis.
CN understands Transport for London’s package of energy contracts will be procured through the scheme.
The Cabinet Office scheme aims to provide guaranteed business to projects of all sizes that are struggling to secure finance by agreeing fixed-price contracts.
The pilot will allocate funding based on diversifying 2 per cent of Cabinet Office demand.
Ministers have identified at least 150 projects that they say could benefit from such a move.
If the pilot is successful, up to half the energy portfolio will be diversified over the next five years representing a value of £750m.
The Cabinet Office’s government procurement service is the UK’s largest energy customer, buying energy for 75 per cent of the public sector.
It is hoped that the pilot will save taxpayers £155m over 15 years by securing lower prices, as well as boosting construction of generators.
Speaking at the scheme’s launch, Mr Maude said Energy for Growth could “release a serious amount of investment for renewable energy projects around the country that have stalled in the current economic climate”.
He added: “Our credit is the best – and we can pay our suppliers quickly.”
The energy contracts will be put out to tender in mid-January, before being awarded in March. The energy is expected to be delivered in April 2017.