£500m strike price deal for UK Energy plant

AMERICAN industrial gases giant Air Products is set to go-ahead with plans for a new £300m power station after winning a £500m contract to supply electricity to the Government.

Earlier this year Air Products started work on its first 50MW advanced gasification plant in Billingham.
Its plans for the second plant, on land adjacent to the first one, are currently being considered by Stockton Borough Council and if approved Air Products will press ahead with construction after winning the Government contract.

In an unusual move, the Government announced it had agreed to a power purchase agreement with Air Products to buy 37MW of electricity from the plant, at a cost of around £25m a year, for 20 years.

Air Products will receive a Government subsidy of around £70 per MW/h in addition to the price agreed between the two parties for electricity. The current wholesale price of electricity is around £50 per MW/h.
The deal highlights the Government’s desire to support renewable energy projects.

The Minister for the Cabinet Office Francis Maude said: “This is the beginning of a pioneering approach to how government uses its collective buying power and long term demand to buy energy.

“Not only have we secured £84m 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.

“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. This is about changing the way we work to not only get the best out of our suppliers, but the best out of the UK.”

Lisa Jordan, Air Products’ business manager for Bio-Energy Europe, said: “We are delighted that the Cabinet Office has agreed to purchase the power which we expect to produce at a new Tees Valley Renewable Energy facility, subject to planning and approval later this year.

“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.”

The two plants are costing Air Products around £600m and will be the largest of their kind in the world. Between them they have the potential to recycle the rubbish from more than one million households.

The waste is heated in a process called advanced gasification producing a syngas, which is composed mainly of hydrogen, and is used to power a turbine and generate electricity.

When the two plants are up and running they will employ around 100 people, with over 700 people involved in construction of each.

ENDS

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