OFFICE OF GOVERNMENT
COMMERCE News Release (Ref: 09/07) issued by The Government News
Network on 18 June 2007
The UK public
sector will have access to green electricity at no premium, thanks
to an innovative new deal signed this week.
The deal, worth around £1 billion over the next four years,
guarantees central and local government customers one terrawatt
hour of electricity from renewable sources - equivalent to 33% of
current volumes - until at least 2011. Sustainability targets
call for central government departments to be sourcing at least
10% of their electricity from renewable sources by March 2008.
Best of all, going greener won't cost departments any extra
cash. Unlike previous arrangements, under this deal buying green
energy will be no more expensive than buying "brown"
(non-renewable) energy and paying the associated climate change
levy. In a market where demand for renewable electricity is
outstripping supply, the new framework has secured these volumes
and prices for four years.
The contract also includes a programme of site assessments for
suitable renewable onsite generation, and toolkits for energy
efficiency programmes for departments to meet the challenge of
reducing carbon emissions by saving energy. There will also be an
innovative carbon off-setting option which allows customers to buy
certified emissions reduction certificates. These certificates
fund climate change reduction schemes, for example projects
providing energy efficient stoves to families in developing nations.
Other new innovative aspects of the deal include options for day
ahead purchasing direct from the wholesale markets, physical
netting off agreements and transparent margins and cost
structures. Significant overall value-for-money gains have been
achieved from the new contract, including a 40% reduction in
controllable supplier costs.
Over the last two years, average day ahead pricing has delivered
savings of over 8% against the month ahead prices. For the first
time central government will have access to the day ahead markets
and sell-back options which can deliver significant savings and
price management in a volatile energy market.
EdF Energy will supply the electricity under the deal, which was
implemented by OGCbuying.solutions with technical support and
energy expertise from the Office of Government Commerce and advice
on sustainability from the Department for the Environment, Food
and Rural Affairs.
The majority of central government's electricity requirement
and significant local government energy needs are supplied under
current arrangements managed by OGCbuying.solutions, which will
continue until delivery under the new contract which commences on
1st October 2007. Over the life of the current contract,
OGCbuying.solutions has achieved consistently competitive prices
for public sector customers, at around 3-5% below the average
forward market price for electricity.
Derek Rothwell, Director of Procurement Buying Solutions at
Buying Solutions said;
"This new procurement model ticks all the boxes - it will
reduce costs, improve prices and provide an
environmentally-friendly energy resource. This impressive
outcome was achieved through collaboration with our public sector
customers and full engagement with the supply market to negotiate
the best deal. Pooling expertise and resource with our colleagues
in OGC has proved fruitful and will pave the way for other
government procurements to be conducted in a similar way."
Claire Manning, Energy Category manager at the Office of
Government Commerce said:
"The collaborative approach used to develop this new
electricity deal, which is unique for the public sector, clearly
shows the benefit of sharing expertise across government. We will
continue to look for future opportunities under the Transforming
Government Procurement agenda to deliver value for money and
innovative solutions in energy procurement for the public sector."
Notes to Editors
For more information about the government's sustainability
targets, please see http://www.sustainable-development.gov.uk/government/estates/targets.htm
The Office of Government Commerce (OGC) is an office of HM
Treasury, responsible for improving value for money by driving up
standards and capability in procurement, from commodities buying
to the delivery of major capital projects, maximising the
effective use of 60% of Government spending and a £30 billion
property estate.
A new Government strategy launched in January 2007, Transforming
Government Procurement, highlighted the central importance of
procurement in delivering high-quality public services and best
value for money. OGC is tasked with delivering this
transformation, and with driving up standards and procurement
capability across central Government. The OGC will do this through:
* Setting the right procurement standards and ensuring they are met.
* Capitalising on the Government's collective buying power
to achieve value for money
* Developing a cadre of senior procurement professionals across
government to drive forward best practice procurement solutions.
OGCbuying.solutions is an Executive Agency of the Office of
Government Commerce (OGC) in HM Treasury. We provide a
professional procurement service to the public sector to enable
organisations to deliver improved value for money in their
commercial activities and provide professional support when it
matters, advising on technical issues, energy saving and
environmental improvements.
Office of Government Commerce, Trevelyan House, 26 - 30 Great
Peter Street, London SW1P 2BY