Tarmac has signed an innovative Power Purchase Agreement (PPA) to buy discounted renewable energy directly from the producer and sell it back to its agreed retailer.
The company will buy energy from Nuon Renewables – now part of Vattenfall Wind Power UK – and sell it back to npower.
The £3.5M deal will commence when Nuon’s windfarm at Pendine Sands in south-west Wales becomes operational later this month. The farm will provide around 14.3 GWh of power to Tarmac per year. Following an initial period of operation, this volume may be increased.
Financial and environmental benefits:
Rob Turner, senior manager for direct material sourcing at Tarmac, said the deal would have financial and environmental benefits. “Through a PPA, Tarmac can guarantee a supply of renewable energy at a discounted or fixed rate. This helps reduce the risks associated with energy costs,” he said. “By securing a buyer for the energy in advance, the capital risk for Nuon and its financers is reduced.
“From a wider perspective, PPAs also help to support the construction of new renewable energy facilities.”
Tarmac typically buys its energy from a retailer – but the deal will see Tarmac buying directly from Nuon and selling to npower, who will credit Tarmac’s account.
Rob Baylis, head of finance at Nuon Renewables said: “As more clean power is generated in the UK by wind farms, the opportunities to sell direct to users will increase.”
Tarmac is the first quarrying and construction business to enter into this type of agreement. The deal is only the second in the UK after J Sainsbury signed a similar contract in December 2008.
The £3.5M deal will commence when Nuon’s windfarm at Pendine Sands in south-west Wales becomes operational later this month. The farm will provide around 14.3 GWh of power to Tarmac per year. Following an initial period of operation, this volume may be increased.
Financial and environmental benefits:
Rob Turner, senior manager for direct material sourcing at Tarmac, said the deal would have financial and environmental benefits. “Through a PPA, Tarmac can guarantee a supply of renewable energy at a discounted or fixed rate. This helps reduce the risks associated with energy costs,” he said. “By securing a buyer for the energy in advance, the capital risk for Nuon and its financers is reduced.
“From a wider perspective, PPAs also help to support the construction of new renewable energy facilities.”
Tarmac typically buys its energy from a retailer – but the deal will see Tarmac buying directly from Nuon and selling to npower, who will credit Tarmac’s account.
Rob Baylis, head of finance at Nuon Renewables said: “As more clean power is generated in the UK by wind farms, the opportunities to sell direct to users will increase.”
Tarmac is the first quarrying and construction business to enter into this type of agreement. The deal is only the second in the UK after J Sainsbury signed a similar contract in December 2008.
Source: The New Civil Engineer
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