POWERING SALFORD: MAYOR SIGNS A 12 MONTH GREEN ENERGY CONTRACT WORTH OVER £4.6MILLION

Salford Mayor, Paul Dennett, signed a 12 month contract with green energy supplier Drax Energy Solutions for a 100KW supply of renewable sourced energy to thousands of Salford properties over the next 12 months.

The mayor said that the 12-month contract provided the best value and will result in a total cost of £4,676,038 to the authority. This amounts to a reduction in costs of £3,413,199 (42.2%) for the term of the contract.

A 24-month contract was considered but it is thought that it would have limited the cost reductions to 39%.

Drax operates a portfolio of sustainable biomass, hydro-electric and pumped hydro storage assets across four sites in England and Scotland.

Drax will provide 100% green energy contract at no additional premium, with the new contract therefore being 100% renewable source.

Procurement of a green energy contract demonstrates the Council’s support for the generation of electricity from renewable sources and its commitment to corporate social responsibility, whilst addressing climate change.

Photo ©: Salford City Council

The council states that energy contracts must be renewed on an ongoing basis following a fixed period of contract duration, as failure to renew will result in the default deemed contract rates being applied which would be considerably higher.

The length of a contract is variable from 12 months and up to several years, subject to wholesale price movements and suppliers’ risk appetite.

The previous contract was agreed at the height of wholesale energy market volatility, where prices had reached new record levels that necessitated government intervention in the form of price relief scheme for the non-domestic market, known as Energy Bill Relief Scheme (EBRS).

This scheme was applicable for 6 months from October 2022 to March 23 and provided some financial assistance towards the overall costs associated with this contract.

Market volatility has now eased off to some degree since last year with overall trend being downward and wholesale prices therefore being much lower compared to those seen a year ago.  

Whilst wholesale prices have eased off, the non-commodity fixed costs are seeing an increase because of inflation and the proportion of unit cost of electricity made up of non-commodity elements is therefore increasing over time.  

However, with the fall in wholesale prices being much bigger, the net result of overall cost of energy will be lower.

The downward trend in wholesale markets provides the opportunity to explore varying contract durations, which along with market conditions, provides the opportunity to consider more than a single option.  

Ultimately the 12-month contract provides better value and an overall cost reduction that will help in easing budget pressures for the council over the course of the next year.

Main Photo ©: Drax Energy Solutions