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U.K. Trial May Lead to $1.2 Billion of Renewable Power Purchases

The U.K. agency that buys energy on behalf of government and public sector bodies may spend as much as 750 million pounds ($1.2 billion) on energy from renewable generators in five years if a trial program is successful.

The Government Procurement Service, which oversees public buying of goods and services, will start offering contracts to non-intermittent renewable energy producers such as biomass plants next year under the plan, the Cabinet Office said today.

If the trial is successful, the GPS may allocate as much as half of its 1.5 billion-pound annual spending on gas and power to renewables in the next five years, according to the service, which is the U.K.’s largest energy customer. The program may save taxpayers about 155 million pounds in 15 years because the GPS, buying energy for 75 percent of the public sector, can access better deals, the Cabinet Office said in a statement.

Britain is seeking to boost renewables to diversify away from fossil fuels after natural gas imports almost doubled since 2007. The government also wants to protect taxpayers from price swings that led companies including SSE Plc and Centrica Plc’s British Gas to push up bills after gains in wholesale gas costs.

“This pilot will take us a step further towards our goal of hedging more of our energy needs against future price fluctuations, protecting the taxpayer,” said Francis Maude, the minister for the Cabinet Office. “Because we will be increasing competition in the energy market, there could be a downward pressure on everyone’s bills as well.”

Under the trial, the GPS will offer 2 percent of its energy demand worth 25 million pounds a year to renewable generators in contracts lasting as long as 25 years. Guaranteed revenue from the arrangements will help producers get finance for operations, it said, with about 150 stalled facilities in need of funds.

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