Haven Power Ltd., a unit of Drax Group Plc, signed a 520 million-pound ($801 million) deal to supply Thames Water Utilities Ltd. with clean energy.
Thames Water will get all its electricity from renewables as a result of the deal, according to a statement on Monday from the water utility serving London. Already the utility, which provides water and sewer services to 15 million customers, gets about 20 percent of its power from wind, solar, hydro power and biogas.
Haven buys its energy from Drax, which is converting the country’s largest coal-fired power station to burn wood pellets. Two out of six units at the plant in northern England have been converted, and a third may start working later this year.
“Our energy and carbon strategy centers around reducing costs for customers and minimizing our impact on the environment,” Angus Berry, Thames Water’s energy manager, said in the statement. “We look forward to growing our relationship with Haven to exploit further opportunities to minimize energy costs and emissions, as well as continuing to work towards our ambitious target of self-generating 30 percent of our own electricity by 2020.”
Britain’s water utilities are increasingly turning to renewables to shield themselves from volatile energy prices. United Utilities Group Plc, the U.K.’s largest publicly traded water company, said last week it will invest at least 100 million pounds in low-carbon power over five years. Severn Trent Plc is planning 190 million pounds of investment in renewables.
Haven will supply electricity for five years to Thames Water, whose “super sewer” tunnel project under London was given the development go-ahead last September. There is an option for two further five-year renewals that would increase the overall value of the contract to more than 1.5 billion pounds over 15 years, according to the statement.