Forecasts of rising electricity prices in the years ahead have led to the launch of a new service to help large users lock-in significant long term savings.
A team being established by SmartestEnergy, the leading purchaser and supplier of electricity from the independent sector, will focus on facilitating Linked Supply agreements between consumers and generators.
The agreements will enable industrial and commercial users to manage their energy costs over a much longer timeframe than currently available.
“The volatility of the wholesale electricity market and rising cost of industry charges will present major challenges to large energy users in the future,” explained Mark Knights, who has recently been appointed to head up SmartestEnergy’s new Origination team.
“Linked Supply agreements provide opportunities to fix power prices or secure significant discounts to market rates for more than 10 years ahead.”
As well as discounts against wholesale prices, consumers can also achieve further savings on industry costs from embedded benefits, ROCs and LECs, which can be structured as part of an agreement.
Under a Linked Supply agreement, a consumer could achieve savings of up to £15 million on 10MWe baseload equivalent volume over 15 years at a 10% discount to the forecast market price.
Knights said there was a strong pipeline of generators looking for supply agreements to secure the necessary funding for their projects.
“Our position in the market means we have unrivalled understanding and knowledge of the issues for both generators and large energy users and a wealth of experience of structuring power purchase agreements.
“Finding the best deal for both parties is not just about the price but about developing an overall package of advice and services which enables both parties to maximise the opportunities.”
Knights said SmartestEnergy was already talking to a number of existing and new customers about Linked Supply arrangements.