Sainsbury’s Signs Wind PPA Deal

UK-based retail giant Sainsbury’s has signed a long-term power purchase agreement (PPA) that will directly lead to the creation of a new £8 million [US $12 million] wind generation project at Lochhead in Scotland. Due to be completed in mid-2009, Sainsbury’s will purchase energy direct from A7 Lochhead Ltd. for the next ten years under the terms of a deal negotiated by energy risk management specialists Utilyx.

The Lochhead project will comprise three 2-megawatt (MW) REpower MM82 machines and is expected to be commissioned in mid-2009. It will be located 20 km to the southeast of Glasgow, about 200 metres from the M74 motorway.

The output from the installation will provide at least 1% of company’s electricity demand, the equivalent of powering four stores. This is the first time in the UK that an organisation as large as Sainsbury’s had made a deal directly with a generator rather than with an energy company. As such, it represents a significant step in the development of the renewable energy market, providing a new model through which projects such as the one at Lochhead can secure funding, Utilyx says.

“Power Purchase Agreements are an innovative way that independent generators can get renewable energy projects off the ground, whether they are biomass, waste-to-energy or in this case, wind turbines. With a shortage of generation capacity looming in the UK, the ability to reduce exposure to price risk by contracting directly with developers is becoming an increasingly attractive option for large energy consumers like Sainsbury’s,” said Alex Hensher, founder of A7.

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