Iceland Foods has said it has secured “clarity” on its electricity bills after signing a ten-year power purchase agreement (PPA) with Octopus Energy.
“This helps to mitigate the impact of the volatility that has plagued the industry for the past 12 months,” Iceland boss Tarsem Dhaliwal commented on the agreement, which will see Octopus power 150 stores from its Breach solar farm in Cambridgeshire.
The deal is set to reduce Iceland’s carbon emissions by 23,000 tonnes, equivalate to taking 12,000 cars off the road, Octopus said in a statement, covering 14% of its energy needs.
“This partnership is an exciting step in our journey towards achieving net zero by 2040. It also gives us some clarity on our energy costs for the coming years - at a significant discount to the current wholesale price,” Dhaliwal added.
Octopus was approached for comment, but was unable to disclose the exact details of the agreement.
Power Purchase Agreements
Power purchase agreements allow businesses to source electricity directly from renewable generators at a fixed price, reducing exposure to rises on wholesale markets.
Many firms hold agreements with generators for direct supply, including Amazon.com Inc, Apple Inc (NASDAQ:AAPL) and Meta Platforms Inc (NASDAQ:FB)’s Facebook with ScottishPower owner Iberdrola.
By 2020 PPA deals accounted for 23.7GW of electricity globally, up from just 0.1GW in 2010, according to BloombergNEF analysts, fuelled by growing investor interest in sustainability.
Revolution bars Group PLC announced on Tuesday its fixed-price energy contract was due to end in late March, prompting the hospitability chain to cut usage and employ brokers to assist its search for a new deal.
It added “utilities remain an area of real focus,” referencing energy bills which are likely to rise from April if government support is indeed slashed.
Despite murmurings that support could be extended, the government is due to reduce subsidies for firms, capping electricity at £302/MWh and gas at £107/MWh, up from £211/MWh and £75/MWh promised currently.
British Beer and Pub Association chief Emma McClarkin warned in February that these price rises posed the “biggest threat” to the hospitality sector.