A new long-term energy contract will lower the amount government pays for energy and generate local jobs.

Cabinet Office and Air Products Plc today formally concluded their deal for a long term contract to deliver electricity to government for 20 years at a fixed price. This will significantly lower the cost government pays for energy and will support the creation of hundreds of local jobs.

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Latest calculations in finalising this deal means savings of £97m can be expected over the life of the contract. Worth 2% of the government's energy spend, the innovative fixed agreement will provide stability in what the public sector pays for energy.

The deal will allow the government - via the Government Procurement Service (GPS) - to buy a portion of its energy directly from a UK-based generator at a low fixed price via an innovative Power Purchase Agreement rather than buying entirely through short-term wholesale markets which are subject to unpredictable price fluctuations.

(CD/JP)