Sainsbury’s gets greener by cutting out middleman

Sainsbury’s is backing a new £8 million wind project at Lochhead in Scotland, due to be completed in Summer 2009. It will consist of three, two-megawatt wind turbines, enough to power four large Sainsbury’s stores for a year – representing one per cent of the supermarket giant’s electricity usage.

Sainsbury’s said the deal struck directly with the wind farm operator, A7 Lochhead ltd, was significant in that it provided a new model through which renewable projects can secure funding.

“Because Lochhead had a guaranteed buyer with a strong credit rating, it was able to get funding for this project, so in effect, we have made it possible for a new wind farm to be built,” said a spokesperson for Sainsbury’s.

But importantly the deal, which was struck under a Power Purchase Agreement (PPA), will also help Sainsbury’s secure its energy requirements at a set price over a long period of time – an increasingly attractive option for large energy consumers, such as big retailers.

“In addition to reducing Sainsbury’s impact on the environment, the deal will also reduce the business’s exposure to price uncertainty in today’s volatile markets,” commented Chris Bowden, ceo of Utilyx, the company that brokered the deal.

Alex Hensher, founder of A7, said PPAs were an important new way to deliver renewable energy projects in the UK.

“They 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,” he said.

Sainsbury’s said it wanted to continue finding new ways to reduce its carbon footprint and was looking to make similar arrangements with other power generators in the UK.

“Customers expect us to do everything we can to minimise our impact on the environment, and this new deal is the next stage in our plan to become even more environmentally-responsible as a business,” said Neil Sachdev, commercial director at Sainsbury's.

The retail giant aims to cut its carbon emissions by 25 per cent by 2012.

The company’s Dartmouth store already uses on-site wind turbines and a biomass boiler, which has resulted in a 50 per cent cut in the shop's national grid dependence.

In another move to reduce its environmental impact, Sainsbury’s announced, last month, that it was sending all of its food waste to anaerobic digestion facilities where it will be used to create renewable electricity.