What contract term am I likely to get for purchased gas and exported electricity?
Typical gas and electricity contracts are normally about up to three years. While the life of a cogeneration unit is about 20 years, this contractual term can lead to a financial uncertainty of the energy costs for the life of the project. This situation is due to the uncertainty of the future value of electricity and natural gas. Electricity generators and gas producers are uncertain as to the future impacts of carbon and the value of the various energy forms, so are reluctant to enter into firm pricing for longer periods with retailers. It is fair to say that this forward price uncertainty is probably the greatest impediment to the effective implementation of distributed cogeneration systems. One option to overcome this is to develop an agreement that provides price certainty for a fixed period followed by a period where the electricity price is linked to the prevailing market value of the cogeneration supply fuel (for example, natural gas) at that time. Whilst this approach does not
