News / Centralised energy deal promises savings up to £100m

A new centralised approach to buying energy could reduce the NHS energy bill by up to £100m a year, NHS England has announced.

Jacqui Rock (pictured), NHS England chief commercial officer, trailed the new deal at the HFMA annual conference at the beginning of December, describing as ‘crazy’ the way energy was bought in 200 different ways.

In a letter to NHS senior leaders at the end of 2023, she said that the current 200 energy contracts in place across English trusts involved different arrangements, with varying value and purchasing strategies. 

Instead, NHS England and Crown Commercial Services (CCS) have now agreed to develop an NHS specific energy agreement. Use of the Supply of Energy 2 framework is claimed to have the potential to save between £60m and £100m a year over an initial three-year agreement. The new NHS basket will also include additional energy management support for every integrated care system, a bill validation service and a full energy bureau service.

The new deal will deliver bulk discounts based on consumption volume. And the deal should also deliver greater price stability and resilience to external events, as well as increased budget predictability for trusts.

However, use of the new deal is not being mandated. Trusts that are existing CCS NHS customers will automatically benefit from the new energy basket, with contracts moved to the new agreement between now and March. Other trusts will be supported to move to the new arrangements if they choose to do so. Trusts have been asked not to enter into any new energy arrangements without first speaking to NHS England.

Ms Rock said that the NHS took its responsibility to the British taxpayer seriously. ‘The NHS is one of the biggest commercial organisations in the country and, by purchasing energy centrally, the health service is using its commercial muscle power to ramp up value for money and unlock significant savings to invest into patient care,’ she said.

The agreement also includes targets to support the aim of moving to 100% renewable energy as part of the commitment to deliver net-zero carbon emissions across the NHS.