Asda plans to save £2 million a year by buying all its energy for stores and depots directly from UK power generators.

The UK’s second-biggest grocer is expected to place its first order next month, initially supplying electricity to its stores in Scotland, initially. A new company, Power4All, will source wholesale energy for Asda's stores and depots.

Asda’s believes that, by cutting out third parties, it will access energy at more affordable prices, including renewable energy.

Initially, the grocer will source at least 5 per cent of its energy from green sources, but its long-term aim is to be 100 per cent supplied by renewable energy, meeting parent Wal-Mart’s goal.

Asda chief executive Andy Bond said: “In a volatile energy market, fixed-term contracts are no longer desirable for a business like ours. By sourcing energy direct, not only will we make significant cost savings, we will also be able to access green energy at much lower prices, helping us move towards our 100 per cent renewable target more quickly."

Asda confirmed it has no plans to enter the retail energy market at this stage.

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