Technical Note SB48: Wood fuel supply contract - price escalation
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For contracts with a term longer than one year the seller may wish to propose a price escalation clause in the contract. There are many things that may affect future prices and sellers and buyers may agree an escalation clause specific to their locality and the sources of biomass fuel being offered. The base price for the biomass supplied would be adjusted annually on the anniversary of the contract according to any movement in the indices set out in the relevant clause of the sale and purchase contract. However, offering a simple percentage increase, or not including any escalation clause, can be attractive for some buyers as their fuel is then fixed for the duration of the contract.
Related documents of interest
The price escalation should be read in conjunction with the full guidance on selling and buying solid biofuels in Technical Guide 6 - Contracting to delivery quality biomass fuel to customers
A model contract for buying and selling solid biofuels is