Nuon and E.ON Compete for $253 Million CCS Subsidy Earmarked for Netherlands

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Researched by Industrial Info Resources (Sugar Land, Texas)--Dutch energy company Nuon (Amsterdam) has made a bid for a $253.81 million (180 million euro) subsidy that has been set aside by the European Commission (Brussels, Belgium) for large-scale carbon capture and storage (CCS) projects in the Netherlands. This is part of the $8.5 billion (6 billion euro) subsidy made available by the commission to all of Europe. Nuon's bid for the subsidy is on the strength of its 1,200-megawatt (MW) Nuon Magnum multi-fuel-based power plant to be set up in Eemshaven in the Groningen province. Nuon aims to capture 85% or 1.6 million tons per year of the carbon dioxide (CO2) emitted. Nuon's closest competitor is the upcoming 1,070-MW coal-fired power plant being set up by a consortium led by German power and gas company E.ON AG (OTC:EONGY) (Dusseldorf, Germany) at Maasvlakte in Rotterdam. E.ON Benelux is setting up a carbon capture plant that will capture 30% of the CO2 emitted by the new plant. The CO2 capture plant is scheduled to be operational by 2015. Brussels will be making a decision about the subsidy by the end of this year.

The Nuon Magnum power plant will be based on gasification technology and will be able to produce electricity from biomass, coal and natural gas. Of all the techniques used to generate power from fossil fuels, coal gasification, along with biomass and natural gas, is the least polluting technique currently available. By using this technology, the new plant is expected to emit between 2 million and 2.5 million tons less CO2 per year. During gasification, coal is first converted to synthetic gas (syngas), which is cleaned and desulfurized, and is then used to fuel the power plant. It is relatively simple to remove almost 90% of CO2 from syngas. Carbon capture, in combination with coal gasification, is a new concept that is being tried by Nuon for the first time. The company has split the development of the new multi-fuel power plant into two phases. The natural-gas-fired power plant will be set up in the first phase, while the second phase will involve implementation of the coal and biomass gasification technology. Construction of the Nuon Magnum plant was halted for a year from May 2008 because of delays in issuing permits. The company has now begun activities to restart construction of the plant. Nuon is already using the coal gasification technology at its power plant at Buggenum in the Limburg province. By using CCS technology, Nuon is supporting the Dutch government's targets towards climate change and protection.

The Maasvlakte power plant 3 will be E.ON Benelux's third coal-fired power plant at Maasvlakte. It will use pulverized coal to produce steam, which will be converted into electricity in a turbine generator set. The technology allows for an efficiency of greater than 46%, which translates into a drop of about 20% in CO2 emissions per kilowatt-hour. E.ON will also be using biomass such as wood chips in the new plant. The plant is expected to be operational from 2012.

The European Commission intends to allocate $2.2 billion to CCS and large-scale wind power projects and another $3.4 billion toward enhancing gas and electricity supply infrastructure. The CCS projects have been observed to be the most controversial, given that the technology in most cases is unproven and as pointed out by environmentalists, all the eligible projects are being implemented by companies that were highly profitable during the economic downturn. Environmentalists complain that all these companies continue to invest their own capital in CO2-emitting projects while bidding for subsidies to set up CCS technology.

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