E.ON UK’s 1.275 MW CHP Plant Will Feed Heat to LNG Terminal

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Researched by Industrial Info Resources (Sugar Land, Texas). After revisions on the specifications for a new $975 million power station at the Isle of Grain in Kent, England, over the past year, E.ON UK (NYSE:EON ) (Dusseldorf, Germany) announced at the end of March that a deal has been signed. National Grid’s adjacent LNG terminal was selected for the supply ‘waste’ heat from the 1,275 MW combined heat and power plant (CHP), which is now scheduled for commissioning in 2009.

The new power station will be constructed under a turn-key contract with Alstom (FRA:ALO ) (Paris, France) who will install three high efficiency Alstom GT26 turbines. The power project, which will be one of the world’s largest CHP plants, will result in the reduction of up to 350,000 tons of carbon dioxide emissions per annum from the LNG terminal. The project will also see a reduction in the amount of heat discharged by the terminal into the River Medway. The CHP investment also benefits from government measures designed to encourage CHP, including exemption from the Climate Change Levy, EU Emissions Trading and possibly the Enhanced Capital Allowance (ECA), although there is currently uncertainty as to whether this project will qualify for ECAs.

EO.N claims that the Grain power project will make it the first power utility company to successfully build major new generation, incorporating a CHP, in line with the government’s recently revised consent guidelines. Currently EO.N runs thirteen CHP projects in the UK, supplying customers with 600 MW of power and 1,000 MW of heat.

Dr. Tony Cocker, E.ON UK’s Managing Director of Energy Wholesale, said, “We’re in the race to replace many UK power stations with new schemes that are more efficient and cleaner than anything that has gone before and today’s announcement shows our commitment to achieving that.” He also made the claim that E.ON was the only UK company committed to reducing the carbon intensity of its generation by 10% by 2012. The company is working on a range of major renewable energy products in addition to clean thermal projects in the UK.

At the end of March the environmental group WWF released a study indicating that CO2 emissions from UK power plants have risen 30% since 1999, and in 2006, reached the highest level since 1992. The study said that emissions reached a level of 178 million tons in 2006, which was a 6% increase on 2005. This increase was attributed to the energy sector’s return to coal-fed generation as a result of high gas prices and mounting demand for electrical power. WWF said that with the increasing emission levels it was concerned with the government’s ability to reach the 2020 target of 26% - 32% reduction in emissions.

The UK government claims that emissions are much lower than in 1990 but admits they have risen in the past few years. They are holding to the standpoint that future emissions could be curbed as new low-carbon generation incentives take effect.

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