European Energy Firms Rush For Carbon-Capture Funding

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Energy companies throughout the U.K. have joined the rush to secure a share of a 4.5 billion-euro ($6.2 billion) fund from the European Union (E.U.) for carbon capture and storage (CCS) projects.

Scottish and Southern Energy plc (OTC:SSEZY) (SSE) (Perth, Scotland), Ayrshire Power Limited (Glasgow, Scotland), and ScottishPower (Glasgow) have confirmed that they have made separate applications for funding from the New Entrants Reserve 300 (NER 300) funding programme. The 4.5 billion-euro ($6.2 billion) NER300 fund will be raised through the sale of 300 million emission allowances on the E.U. Emissions Trading System (ETS). The funds, which were announced last November, will be used to support up to eight CCS projects. For additional information, see November 11, 2010, article - E.U. Unveils 4.5 Billion Euros for Carbon Capture and Renewable Energy Projects.

SSE this week announced that it is seeking funding from the NER 300 programme for its proposed CCS demonstration project at the 1,840-megawatt (MW), gas-fired power station in Peterhead, Aberdeenshire. The company also revealed that it is partnering with Shell U.K. (London, England) and Petrofac subsidiary CO2 DeepStore for the offshore transport and storage elements of the proposal.

The project will involve creating a full chain, post-combustion CCS facility capable of capturing the CO2 from a 385-MW, combined-cycle gas turbine unit at Peterhead Power Station. Captured CO2 then will be transported via an existing underground pipeline to St. Fergus for further compression, and then transported via an undersea pipeline to an existing gas reservoir in the North Sea, owned by Shell U.K.

"If long-term targets for reducing emissions are to be met, CCS technology must be applied as widely as possible," said Ian Marchant, the chief executive officer of SSE. "We therefore welcomed the government's decision to include gas-fired generation plant in its CCS demonstration programme. However, the development of a commercial-scale CCS demonstration project presents significant challenges and will require appropriate levels of support from both the E.U. and U.K. government. I believe Peterhead represents the best site in the U.K. for a gas CCS project, and our co-operation with Shell and Petrofac strengthens this proposition even further. Given the work already undertaken, the project can proceed at a pace at least equal to other CCS projects in Europe."

ScottishPower also has confirmed that it is seeking NER 300 funds for its CCS demonstration project at the Longannet coal-fired plant. The company signed up partners Shell U.K. and National Grid plc (NYSE:NGG) (London) in 2009. For additional information, see August 20, 2009, article - ScottishPower Signs Shell, National Grid as CCS Partners.

Ayrshire Power, which was formed by Dong Energy (Fredericia, Denmark) and Peel Holdings (Manchester, England) in 2008, has applied for NER 300 funding for its proposed coal and biomass facility at Hunterston, North Ayrshire, Scotland. The bid has been made by partner Peel Energy Carbon Capture and Storage Limited (PECCS), a sister company within the Peel Group (Manchester, England).

Muir Miller, project director at Ayrshire Power, commented: "Our NER 300 funding submission is another important milestone in the process, and demonstrates our commitment to delivering a project which, together with other CCS initiatives, will take Scotland one step closer to becoming a world leader in pioneering CCS technology. Our application for NER 300 funding has been submitted to the U.K.'s Department of Energy and Climate Change (DECC), which will carry out an initial assessment over the next few months. It is expected that the application will be submitted to the European Commission for detailed consideration in May 2011."

Ayrshire Power applied for planning consent for the 1,600-MW, multi-fuel Hunterston power plant last March. For additional information, see March 22, 2010, article - Planning Application Submitted for 1,600-Megawatt Scottish Coal-Fired Plant.

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