Two carbon capture and storage (CCS) projects have already thrown their hat into the ring just one day after the government announced a new £1bn competition to develop the new technology.

They are: Teesside Low Carbon, a consortium of BOC, International Power, National Grid, Fairfield Energy, Premier Oil and Progressive Energy, who said their planned 450 MW IGCC project "would form the anchor for the development of a power and industrial CCS cluster in Teesside and the wider North East of England".

If built, around 85% of CO2 emissions will be captured and stored under the North Sea. Like several other potential contenders, the plant could also be used to produce decarbonised hydrogen fuel. A network for disposing of CO2 from other power plants and industrial processes in Teesside and the North East would also probably be created.

Capture Power is the second entrant; a consortium formed by Alstom, Drax and, again, BOC, which is part of the Linde Group. It plans to capture emissions on the Drax coal power station site, Britain's single worst emitter of greenhouse gases.

Nicknamed the ‘White Rose CCS Project' after the county symbol of Yorkshire, the group aims to form another CCS cluster, and capture emissions from a 436 MW oxy-fired project in Selby, North Yorkshire.

A third cluster, the Don Valley CCS project based around a 650MW integrated gasification combined cycle (IGCC) power station in Stainforth, Yorkshire, is also expected soon to announce its intention to participate. Capture Power said it will collaborate with the developer of this project, 2Co Energy, and National Grid via its 'Humber Gateway'. Last month, South Korean giant Samsung took a 15% stake in the company.

Other British CCS projects and potential entrants include:

  • Ayrshire Power's co-firing coal and biomass project with owners Peel Energy and DONG Energy, at Hunterson, Scotland
  • SSE's post-combustion capture project, retrofitted to an existing gas CCGT power station at Peterhead, Scotland
  • Ferrybridge, managed by SSE, Doosan Power Systems and Vattenfall, supported by the Technology Strategy Board, DECC and Northern Way, already capturing 100 tonnes of carbon dioxide a day from a 5 MW coal-fired plant
  • C.GEN's new 450 MW IGCC power station (pre-combustion with CCS on the coal-feed, but also sustainable biomass) in Killingholme, Yorkshire
  • Caledonia Clean Energy Project, managed by the Seattle-based Summit Power Group with National Grid and Petrofac, to develop a full-chain commercial-scale CCS plant in the Port of Grangemouth on the Firth of Forth.

 

2Co Energy agreed with the government's preference for a ‘cluster approach’ to supporting CCS projects in the UK, as economies of scale would allow the UK’s clean electricity goals to be met at least cost. Lewis Gillies, its Chief Executive, said: “The government must support UK projects that are ready to go and can make the biggest difference to the environment, jobs and the economy.

The £1 billion competition

Announcing the ‘CCS Commercialisation Programme’, energy and climate change secretary Ed Davey said he was looking to achieve “a new world-leading CCS industry," which "could be worth £6.5bn a year to the UK economy by late next decade as we export UK expertise and products".

To support his stance he also announced £125 million funding over four years for research and development, including a new £13 million research centre at the University of Edinburgh.

The government's first CCS competition ended badly, with all participants withdrawing and four years of potential development lost.

The CBI expressed hope that this one will be completed as quickly as possible. Rhian Kelly, its director for business environment policy, said: "If we are to gain any advantage from developing this important technology in the UK, the government cannot afford to waste this opportunity”.

Because of the lost time, the UK is already lagging behind projects in the US.

Projects will be financed through a combination of direct capital grants and being able to earn revenue from the sale of clean electricity in a reformed electricity market. Some support is also expected from Europe.

The Department of Energy and Climate Change (DECC) is still looking to determine, with CCS developers, an appropriate minimum electricity price level for the technology to be awarded to projects through so-called contracts for difference (CFDs), on top of the competition funding.

It's not clear how many projects will finally be selected or how much each will receive. But potential entrants must let the government know by 13 April and the deadline for submitting for applications is 3 July.

Amongst the entry conditions are the need for a power plant with carbon capture facility on the British mainland and access to a nearby offshore storage site.

The successful projects could sign front-end engineering and design contracts by the end of this year or in early 2013, with operation expected to start between 2016 and 2020, although the government would prefer if it was sooner.

"(CCS) could be an absolute global game-changer. We think this could be a hundred thousand jobs to the UK in the 2020s," said energy minister Charles Hendry on Tuesday.

European funding

The European finance is through the New Entrants Reserve (NER), a funding programme for CCS and innovative renewable technology demonstration projects.

The problem is that it is funded through the auction of 300 million EU ETS allowances; 200 million in 2011/2012 and 100 million at an unspecified future date.

But the price of these allowances is at an all-time low. It is therefore likely that there won't be enough money to support the original number of projects that was anticipated: up to eight CCS and 34 renewable technology proposals.

The NER will support a maximum of three projects in any Member State. However, the low carbon price means that the total amount of NER funding is likely to be lower than had been anticipated, and the total number of CCS projects that will be supported is likely to be small.

Potential projects have been evaluated by the European Investment Bank. Its deliberations on the original six applicants from the UK were passed to the European Commission on 9 February. The EC will announce its final decision on which projects it will support in the second half of 2012.

As part of its deliberations on whether to set aside allowances to support the carbon price, EU environment ministers will meet on 19 April, according to a draft note on Tuesday.

Story: David Thorpe, News Editor