Peel Energy consortium exits UK carbon capture demo competition

London - The consortium of Peel Energy, DONG Energy and RWE npower is no longer a runner in the UK Government's carbon capture and storage demonstration competition, Peel Energy has announced. The decision follows DONG Energy's recent decision to withdraw from its role as an investment partner in the venture.

Peel Energy is committed to developing low carbon energy solutions and will continue to seek EU or UK funding to support the deployment of commercial scale carbon capture and storage technology as part of a new power station at Hunterston, according to Owen Michaelson, chairman of Peel Energy.

 "We are continuing to work with the UK and Scottish governments to develop a workable regulatory framework for new coal power stations with CCS technology that will allow investment in new state of the art power plant to provide efficient, secure baseload power and significantly lower carbon emissions. We are confident that the new regulations will be in place in time to pursue all the necessary consents and licenses for CCS technology should Hunterston be deemed to be an acceptable place for a new coal power station," Michaelson saidd

Last month, DONG Energy revealed that it had decided to not to go ahead with its planned investment in a new coal- and biomass-fired power station in Scotland. The company will instead limit is role to being a design partner in Ayrshire Power, the joint venture behind the project.

Peel Energy and DONG Energy established Ayrshire Power to exam the feasibility of building the power station at Hunterston, West Kilbride, North Ayrshire, which would use carbon capture and storage technology to capture carbon dioxide emissions. The joint venture agreement "provided opportunities for either party to exit the project at various key milestones," said Peel Energy.

Within the next decade, Scotland is likely to have insufficient generating capacity to meet its requirements for baseload electricity: the constant, reliable supply that cannot be provided by renewables such as wind and hydro. Peel and DONG Energy are exploring the possibility of a 1600-MW multi-fuel power station that would provide electricity to meet the average needs of up to 2 million Scottish homes.

The state-of-the-art facility would be fuelled by coal and up to 15% biomass, such as wood, and would deliver the highest thermal efficiency. The proposed site at Hunterston is considered to be ideal for a new power station. Clydeport, a sister company of Peel Energy, owns the port, which currently feeds several UK power stations with coal. Peel Energy is proposing to build a power station where the coal comes in, thus eliminating the need to transport millions of tonnes of coal across the UK every year.

The proposed power station would also utilise carbon capture and storage technology, a technology that can capture up to 90% of the carbon dioxide produced by a power station, thus enabling it to provide secure low-carbon energy for decades. The local economy would benefit from the development, with up to 1500 people being employed during the construction phase and up to 150 directly, and many more indirectly, once the site is operational.

Over the last year Peel Energy has been providing direction on the planning application while DONG Energy has been providing technical input on the power station design. The partners have been supported by a team of consultants.

Following a recent strategic review, DONG Energy has decided to change its status within Ayrshire Power from being an investor to a design partner.  The company linked the decsion to a separate announcement that it intends to reduce its net investment programme.

The current team, with the continued input of DONG Energy's technical experts, will pursue the project into the planning process. A section 36 application will be submitted to the Scottish Government later this year.

At that stage Peel Energy boss Michaelson said: "We can all appreciate the business drivers behind this decision. We are sorry to lose DONG Energy as an investor on this project but are pleased the relationship will continue through their design services.

"Ayrshire Power's overall strategy for the project is unaffected by this decision. We have just completed the latest stage of our public consultations with the local community and other key stakeholders and we now look forward to continuing to progress through the planning process."