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25. Title: Platts Headline: UK Longannet CCS project canceled Date: 20/10/2011 Scottish Power, along with Shell and National Grid, had been negotiating funding support for the project at Longannet, which would store extracted CO2 under the North Sea. The government had offered GBP1 billion towards the cost of a pre-commercial post-combustion facility on around 330 MW of existing generating capacity. The cost of a precommercial CCS project was put at around Eur1.5 billion last year. That funding will now be available to other planned CCS projects. Among those planning CCS projects in the UK are Drax/Alstom/National Grid (426 MW oxy-fired capture at Drax power station), Peterhead (SSE, 385MW post-combustion capture), Hunterston (Peel Energy, post-combustion), Eston Grange (Progressive Energy, integrated gasification), Don Valley (2Co Energy/National Grid, integrated gasification) and North Killingholme (C-GEN, integrated gasification). Reaction to project collapse It had been known for some time that the Longannet CCS project was struggling because it was tethered to the unviable retrofit of an existing subcritical coal plant, an industry source told Platts.

The Longannet carbon capture and storage project will not receive government funding and alternative CCS projects in England and Scotland are to be considered in its place, the Department of Energy and Climate Change said Wednesday. DECC said in a statement it would not proceed with the Scottish Power-led Longannet project after negotiations broke down, but reaffirmed its commitment to the technology. “Despite everyone working extremely hard, we’ve not been able to reach a satisfactory deal for a project at Longannet at this time, so we’ve taken the decision to pursue alternative projects,” Energy Secretary Chris Huhne said. “CCS is a key technology for the UK’s long term energy strategy. A billion pounds is enough to demonstrate this vital new technology in the UK, but it’s got to be spent in the most effective way,” said Huhne. Prime Minister David Cameron told Parliament earlier Wednesday that the GBP1 billion ($1.583 billion) funding for a large CCS demonstration project was still on offer despite problems in negotiations with Scottish Power and its partners over the project at the Longannet coal-fired power station in Fife, Scotland.

“The old power station would have needed rejuvenating, but still would not have reached the efficiency levels of modern supercritical technology,” the source said. “It was always going to need selective catalytic reduction equipment fitted to meet the Industrial Emissions Directive, costing several hundreds of millions of pounds. Finally, the carbon price floor came along and only added to the burden,” said the source. A business plan for a power station in the UK had to be viable in its own right and should not be confused with a business plan for a CCS demonstration, the source said. Investing in Longannet under current market conditions was not viable, he said, CCS demonstration or not. New generating units using gasification technology or oxyfuel firing could be better placed to pick up some of the CCS funding, as could a retrofit to a gas plant such as SSE’s Peterhead in Scotland, the source said, but “a new shape to the competition is needed,” he said. “If you just re-open the old one you’ll end up with the same result.” UK’s Drax told Platts earlier Wednesday they would be interested in reapplying for the government funding. “We welcome the fact that the one billion funding is preserved. The option for UK government funding is of interest to us,” said Melanie Wedgbury of Drax. Drax has also submitted its CCS project as one of 13 being considered by the European Investment Bank for funding under the NER-300 scheme. 39

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Communications Report 2011

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