The UK government has insisted its competition to build a commercial-scale carbon capture and storage (CCS) demonstration project will go ahead despite the withdrawal of E.ON from the race.
E.ON’s Kingsnorth coal fired CCS power plant project was one of two schemes shortlisted as part of the government’s competition. However, with the market “still not conducive to building the 1600 MW supercritical power station it had become clear that Kingsnorth could not meet the project timetable,” the company said in a statement on Tuesday, just hours before the chancellor said he was committing up to GBP1bn ($1.6bn) towards CCS in his spending review, reports the Financial Times.
“Having postponed Kingsnorth last year, it has become clear that the economic conditions are still not right for us to progress the project and so, simply put, we have no power station on which to build a CCS demonstration,” said Paul Golby, E.ON UK chief executive. Last year, E.ON postponed its Kingsnorth coal fired CCS power plant project to around 2016, which would have taken it past the competition deadline date of 2014 or 2015.
The decision leaves just one contender in the competition. Longannet entered by a consortium led by Iberdrola-owned Scottish Power. Scottish Power said it welcomed the government’s “re-affirmed commitment to making the UK a world leader in carbon capture and storage”. The Scottish Power-led consortium “remains committed” to its project and “we are on schedule with our our front end engineering and design work,” it added.
The GBP1bn announced by George Osborne, chancellor, is expected to pay for just one demonstrator plant rather than the four industry had hoped for. The validation project is likely to cost GBP500m to build and GBP500m to operate, according to industry analysts.