E.On says that it is to focus its efforts in the development of carbon capture and storage (CCS) technology on a project in the Netherlands after scrapping plans for a new supercritical coal-fired plant in the UK.

The German company has announced that current market conditions are not right for the construction of a new, 1600 MW coal-fired plant in Kent, southeast England.

The project was at the heart of E.On’s CCS development plans, and had been shortlisted under the UK’s government’s CCS competition, which aims to help fund the construction of a commercial-scale CCS demonstration by 2014.

“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 Dr. Paul Golby, Chief Executive of E.On UK.

He added: “We therefore took the decision to withdraw from the government’s competition because we cannot proceed within the competition timescales.”

Kingsnorth would have been the UK’s first new coal-fired power plant for decades.

E.On’s withdrawal from the CCS competition leaves just one bidder – ScottishPower – in the process to win government funding. The UK’s Department of Energy and Climate Change (DECC) is hoping to agree terms with ScottishPower by the end of 2011.

The government said in its latest spending review that up to £1 billion of public funds would be awarded to the winner of the competition.

ScottishPower is planning to retrofit a CCS system onto its existing Longannet power plant to capture more than 2 million tonnes of carbon dioxide (CO2) per year from the plant and transport it for storage under the North Sea.

E.On submitted its plans for a CCS demonstration project to the UK’s competition as part of its project for a new coal-fired plant at Kingsnorth. Depressed power prices have made the construction of such a large, advanced power station uneconomic.

It is now planning to concentrate CCS development efforts on its Maasvlakte project in the Netherlands, where it wants to build a 250 MW CCS unit on a power plant that is currently under construction. E.On is currently working with Electrabel, GDF Suez and the Rotterdam Climate Initiative to conduct a joint CCS feasibility study on the project.

“As a Group we still believe that carbon capture and storage is a vital technology in the fight against climate change and will now be concentrating our efforts on our Maasvlakte project in the Netherlands as we believe the lessons from that project can be brought back to the UK for future generation CCS projects,” said Golby.

“We would obviously also wish Scottish Power well as they look to develop their own project at Longannet.”

E.On is currently undertaking a front end engineering and design study at Kingsnorth and aims to complete this to gather valuable information on CCS that could be shared more widely.