RWE buys into the UK's CCS competition

15 December 2008

RWE npower has entered the competition to build the UK’s first commercial-scale demonstration of carbon capture and storage (CCS) technology by creating a joint venture with Peel Energy and Denmark’s DONG Energy.

Npower, the UK subsidiary of German utility RWE, has taken a 75 per cent stake in Peel Energy CCS Ltd., which is one of three groups that have pre-qualified for the UK government’s CCS demonstration competition. Peel Energy CCS was formerly jointly owned by DONG and Peel Energy, which is part of UK infrastructure development company Peel Holdings.

The creation of a new joint venture resolves a dispute between RWE npower and the government, which started in July 2008 when the utility failed to pre-qualify for the competition. The other companies taking part in the competition are E.On UK and Scottish Power Generation.

The restructured Peel Energy CCS will now work towards submitting a final proposal to the government in early 2009. The winning bidder is expected to be announced in late 2009.

The competition stipulates development of a CCS unit capturing 90 per cent of carbon dioxide emissions from a coal-fired unit of at least 300 MWe in size, with storage of the CO2 offshore in the North Sea.

RWE npower says that if their bid succeeds, the project most likely to host the CCS demonstration will be npower’s proposed Tilbury plant, a 1600 MW supercritical coal-fired power station in Essex. Peel and DONG have also drawn up plans for a 1600 MW coal-fired plant at Hunterston in Ayrshire, Scotland, although this project is not as advanced in the scoping process as Tilbury.

“We have been collaborating with Peel for some time, exploring the possibility of constructing a new power plant in the UK and it is important that we take into consideration the issue of CO2,” said Bent Christensen, Senior Vice President of DONG Energy. “Our combined expertise and commitment to this technology represent a strong and compelling proposition.”

Participation in the government’s competition is a key element of RWE’s strategy to develop and commercialise CCS technology. The company has already commissioned a separate test facility at its Didcot coal-fired power station in Oxfordshire, capturing CO2 using both post-combustion (PCC) and oxyfuel carbon capture methods.

RWE npower is also due to begin construction of a CCS pilot plant at its Aberthaw coal-fired station in Wales next year. The plant, due to be completed in 2010, will be the first to capture CO2 direct from a commercially operating power station in the UK.

“Energy companies cannot commit to commercial investment in CCS on a new power station until the technology is proven and seen to be economically feasible,” said Andrew Duff, RWE npower CEO. “This could be a major barrier to the construction of much needed new build power plant and so this project is vital to unblocking the potential for coal to play its part in the UK’s long term energy mix.”

RWE npower believed that its projects at Didcot and Aberthaw put it in pole position to win the government’s CCS competition, the winner of which will be awarded funding to demonstrate the technology. It has agreements with BASF and The Linde Group to develop CO2 capture processes, and also has partnership agreements with another five companies – including BOC and Tullow Oil – to deliver its CCS strategy.

DONG Energy is also actively involved in the development of CCS technology. Its CCS pilot plant at Esbjerg power station in Denmark, part of the CASTOR R&D project, is Europe’s largest CO2 capture facility to date and has been capturing the gas since 2005.

Peel brings experience in engineering and delivering major infrastructure projects to the partnership, says npower.

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