The U.K. government is seeking funds from the European Union for 12 projects under a 4.5 billion-euro ($6.5 billion) program to promote low-carbon energy.
The projects will compete for funds generated by the sale of 300 million allowances to emit carbon dioxide under the EU's New Entrants' Reserve initiative, the U.K. Department of Energy and Climate Change said today in a statement. At a carbon price of 15 euros ($21.50), less than today's price, that could raise about 4.5 billion euros, the government said.
Seven proposals are for carbon capture and storage, which gathers emissions for storage in depleted oil and gas fields. The remaining proposals were for innovative renewable technologies including four tidal plants and an offshore wind project. The European Investment Bank will evaluate those before the commission awards funding next year. At most three per member state can be supported, DECC said.
"Taking forward these sorts of technologies will be crucial to our move to a low-carbon economy, providing green jobs as well as helping us lower emissions and increase energy security," Energy Minister Charles Hendry said.
Carbon Capture Plants
Scottish Power Ltd., a unit of Spain's Iberdrola SA (IBE), will seek funds for CCS technology at its coal-fired power station at Longannet. That project is the only entrant in a separate U.K. funding competition that will award as much as 1 billion pounds ($1.6 billion), the largest confirmed commitment to a single commercial scale CCS project in the world, according to DECC.
"U.K. projects accounted for nine of the 22 European CCS projects that originally applied for NER 300 funding," said Kieron Stopforth, an analyst at Bloomberg New Energy Finance. "That the majority of those are progressing shows for now U.K. CCS is in good health and the government's creating a stable policy regime."
Scottish & Southern Energy Plc (SSE) will seek EU cash to develop CCS at its gas-fired power station in Peterhead, Aberdeenshire.
"It's good news, but only the next step in the process," Justyn Smith, a Perth-based spokesman for Scottish & Southern, said by telephone. "It could be sometime before the project becomes reality."
Four Demonstrations
The U.K. government said it intends to fund four demonstration CCS projects as it bets on the technology to help tackle climate change, though it scrapped a tax on power consumers designed to fund them in March saying it would fund them by general taxation.
"The competition's long timescale means this wave of European projects won't start construction until funding's finalized," Stopforth said. "Unlike in the U.S., where for instance construction has started at Mississippi Power's Plant Ratcliffe CCS project."
Ayrshire Power Ltd. plans to build a new 1,852-megawatt plant in Hunterston with carbon capture kit, the third Scottish CCS project proposed.
It shouldn't be a case of "either/or", Muir Miller, project director at Ayrshire Power, said in an e-mailed statement. "It should be a case of the regulators and the operators working out how best to gain the maximum advantage for this country, for Scottish jobs and our wider economy."
Alstom and Drax
A CCS initiative by a group including Alstom SA (ALO) and Drax Group Plc (DRX) at a site in Selby, North Yorkshire, will move forward, as will the Don Valley carbon capture project owned by 2Co Energy Ltd., a British emissions-reduction company backed by U.S. private equity firm TPG Capital.
Progressive Energy Ltd. is leading a group whose CCS project in Teeside, North England, went through alongside a program in Yorkshire by C.GEN, a company based in Belgium.
DECC also proposed initiatives that harness the power of waves and tides including the world's first demonstration tidal array by Scottish Power Renewables on Scotland's west coast. MeyGen, a group including Morgan Stanley (MS), is planning a project that includes Rolls-Royce Group Plc (RR/) and Atlantis Resources Corp. tidal turbines as DECC estimates wave and tidal stream energy could provide as much as 20 percent of the U.K.'s current electricity demand.
The Pentland Orkney Wave Energy Resource project that'll use Aquamarine Oyster and Pelamis wave energy converters off the coast of the Orkneys in Scotland was also put forward alongside the Kyle Rhea Tidal Turbine Array that will deploy devices made by Marine Current Turbines.
One offshore wind project, the Blyth Britannia initiative that'll use 10-megawatt wind turbines made by Clipper Windpower Ltd. in Northumberland, will also compete.
