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Clean coal projects take a hit as Powerfuel enters administration

  • 13 years ago (2010-12-11)
  • Junior Isles
Europe 1072 Nuclear 644

Powerfuel Plc which had hoped to develop the UK’s first commercial scale clean coal plant with carbon capture and storage (CSS) has gone into administration due to the high cost of the project.

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Powerfuel Plc, the Doncaster, England-based parent company of Powerfuel Mining Ltd. and Powerfuel Power Ltd., had secured £160 million of European Union funding to demonstrate CSS plans at its 900 MW Hatfield integrated gasification combined cycle (IGCC) power station. It had received permission to build the power station portion of the plant

“Developing low-carbon energy generation requires a large amount of capital up front, and the CCS development falls £635 million short of the investment needed to progress the project beyond the preliminary stage,” said Richard Fleming, joint administrator and UK head of restructuring at KPMG. “The substantial funding gap has not been addressed in the past 12 months, and accordingly the project has stalled.”

The British coalition government is running a competition to provide £1 billion in funding for the first CSS demonstration project. A consortium led by Iberdrola-owned Scottish Power is the only bidder left in the competition. The government also promised subsidies for three more CCS projects via a levy on electricity bills.

Powerfuel Mining, owners of a coal mine at Hatfield, northern England, and Powerfuel Power will not be affected by the administration, KPMG said. KPMG said its central goal was to “sell the share capital of the coal mining and CCS development project, which sits in Powerfuel Plc.”

This failure of one of the UK’s largest CCS projects has called into question the UK governments market leading ambitions in the sector.

However, the Department of Energy and Climate Change (DECC) has said the government remains fully committed to the technology which, along with renewables and new nuclear, makes up one of the government's three so-called ‘energy pillars’ for a low-carbon future.