UPDATE 1-Shell,Nat Grid join ScottishPower for CCS in UK

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LONDON Aug 13 (Reuters) - ScottishPower said Shell UK Limited (RDSa.L) and National Grid (NG.L) are joining its consortium to enter a government competition to build a carbon capture and storage (CCS) demonstration plant. ScottishPower, a unit of Spain's Iberdrola (IBE.MC), said in a statement on Thursday the consortium was in the process of submitting a bid for the competition.

ScottishPower's consortium is one of three groups short-listed for the government sponsored CCS project, which should have a minimum capacity of 400 megawatts and aims to be in operation by 2014.

The government is expected to pick two out of the three by early next year and fund a feasibility study on the two before making the final decision. The other two consortiums are led by Germany's E.ON (EONGn.DE) and RWE npower (RWEG.DE).

Industry sources said the government was likely to provide around 1 billion pounds for the first demonstration project.

It has announced it would support three other CCS demonstration projects, but no details are yet available.

ScottishPower plans to retro-fit CCS to its existing coal-fired power generator in Longannet, while E.ON and RWE are to build a new plant for adding CCS.

"The fact that a company of the size and scope of Shell has chosen to join our Carbon Capture consortium is a considerable coup and a significant boost to our bid," said Nick Horler, chief executive of ScottishPower.

(Reporting by Nao Nakanishi; Editing by Keiron Henderson)