LONDON (Reuters) - E.ON UK’s Kingsnorth coal-fired power plant is still vying for funding in the government’s carbon capture and storage (CCS) competition, the government said on Thursday.
E.ON UK said on Wednesday it expected to delay building the controversial plant for up to three years because of lower demand for electricity.
“Nothing has changed with our CCS competition, E.ON has not withdrawn,” a spokeswoman for the Department of Energy and Climate Change (DECC) said.
“EON’s decision to delay a decision on their proposed project is a response to the global economic situation.”
On Wednesday E.ON said it was delaying its decision on Kingsnorth, the first coal plant in UK to be built in decades, because of lower electricity demand. But it said it remained committed to the development of CCS.
Kingsnorth has been the focus of environmental protests in the UK since it was proposed in 2006. E.ON has long been awaiting government funding to test the new technology that is meant to trap climate-warming greenhouse gases emitted by the plant and store them underground.
E.ON is one of three bidders for the UK’s government-funded project for a 400 megawatt CCS demonstration facility, which is expected to be in operation by 2014 or 2015.
“We are still taking part in the competition. We haven’t withdrawn,” the E.ON UK spokeswoman told Reuters on Thursday.
When asked about the government’s target date for the facility, the spokeswoman said: “There’s quite a lot of conversation that needs to happen now. We are going to be talking to the DECC team about the competition.”
The DECC spokesman said: “The timetable is not a deal breaker. There are a number of criteria that the projects have to meet.”
In March, E.ON said its Kingsnorth project in south-east England was one of three demonstration plant options for the German utility. It could also build demonstration plants in Wilhelmshaven in Germany and Maasvlakte in Holland.
Other two groups still in the competition are a consortium led by ScottishPower, a unit of Spain’s Iberdrola, including Shell UK Limited and National Grid, and another, led by RWE npower.
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 RWE is also to build a new plant for adding CCS.
Reporting by Daniel Fineren and Nao Nakanishi, editing by Anthony Barker