Isra-Mart srl:Updated: SSE resurrects Peterhead gas carbon capture plans

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New EU and UK subsidies have convinced Scottish and Southern Energy (SSE) to revive plans for a carbon capture and storage (CCS) project at Peterhead power station, four years after it mothballed the project blaming a lack of Treasury support.

And it has also been reported that Peel Energy has asked for EU funds to fit CCS to a planned coal and biomass-fueled power station at Hunterston, Ayrshire.

SSE announced today that it has teamed up with Shell, arch rivals of its former partners on the project BP, and Petrofac subsidiary CO2 DeepStore to develop a full chain, post-combustion facility capable of capturing the CO2 from one of its 385MW combined cycle gas turbine units at the Peterhead power station.

Captured gas will be passed along an existing pipeline to the coast, before it is compressed and pumped through a proposed undersea conduit and stored in a disused gas reservoir controlled by Shell.

The original project was ineligible for the first round of the UK's CCS demonstration programme, which concentrated on coal-fired power stations. But in November last year, the UK government announced that the second phase of its £9bn CCS competition – the three projects that will follow the first demonstration plant – would be open to projects on gas-fired power plants as well as coal-fired power plants.

At the same time, the EU unveiled its €4bn NER300 programme which is intended to fund CCS and renewable energy infrastructure.

SSE chief executive Ian Marchant said the emergence of these potential new funding streams had encouraged the firm to restart the project, adding that the company had today submitted a proposal for funding under the NER300 process.

He also welcomed the government's decision to support gas as well as coal-fired plants, but warned the high capital costs of CCS would require further support from the UK and Brussels.

"Given the work already undertaken, the project can proceed at a pace at least equal to other CCS projects in Europe," he said. "I hope that our submission will successfully persuade others that this is the case."

Meanwhile, Peel Energy is also working with Petrofac, alongside engineering and construction company Doosan Power Systems to build a new coal-fired power station fitted with CCS capabilities at the existing Hunterston site. Danish company DONG energy withdrew from the project in 2009.

An announcement on whether either project has succesfully secured EU funding is expected by the end of next year, meaning work could start in 2013.

CCS technology is highly regarded by the Department of Energy and Climate Change (CCS) and, along with renewables and nuclear, comprises one of the three pillars of Chris Huhne's energy policy.

Only last week, deputy prime minister Nick Clegg said CCS offered export opportunities of up to £6.5bn a year by 2030, and could help create 100,000 new high-skilled jobs while cutting UK carbon emissions.

But despite political support, the history of the UK's CCS sector remains chequered, with the government facing multiple withdrawals from its £1bn competition to find a suitable demonstration project and one of the leading lights in the industry, Yorkshire-based Powerfuel Plc, being forced into administration.