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Company Buyout Revives 900-MW CCS Project in the UK

The 900-MW Hatfield power project, one of the UK’s first carbon capture and storage (CCS) coal-fired projects, was revived on Monday with the purchase of Powerfuel Power Ltd. by 2Co Energy, a new company backed by private equity fund firm TPG Capital. The project has now been renamed Don Valley Power Project, and it is set to begin operations between 2015 and 2016, capturing and storing up to 5 million metric tons of carbon dioxide per year under the seabed of the North Sea.

The project had in December 2009 garnered a €180 million (US$259 million) grant from the European Union (EU) as part of the EU’s European Energy Programme for Recovery, which seeks to accelerate the development of CCS technology. But the former owners of the South Yorkshire project had told the UK government that they lacked nearly €723 million needed to build the plant.

2Co Energy on Monday said it had provided a €45 million pre-financing payment, enabling the money to be used to further the project. The company said that with the acquisition, the project now has "both the technical and financial robustness" needed to be successful in its application for further funding under the EU’s New Entrant Reserve 300 scheme.

2Co Energy and project partner National Grid now plan to select the best carbon storage site, which will include conducting a technical and economic evaluation of potential sites and enhanced oil recovery projects in the central North Sea. National Grid is expected to focus on saline formations in the Southern North Sea, which could be used to store the greenhouse gas for future 2Co Energy projects in Yorkshire.

National Grid has already begun work on transportation and storage options, including designing a carbon dioxide pipeline that could link up with other carbon dioxide emitters in the Yorkshire-Humberside region.

Sources: POWERnews, 2Co Energy

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