Drax said on September 25 it was still committed to fulfilling its current work on a CCS feasibility and technology development study, but would not be investing further once that’s done, at which point it will withdraw as a partner of project developer Capture Power, on whose shoulders the burden now lies to take it forward.
The two-year project – being taken forward by the Capture Power partnership – made up of Drax, Alstom and BOC – is looking at the potential to capture up to 90% of carbon emissions from a new coal-fired power station and safely store them beneath the North Sea.
The project is due to conclude during the next 6-12 months.
Drax has also confirmed that while it would cease to commit further investment, it will continue to make the site it owns, along with the infrastructure at the power plant, available for the project to be built.
“We remain fully committed to completing what we’ve signed up to – the completion of a study into the feasibility and development of world leading technology that could result in dramatic reductions in carbon emissions produced by power stations and heavy industry,” Drax Group operations director and Capture Power board director Pete Emery said.
“We are confident the technology we have developed has real potential, but have reluctantly taken a decision not to invest any further in the development of this project.
“The decision is based purely on a drastically different financial and regulatory environment and we must put the interests of the business and our shareholders first.
“We will focus our resources on the areas which we can deliver best value, particularly working with government to explore the potential for converting a fourth generating unit to run on sustainable biomass.
“Drax still believes this project has great potential and we have announced that the site at the Drax power plant, along with our existing infrastructure remain available for the project to be built.”
Emery also said that several “critical reversals” in government support for renewable energy had made a severe impact on Drax’s profitability’
Capture Power CEO Leigh Hackett also said following Drax’s announcement that the JV was still committeed to delivering White Rose, which has been hailed by the coal industry as a way that coal can be part of the solution to the world’s emissions issues.
However, World Coal Association policy advisor Liam McHugh said the ultimate litmus test would be in the coming months when the final investment decision is made by the government.
“Questions should be raised over the UK’s energy security,” McHugh said.
“Coal still provides a significant chunk of the UK’s energy pie and is important in times of high-demand, such as in colder winters.”
In recent years, aging coal-fired power stations have closed without equivalent energy sources coming online.
Last month, following the most recent closure, ScottishPower said that spare capacity would fall to 53 gigawatts, below the estimated peak demand of 56GW – which McHugh said “hardly provides confidence to the Secretary of State’s recently announced priority of ‘keeping bills as low as possible for hardworking families and businesses and powering the economy while decarbonising in the most cost-effective way’.”
McHugh also noted that spending on energy projects played a major role in the UK’s recovery following the global financial crisis.
A recent report by the Department of Energy and Climate Change said energy projects made up 60% of the country’s total infrastructure project pipeline totalling over £200 billion.
“Change to energy policy, such as dropping support for biomass, hurts investor confidence,” McHugh said.
“The UK needs a clear energy strategy. Acknowledging the continuing role of fossil fuels – including coal – will be a major part of this outcome.”
