The coal industry has been urging the Government to fund a demonstration "clean coal" power station for a decade (ENDS Report 265, pp 22-24 ). The favoured technology has been integrated gasification and combined cycle (IGCC), which offers very low emissions of acid gases and higher thermal efficiencies than conventional coal-fired plant.
Last year, the Government ruled out support for a demonstration plant, arguing that the technology was well-proven (ENDS Report 325, p 48 ). Instead, it highlighted the need for more research into CO2 capture and sequestration - seen as essential if coal is to play a significant long-term role in electricity generation.
Just before Christmas, Valleys Energy unveiled plans for a 480MW, £375 million IGCC station near Onllwyn in south Wales. The project has won backing from Welsh Secretary Peter Hain, Welsh Assembly ministers and local coal producers. Friends of the Earth Cymru also gave a "cautious welcome" to the scheme.
Valleys Energy is a subsidiary of Progressive Energy, which spun off from former nuclear generator Magnox Electric several years ago. It has applied to the DTI for consent, and hopes that construction of the station will begin in 2004 to allow commissioning by 2007. The company is also _developing proposals for a second IGCC station in north-east England.
Managing director Peter Whitton told ENDS that the station would generate electricity at a price "well below" that of a new combined cycle gas turbine (CCGT) - typically put at 2-2.2p/kWh.
In contrast, last year's energy review by the Government's Performance and Innovation Unit put the generating cost of IGCC plants at 3-3.5p/kWh in 2020 (ENDS Report 325, pp 19-23 ). Mr Whitton dismisses the PIU's figures as "some very high-level, hand-waving sums for a general case." He says that the Onllwyn plant will achieve lower costs because petcoke - a cheap residue from oil refineries - will meet up to half of its fuel demand. Moreover, he argues, transmission charges will be very low because of a shortage of generating capacity in the region.
The other main barrier to clean coal technology is its relatively high CO2 emissions. Valleys Energy says that its IGCC plant will have a thermal efficiency of 40% or more - meaning that its CO2 emissions will be some 20% lower than existing coal-fired stations, but still considerably higher than from a CCGT.
Valleys Energy claims that life-cycle emissions of CCGTs may "start to converge" with those of a coal-fired IGCC station as the UK becomes dependent on gas imports because of the energy needed to pump gas over long distances. However, it could not provide any independent data to support the_claim.
More significantly, the company has designed the plant to allow the retrofitting of equipment to capture CO2. Mr Whitton put the capital cost of this option at just £10 million, although operating costs would be very significant. The company has commissioned the British Geological Survey to explore potential disposal sites, with the main focus being sandstone strata under the Irish Sea.
In contrast to the PIU's cautious assessment of the prospects for CO2 capture and disposal, Mr Whitton says that the technological risk is "quite low" and that other legal, planning and economic barriers could be overcome rapidly with Government support.
"Given political will," he said, "it's possible to think in terms of early [CO2 capture and storage] projects coming together by the end of this decade." Measures to value carbon emissions would help to overcome the added costs, which Mr Whitton put at perhaps 0.5-0.6p/kWh.
Another unusual aspect of the project is that Valleys Energy hopes to sell hydrogen from the plant to stimulate the development of a "hydrogen economy" in the Swansea area. It is working with the Welsh Development Agency to identify potential markets in transport and stationary CHP applications. Valleys Energy is also promising to use locally produced coal, including output from the region's few remaining deep mines - an important selling point to the local community and politicians.
Mr Whitton commented: "We've no intention of being party to any new opencast consent - it would be political suicide for us to do so."
Other proposed IGCC projects are proceeding less rapidly. Coalpower, owned by former RJB Mining chief Richard Budge, has been developing plans for a £300 million, 432MW IGCC station to serve a new business park beside its colliery in Hatfield, South Yorkshire. The company has won backing from the local authority, but has yet to apply for DTI consent.
Four years ago, RJB proposed an IGCC station for the Kellingley colliery in West Yorkshire. However, the mine's new owner, UK Coal, says that the proposal is "dormant" and "would need some Government kickstart funding".