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A second phase of carbon capture and storage projects could follow the two awarded a share of £1 billion, Ed Davey hinted on Monday.
As government confirmed funding for Peterhead and White Rose under its £1 billion commercialisation competition, it officially deselected two other schemes on the reserve list.
In a blog, the energy secretary assured the unsuccessful developers that government’s plan for CCS “does not stop at these first projects”.
“We envisage three phases of CCS in the UK,” said Davey, “with a second phase of projects possibly following Peterhead and White Rose projects on a similar timescale.”
Despite high initial costs for CCS, Davey said achieving a low carbon mix without the technology would be “much more expensive”.
The industry is seeking support under the contracts for difference (CfD) regime, similar to that available for renewable and nuclear. The contracts will be negotiated case by case, as the cost depends heavily on how advanced the surrounding infrastructure is.
The consortia behind Captain Clean Energy and Don Valleyprojects are talking to government about getting early approval for these subsidies. Another development at Teesside is on ice.
Luke Warren, chief executive of the CCS Association, said a second phase must happen “in parallel” with the competition. He is hoping for a subsidy deal to be struck “in the coming months”, adding: “Government has to make these CfDs available or these projects will fold.”
The levelised cost of electricity for the first projects is estimated at £150-£200/MWh. The industry aims to bring that below £100/MWh by the early 2020s.
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