London (Platts)--21Nov2012/150 pm EST/1850 GMT

Gas and coal-fired power generated using carbon capture and storage (CCS) technology could produce energy at a comparable cost to other low-carbon generation sources by the early 2020s, a government task force said Wednesday,

The CCS cost reduction task force was created by the Department of Energy and Climate Change in March 2012 and published its interim report on Wednesday suggesting that costs could fall considerably by 2020.

"UK gas and coal power stations equipped with carbon capture, transport and storage have clear potential to be cost competitive with other forms of low-carbon power generation, delivering electricity at a levelized cost approaching GBP100/MWh ($159/MWh) by the early 2020s, and at a cost significantly below GBP100/MWh soon thereafter," said the report.

However, in order to achieve these levels of cost reduction the task force has isolated five key areas in which the UK will need to progress.

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The report recommends investment in large carbon storage clusters to supply multiple storage sites as well as investment in large shared pipelines with high utilization.

In addition there needs to be investment in large power stations with increased carbon capture capability by the early 2020s and measures taken to exploit synergies with carbon-based enhanced oil recovery in the North Sea, the report said.

Finally a reduction in cost of project capital through reduced risk and improved investor confidence is needed, the task force said.

The task force said it is confident that success in the five areas can be achieved.

"However, this can only happen if these measures are taken against the background of a landscape in the UK which is favorable to the development of CCS projects."

GOVERNMENT AWARDS GBP20 MILLION IN CCS FUNDING

The report was released on the same day that the UK government awarded GBP20 million in funding to 13 carbon capture and storage (CCS) projects through its GBP125 million research and development fund and the government-funded UK CCS Research Centre.

DECC said the GBP18.3 million government funding is expected to leverage a further GBP18 million for the sector while the UK CCS Research Centre has put forward an additional GBP1.8 billion for the projects.

UK energy secretary Ed Davey said in a statement that the funding secures the UK's place as a world-leader in CCS development.

"Through the projects we have selected, pioneering companies and universities will be able to create new jobs and expand their markets," he said.

The company receiving the highest funding package at GBP5.8 million is Millennium Generation which is building a 3MW carbon capture pilot plant in Stainforth, Doncaster.

The second highest funding package was awarded to NET Power for its 25 MW pilot project, while Carbon Clean Solutions received GBP3.35 million to develop solvents for the the use in CCS systems.

--Jillian Ambrose, jillian_ambrose@platts.com
--Edited by Maurice Geller, maurice_geller@platts.com

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