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14 | 19Th - 25Th SEpTEmbEr 2014 | UTILITY WEEK Policy & Regulation Analysis R ecent confirmation by the energy sec- retary Ed Davey that banning una- bated coal generation would be one of five key green commitments by the Lib- eral Democrats could prove very relevant if next May's general election produces a hung Parliament. Currently, all major baseload fuel pro- cesses face challenges. Gas-fired plant is barely profitable (and in Centrica's case cer- tainly is not) while EDF's Hinkley Point C nuclear project still awaits EU ratification. In coal's case, environmental issues are to the fore. But, as Germany has recently dem- onstrated, new coal-fired plants can be built. Today's UK energy scenario is very dif- ferent from the 1960s and 1970s when coal was king. The chaos caused by successive miners' strikes in 1972 and 1974, not forget- ting the epic year-long strike in 1984-85, underlined how coal dependent the UK had become. However, electricity privatisation and, more specifically, the impressive efficiency of Combined Cycle Gas Turbine (CCGT) plants put coal – literally and metaphorically – on the back-bencher. Furthermore, the climate change issue, notably carbon emissions levels, has made coal-fired generation controversial. Not surprisingly, virtually every large baseload plant built in the UK since 1990 has been a CCGT. The last sizeable coal-fired investments were the later units built in the 1980s at the iconic 4GW Drax. Against this background, coal plant might seem to have little future, especially with the implementation of the carbon price regime. Yet despite its carbon price disadvantage, coal-fired output has been robust in recent years. The driver for this has been the com- parative price differential favouring coal over gas, along with a low carbon price. The key to coal's cost advantage has been the rapid development of US shale gas resources, which has seriously depressed gas prices there. Hence, US coal producers – in states such as Pennsylvania and Kentucky – along with other exporters have sent very competitively-priced coal to Europe and the UK remains a sizeable coal importer. This situation may not endure. Due to the Large Combustion Plant Directive, most coal plants are being run down as they reach the end of their allotted output levels. Eon's plant at Tilbury generated its last commercial power in December 2012 and is now closed. And the prospects for Eggbor- ough, in Yorkshire, are looking bleak since it missed out on securing a substantial subsidy for biomass conversion. In terms of UK new coal-fired plant, the medium-term prospects do not look bright but should not be totally discounted. There would be an environmental gaunt- let to be run before any such project was approved, no doubt. Greenpeace recently identified the 30 highest EU carbon dioxide polluters and while Poland's vast site at Bel- chatow unsurprisingly topped the list, 18 of the remaining 29 plants were either in Ger- many or the UK. Then there would be the complex chal- lenge of designing scalable emissions' tech- nology at a commercial cost, and satisfying various political tests – aer all, the days of coal plants supporting thousands of mining jobs locally are long gone. But even so, the potential remains. Government policy for new coal-fired plant generally requires the retrofitting of expensive carbon abatement equipment. Given the latter's many uncertainties, some financial and some technological, it was no surprise that this obligation was effectively the deal-breaker of Eon's now abandoned Kingsnorth coal project. To attract new coal-fired plant inves- tors, it seems clear that carbon capture and storage (CCS) technology will need to make major advances. Progress over the last dec- ade has been disappointingly slow. Aer the collapse of its first CCS compe- tition, the Decc has launched a rerun. The most likely winner is the Peterhead project backed by Shell and SSE, but even this pro- ject remains at the design stage. CCS has also struggled in mainland Europe. Although Vattenfall's 30MW oxy-fuel Schwarze Pumpe demonstration project was highly regarded, it has failed the scalability test as a recent decision to redirect its R&D budget effectively confirms. According to the Global CCS Institute, there are 12 large-scale CCS projects in opera- tion around the world, mainly in the US and China. Whether they can deliver the required outputs remains to be seen. Aside from CCS, the more immediate template lies perhaps in Germany, where new coal-fired plants have been built by RWE. Recently, RWE commissioned the first of two hard coal-fuelled 764MW units at the Westfalen site near Hamm. The total cost of the two units is projected at c€2 billion: a 46 per cent effi- ciency figure is being achieved. RWE has also been investing in lignite- fuelled plants, most notably at Neurath where two new units, using optimised power-plant engineering technology, have recently been built. Importantly, too, RWE is at the fore- front of European coal technology research through its Coal Innovation Centre at Nied- eraussem, and Germany's nuclear phase-out year of 2022 is rapidly approaching. Even so, if the many technical concerns on coal generation can be satisfactorily over- come – a very big if – future new coal-fired plant should not be ruled out in the UK, especially if Hinkley Point C's financing falls foul of EU law. Aer all, the UK has a well-publicised baseload generation margin problem. With minimal CCGT investment, this is unlikely to improve markedly for many years. Nigel Hawkins, director, Nigel Hawkins Associates Coal generation games Climate change concerns have dramatically changed the fortunes of coal plant over the past 20 years, but that doesn't mean new coal plant should be dismissed out of hand, says Nigel Hawkins. It the many technical concerns on coal generation can be satisfactorily overcome – a very big if – future new coal-fired plant should not be ruled out in the UK