Powerfuel in administration

YORKSHIRE’S vision to become a global leader in green technology could be under threat after the parent company of the operation behind plans to develop the UK’s only carbon capture and storage power station went into administration.

Powerfuel, the Doncaster-based parent company of Powerfuel Mining and Powerfuel Power, has been placed in administration.

Powerfuel Mining owns Hatfield Colliery, while power generation company Powerfuel Power won the bid last year to build a coal-fired power station which will use carbon capture and storage technology (CCS), a process of burying climate-warming gases.

Richard Fleming and Brian Green of KPMG have been appointed joint administrators of Powerfuel.

Neither Powerfuel Mining or Powerfuel Power are in administration and none of the 380 staff employed at the mine have been made redundant.

However, the administrators have warned that significant funding shortfalls exist on both projects although they hope to find buyers.

Mr Fleming, joint administrator and UK head of restructuring at KPMG, said the day-to-day business of both operations would not be affected as the sale process developed. 

Mr Fleming daid: “Developing low carbon energy generation requires a large amount of capital up front and the CCS development falls £635m short of the investment needed to progress the project beyond the preliminary stage. 

“The substantial funding gap has not been addressed in the past 12 months and accordingly the project has stalled. 

“The administration will enable a sales process to find a new owner, who can both take the CCS project forward and buttress the mine, which also requires around £30m of capital expenditure for works improvements.”

Powerfuel beat off competition from rival schemes from E ON at Kingsnorth, RWE at Tilbury and Scottish Power at Longannet for the CCS project at its site in Hatfield, near Doncaster.

It is planned for the 900 megawatt plant to use CCS technology, which involves liquefying carbon dioxide emissions by burning fossil fuels and then pumping it out to depleted gas fields.

Mr Fleming added: “CCS is projected by the Department of Energy and Climate Change to be one of the cheapest forms of low carbon energy generation. 

“Powerfuel plc boasts the only licence to trial the technology in the UK. While the economic environment is still challenging, we are hopeful that we can secure a sale of both companies and will be actively speaking to interested parties from today.”

Funding for the CCS station was given the green light from the European Commission’s energy programme recovery fund last October.