Centrica plans £1bn 'clean coal' station to cut emissions

Centrica, the owner of British Gas, has joined the race to build the UK's first environmentally friendly coal-fired power station with plans for a £1bn investment on Teesside.

The 800 megawatt plant would be the first new coal-fired station to be built in Britain for 30 years. Using "clean coal" technology, it would produce just a third of the carbon of a conventional station and 85 per cent of those emissions would be captured and pumped into the North Sea for storage.

Powergen, which is owned by E.ON of Germany, has also announced a feasibility study into building a clean coal station at Killingholme on the Lincolnshire coast while npower, which is part of RWE, is studying plans to build one at Tilbury.

Centrica said the station would be fuelled entirely by coal from the UK and would generate enough electricity for 1 million homes. Provided that the company gets government approval and planning permission, construction would start in 2009, enabling the station to open in 2012 or 2013.

The station is the brainchild of a small company called Progressive Energy which has set up a subsidiary called Coastal Energy to take the plan forward. Centrica has paid £7.15m for an 85 per cent interest in Coastal Energy. It will also take a controlling 55 per cent interest in Coots, a CO2 pipeline company.

The technology Centrica has chosen is known as integrated gasification combined cycle. This involves removing the CO2 from the coal before it is burnt and transporting it out to sea via a pipeline. The technology also allows the station to run on natural gas or biofuels.

Centrica is the UK's biggest energy supplier, with 13 million gas and electricity customers. It also operates the UK's biggest fleet of gas-fired power stations and is building a further 855 megawatt gas-fired plant at Langage, Devon. The new clean coal station is designed to bridge the gap between older coal-fired and nuclear stations closing down, and the construction of new nuclear capacity.

Separately yesterday, Centrica said it could ease the restrictions on withdrawing gas from its Rough storage facility next month. Centrica declared force majeure on withdrawals in February after a fire at the site, a depleted gas field in the North Sea which accounts for about 70 per cent of the UK's storage capacity.