MGT Power's proposed 275-MW biomass CHP plant in Teesside, England, qualifies to receive early version of support scheme for low carbon electricity set to be unveiled next year; CEO says qualification is governmental vote of confidence in project
December 10, 2013
– A LONG-AWAITED biomass plant for Teesside has been given a Government "vote of confidence" that bosses say will shift the project "into a higher gear".
MGT Power's 275 megawatt facility has qualified for a scheme that brings welladvanced energy projects a step closer towards long-term support for their power generation. The Tees Renewable Energy Plant (Tees REP) received full planning consent in 2009, but bosses have struggled to reach financial closure amid changing UK regulations on biomass power schemes.
Bosses say the latest step - qualification for the Final Investment Decision Enabling Scheme - is a "big vote of confidence" from the Government that the project can be delivered.
Under the scheme, projects that are already well-advanced will be given an early version of a Contract For Difference (CfD) - to provide long-term support for low carbon electricity generation.
CfDs, due to come in next year, will give "greater certainty and stability of revenues by removing exposure to volatile wholesale prices" according to Government.
They will also protect consumers from paying for support when electricity prices are high.
Ben Elsworth, chief executive of MGT Power, said: "The quali- fication process involved [the Government] carrying out a very rigorous assessment of the project's deliverability so it's a big vote of confidence to have passed.
"Tees REP's qualification for the Final Investment Decision Enabling scheme means we will shift into a higher gear in moving this project into its final phase of development and financing.
"Of the 16 projects to have qualified for this scheme, the Tees REP is the only one to offer brand new baseload capacity to the UK system at a time when generation margins are getting very tight, so we will play a major part in the country's energy security going forward."
Tees REP is set to create around 600 construction and supply chain jobs and 150 permanent roles.
It will generate enough electricity to supply 600,000 homes and supply heat to nearby commercial and industrial users, both existing and planned.
It's being co-developed by a consortium of MGT Power and three Korean companies - Korea South-East Power (a major power generation utility), KBD Daewoo Securities (an investment bank) and Ecofrontier (a low carbon and renewable energy specialist).
The project was the only one of four UK biomass combined heat and power (CHP) schemes to pass both phases of qualifi-cation, which means it won't face a further selection round.
Mr Eung Chul Jun, executive director at KDB Daewoo Securities, said: "The Korean codevelopment partners have been actively working on the Tees REP project for over a year, so we are very pleased to have reached this important milestone.
"The assessment process was extremely rigorous and it is welcome news that the project has qualified on the first attempt. We now look forward to moving quickly into the next phase of development."
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