Scottish and Southern Energy seeks permission for carbon capture trial facility at Ferrybridge power plant; Reveals Profit Growth In H1

Scottish and Southern Energy plc (LSE: SSE) announced that it intends to submit a planning application to Wakefield Metropolitan District Council for developing the UK's largest carbon dioxide capture trial facility at its Ferrybridge coal-fired power station near Castleford in Yorkshire. SSE also revealed an improved financial performance in its first half results which it also announced this morning.

The proposed £21m trial follows Monday’s government report which said that no new coal-fired power generation plant should be built in the UK without carbon dioxide abatement. In this morning’s statement Scottish and Southern Energy said it endorsed the government’s stance.

In its current operations SSE generates 4,000 MegaWatts of coal-fired capacity, which accounts for almost 40% of its overall power generation capacity. The carbon capture trial facility will be developed and operated in collaboration with Doosan Babcock, the energy services subsidiary of Korea's ‘Fortune 500’ ranked conglomerate the Doosan Group (KOSDAQ: 000150).

The partnership intends to demonstrate the carbon dioxide capture element of carbon capture and storage (CCS) technology.  It is hoped construction will start next year, with the trial itself commencing in early 2011 and running through to the end of 2012.

According to SSE the scale of the project bridges the gap between the various laboratory-scale trials that are under way and the larger-scale projects envisaged by the UK government. SSE is also involved in a number of other initiatives to transform the environmental impact of coal in power generation.

In addition to the outlined government plan, SSE said it believes that no coal-fired generation plant without full carbon dioxide abatement should remain operational beyond 2030.  Scottish and Southern Energy, Chief Executive Ian Marchant commented on the company’s coal-power strategy going forward: "Most people agree that the UK's current portfolio of coal-fired power stations still have a crucial role to play in keeping the country's lights on, but that role will have to alter if climate change targets are to be met ... The development of the UK's largest carbon capture demonstration plant at Ferrybridge will be a major step forward in realising the undoubted potential of CCS technology.”

Scottish and Southern Energy also released its H1 interim results this morning which revealed a 6% increase in the interim dividend, following the period’s increased profit growth which rose to £410 million compared to £302 million in 2008. In the first half, earnings per share also increased considerably to 34.2p from 26.3p in 2008.

According to SSE the increased profit was the result of increased power generation, an increase in the number of electricity and gas customers and the ‘restoration of greater balance’ between the cost of procured energy and the cost of the energy supplied to customers.

SSS said that the improved level of power generation was due to a number of operational developments during the period. Such as the newly restored, un-restricted running hours at the Fiddler's Ferry and Ferrybridge power stations, following the installation of flue gas desulphurisation (FGD) equipment.  The Medway power station’s return to service after a prolonged and unplanned outage and a 31% increase in renewable energy output across SSE's hydro electric schemes, wind farms and its dedicated biomass plant.

In his accompanying statement SSE Chairman Lord Smith of Kelvin, however added context to the ‘encouraging’ results by emphasising the fact the comparatives flatter against ‘unusual and exceptional circumstances’ in 2008. According to Lord Smith of Kelvin, adjusted profit is still substantially lower than in 2007 and 2006.

Lord Kelvin of Smith also commented on the company’s progress through its investment program: "We are now more than 18 months into our five-year, £6.7 billion programme of investment in electricity generation, energy networks and gas storage. While the last six months have again demonstrated the short-term complexities and challenges involved in investment on such a scale, the long-term value of the assets this programme is delivering is not in doubt.”