A £100million investment in Lynemouth Power Station has moved a step closer after securing backing from the Government.
The scheme to convert the coal-fired power station to biomass has been listed as part of the National Infrastructure Plan announced by Chief Secretary to the Treasury Danny Alexander last week.
The move could safeguard 130 jobs at the Lynemouth plant as owner RWE npower has until the end of next year to undertake the conversion, or face closure under European emissions regulations.
The Government has also finalised the subsidy levels – strike prices – that will be paid for the various forms of renewable energy.
And if the Lynemouth project goes ahead, the station could sell the electricity it generates at £100 per MW/h — twice the current wholesale price.
However, a decision on the conversion will not be made until the New Year.
Lynemouth Power Managing Director, Bob Huntingdon, said: “This is a good step forward for Lynemouth Power, but there are a number of steps remaining before we can make a final investment decision. We are aiming to take an investment decision on the station’s conversion to biomass early next year, but this is a positive step in the right direction.”
The Government backing for the scheme will be welcome news for the community, which was shattered by the loss of 550 jobs at the neighbouring Rio Tinto Alcan aluminium smelter when it closed last year.
The introduction of a new tax on carbon emissions was blamed for the closure and the same fate threatened the 400MW coal-fired power plant until RWE npower stepped in to buy the facility.
An RWE npower spokesman said: “The Department of Environment and Climate Change has confirmed that the project to convert Lynemouth Power Station to run on dedicated biomass meets the minimum criteria for an investment contract under the Final Investment Decision Enabling Scheme, part of the Government’s proposed Contract for Differences mechanism aimed at supporting major low-carbon energy projects.”
The Infrastructure Plan also saw subsidies agreed for a new £600million biomass plant at Teesside and the conversion of Drax power station in Yorkshire to biomass.
The announcements could also spell good news for the Port of Tyne, which has plans to develop a £180million wood-pellet handling facility in South Shields.
There were 16 renewable energy projects marked out for Government subsidy support, amounting to £40billion of investment.
It is hoped that the programme and subsidy levels will bring forward a further £60billion of investment in renewable-power and heat-generation schemes by the end of the decade.
Energy and Climate Change Secretary, Ed Davey, said: “This package will deliver record levels of investment in green energy by 2020.”