Dong withdraws from energy deal

Hunterston B is scheduled for shut-down in 2016

Plans to build a coal-fired power station in Ayrshire could still go ahead despite a decision by one of the main backers to pull out.

Danish energy firm Dong said it would now act as a design partner for the station at Hunterston, next to British Energy's nuclear plant.

Its partner in Ayrshire Power Limited, UK firm Peel Energy, said it remained committed to the project.

Peel said plans would go before the Scottish government later this year.

A spokesman for Dong said: "Dong Energy entered a joint venture with Peel Energy last year to develop a project at Ayrshire. We have chosen not to take up this option.

"Due to the financial situation, which affects Dong Energy especially on the power production side - due to less sale and falling prices - Dong Energy has decided to strengthen its capital structure, which includes reducing investments in the coming years."

Peel Energy said it appreciated the "business drivers behind" Dong's decision.

Energy companies are finding it impossible to justify such climate-trashing developments Liz Murray World Development Movement

Chairman Owen Michaelson said: "We are sorry to lose Dong Energy as an investor on this project but are pleased the relationship will continue through their design services.

"Ayrshire Power's overall strategy for the project is unaffected by this decision.

"We have just completed the latest stage of our public consultations with the local community and other key stakeholders and we now look forward to continuing to progress through the planning process."

Dong's decision to withdraw financial backing from the project has been welcomed by environmental groups.

RSPB Scotland's Aedán Smith said: "We urge the other partner in this proposal, Peel Energy, to forget about highly polluting coal energy and focus on delivering badly needed renewables."

Friends of the Earth Scotland's chief executive Duncan McLaren said: "Dirty coal is more than a bad investment, it's also bad policy.

"The Scottish government must move swiftly to ensure that no new proposal for a coal-fired power station can come forward without a full and immediate commitment to carbon capture and storage."

'Dirty coal'

Liz Murray, head of Scottish campaigns at World Development Movement added: "It's clearer than ever that dirty coal is a risky investment.

"Energy companies are finding it impossible to justify such climate-trashing developments."

Dong and Peel revealed last year that they wanted to build a 1,600 MW plant at Hunterston - next to British Energy's nuclear plant and deep water port facilities.

If the planned facility at Hunterston goes ahead it will be the first conventional station to come on stream in Scotland since 1980.

The plant would have the capacity to power about two million homes.

It would also be suited for generating power from burning biomass, by-products from forestry and farming.

The plant would be dependent mainly on imported coal, which has lower emissions than coal from Scottish fields. This would be shipped in to the adjacent deep water port facilities.

Go-ahead for the scheme would depend on the viability of carbon-capture technology.

A Scottish government spokesman said it would be "inappropriate" to comment as the application would be determined by ministers.

He added: "As part of a balanced energy mix, coal-fired power has a long-term future in Scotland in tandem with the continued development of carbon capture technology.

"We want to see carbon capture technology demonstrating in Scotland as soon as possible."