RWE to Decide on Spending Needed to Keep U.K. Plant Open in 2012

RWE AG’s U.K. unit expects to decide this year on investment needed to keep Europe’s largest biomass plant running beyond 2013 after it reviews government proposals to support clean energy that are due to be released this month.

Renewable power incentives will “give us the indication” on upgrades to Tilbury station needed to meet European emission rules, after it was converted to biomass from coal last year, RWE Npower Plc Chief Executive Officer Volker Beckers said. He declined to give investment estimates for the plant.

The plant in southeast England has only a limited number of hours to operate under European Union laws. The Large Combustion Plant Directive requires power stations that haven’t invested in systems that scrub emissions causing acid rain to close after operating for 20,000 hours from January 2008 or by the end of 2015. The rule covers sulphur dioxide, nitrogen oxides and dust.

“By the middle of next year, we will have utilized this, so we are now preparing the second phase, which would then mean we have to invest in new boiler technology,” Beckers said in an interview on Nov. 6 in London. The plant would also have to meet standards under the Industrial Emissions Directive from 2015.

The U.K. proposals, designed to spur investment in clean energy that will replace 110 billion pounds ($176 billion) of aging plants, will go before parliament this month. They include contracts that guarantee a price for power from low-carbon producers such as nuclear and biomass from 2017. The mechanism will replace the Renewables Obligation program that has already encouraged Drax Plc to decide to convert three of the six units at its northern England power station to fully use biomass.

Tilbury has three units able to generate as much as 750 megawatts from wood chips. RWE is studying further opportunities for biomass, including a new plant, Beckers said, without giving a location. It may also use more biomass at its Aberthaw plant, a coal-fired station with a facility for burning organic matter, he said. “We are heavily investing in biomass,” he said.

RWE has applied for an environmental permit to keep Tilbury operating beyond 2013, the company said on Sept. 26. The U.K. government plans are part of an electricity market reform bill.

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