Tees Renewable Energy Plant secures investment

26th October 2012

logos-TK-news-mgt-v1NEWS RELEASE: 26th October 2012
MGT Power announces co-development agreement for Tees RenewableEnergy Plant

UK biomass power station developer MGT Power Ltd has signed an agreement to codevelop its 275MW biomass power project at Teesport in the North-East of England with a consortium of three South Korean companies.

MGT Power is to partner Korea South-East Power (KOSEP), KDB Daewoo Securities and Eco-Frontier in the final pre-construction development stages of the £600m project. The UKKorean consortium is targeting the first quarter of 2013 to reach a financial investment decision that will enable the project to be financed and built.

The site of the Tees Renewable Energy Plant is about 5kms east of Middlesbrough and 6kms west of Redcar. It will generate electricity for the equivalent of 600,000 homes by using certified sustainable forestry residues, mainly imported from the USA’s east coast. Once built, the station will help to meet the UK’s renewable energy target of 15% by 2020, accounting for around 5.5% of the renewables target. It will save about 1.2million tonnes of CO2 per year.

About 600 people would be employed during a three year construction phase, with about 150 permanent jobs created to operate and maintain the plant, and the associated port operation.

The scheme has received widespread local support since it was first proposed in 2007 and it secured planning consent from the UK Government in 2009. However, MGT’s efforts to secure the necessary finance since have been hindered by the economic and financial climate in the UK as well as the uncertainty with the Government’s policies towards biomass power generation, in particular in relation to the Renewables Obligation, the UK’s main policy to encourage the deployment of renewable energy in this country.

MGT’s acting CEO Ben Elsworth said: “It has been a difficult period for MGT and for the biomass industry as a whole in the UK, but today’s announcement is a great step forward. We are very pleased to be working with all three Korean companies, and KOSEP in particular, who will now play a strategic role in the project.”

“We have been heartened by the encouragement by the local business community and Redcar’s MP, Ian Swales. Ian has offered valuable support and advice to us. His wide business experience and understanding of government are invaluable to companies looking to invest in Teesside. We remain determined to get Tees REP financed and built, creating jobs and securing long-term investment for Teesside.”

There are a number of issues still to be resolved before construction on the project can start, most importantly the outcome of a consultation on proposals by the Department of Energy and Climate Change to cap the capacity of new-build biomass.

Ben Elsworth added: “It’s not the idea of the cap itself that we object to, even though biomass can provide predictable renewable electricity at a cost well below that of offshore wind. It is the way in which the cap is proposed to work which will unfairly skew the market towards the big 6 energy companies and may prevent new entrants from financing projects. We will continue to press the arguments for dedicated biomass generation with ministers

and officials at DECC.”
ENDS
For further information – www.mgtpower.com
Ben Elsworth, MGT Power – enquiries@mgtpower.com / +44 (0)7711 515573

For a PDF of this press release, click here.

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