Energy group names advisers for huge ‘clean coal’ project

2Co Energy has named BNP Paribas as the bank to advise and secure debt financing required for the planned 650MW Don Valley Power Project, while Linklaters and Nabarro will act as legal advisers.

The 2Co Energy project, at Stainforth close to Hatfield Colliery near Doncaster, is currently competing for EU funding to build one of Europe’s first carbon capture and storage (CCS) projects in the UK.

The project will cost approximately £3bn onshore and £1bn offshore.

Dean Hislop, chief financial officer of 2Co Energy, said: “BNP Paribas will help us structure the project finance and debt for the Don Valley Power Project and ensure that it is a credible and ‘bankable’ project.”

BNP Paribas will conduct an initial review of the project’s commercial contracts and business model as well as providing high-level support on regulatory, commercial and technical discussions to facilitate the development of an overall financing and debt structure for the project.

The Don Valley Power Plant has already attracted an initial £180m in EU funding. Its business model centres on the vast CO2 storage and additional oil recovery potential under the North Sea.

The project will provide low carbon electricity to the equivalent of around a million UK homes, capturing 90 per cent of its entire CO2 output – up to five million tonnes a year. Planning permission for the power plant has already been granted making it well placed to start construction in 2013, with final commissioning in 2016.

Adrian Lumley-Smith, commercial director of 2Co Energy, said: “The project is attracting major international interest and in Linklaters and Nabarro we have found legal advisers with the world-class expertise we need to secure its future development.”

However, last week it was revealed that a collapse in the price of carbon permits means only a fraction of the expected money will be made available by the EU for CCS schemes this year. The European Investment Bank will reveal its recommendations as to which schemes should be funded next month. A final decision is expected later in the year.