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Peterhead Carbon Capture project to contribute £660 million to Scottish economy

16 May 2022

A planned new low-carbon power station at SSE Thermal’s Peterhead site in Aberdeenshire could generate significant benefits to the Scottish and UK economies over its lifetime, according to a new report.

The ‘Powering the Next Generation’ report highlights the potential socio-economic benefits of Peterhead Carbon Capture Power Station, which is being developed by leading energy companies SSE Thermal and Equinor.

The proposed plant could become one of the UK’s first power stations equipped with a carbon capture plant to remove COfrom its emissions and would connect into the Scottish Cluster’s CO2 transport and storage infrastructure, which underpins plans to deliver one of the UK’s first low-carbon industrial clusters.

Based on analysis from BiGGAR Economics, the report highlights the scale of the economic impact at a local, Scottish and UK level. In total, it is estimated that £2.2bn will be invested throughout the development, construction and the first 25 years of its operational life.

The new development would create significant benefits, with the report showing that £60m is expected to be contributed to the Aberdeen City and Shire economy during development and construction, with 980 years of employment supported. Over the station’s operational lifetime, it is estimated that around £25m will be added to the wider Aberdeen economy each year, with around 240 jobs supported on an annual basis.

On a Scotland-wide level, the analysis shows that £190m would be added to the economy during development and construction, with 3,070 years of employment supported. Across the lifetime of the station, an average of around £35m would be added to the Scottish economy annually with 290 further jobs supported each year.

Finally, at a UK level, the report estimates that £470m would be added to the economy through development and construction, as well as 7,850 years of employment. On an annual basis once operational, the plant would contribute an average of around £50m to the UK economy and support 560 jobs.

Net Zero and Energy Secretary Michael Matheson said: 

“Carbon capture, utilisation and storage is critical for meeting, not only Scotland’s statutory emissions reduction targets, but those set across the UK. Indeed, advice from the Climate Change Committee describes the technology as a “necessity, not an option”. The innovative Peterhead CCGT Power Station is a fantastic example of how Scotland’s energy sector can make the transition to net zero and – as this study demonstrates – benefit the Scottish economy, providing employment and a just transition for our workforces.

“It shows just how important it is to invest now in carbon capture technology. Which is why the UK Government must award the Scottish Cluster clear and definitive Track-1 status. We continue to press them to reconsider their decision and work in collaboration with the Scottish Government to accelerate support for the energy transition in Scotland. This includes offering £80 million under our Emerging Energy Technologies Fund to accelerate the Cluster’s deployment.”

"Peterhead is vital to Scotland’s energy system and a new low-carbon power station at the site would be key to delivering a secure and credible transition to net zero. The proposed Peterhead Carbon Capture Power Station would provide essential flexible and reliable power to keep the lights on and back up Scotland’s world-leading renewables sector, while helping to meet our climate action targets."

Catherine Raw, Managing Director of SSE Thermal

Catherine continued:

"But the benefits stretch even further as we look to maximise the positive impacts of the energy transition for workers and communities in the North-East of Scotland.

“While we await clarity from the UK Government on the timeline for deployment of the Scottish Cluster, we are pushing ahead with our development plans, and in March we submitted a planning application for the new low-carbon plant – which, as this new report shows, has the potential to be a game-changer for the region and for Scotland.”

Grete Tveit, Senior Vice President for Low Carbon Solutions at Equinor, said: 

“Peterhead Carbon Capture Power Station is a significant project that will get the UK closer to its net zero goal, while also working alongside intermittent renewables and enhancing low-carbon energy security. Together with our longstanding partner SSE, we’re committed to delivering our hydrogen and CCS projects such as Peterhead Carbon Capture Power Station to help Scotland and the UK become a world leader in low carbon technologies. While supporting the decarbonisation efforts, this project will also offer great benefits for the local economy and supply chain, safeguarding high-value jobs and creating new ones.”

In addition to their plans at Peterhead, SSE Thermal and Equinor are also working in collaboration on three low-carbon projects in the Humber region in England, including Keadby Carbon Capture Power Station in North Lincolnshire. In addition, Keadby Hydrogen Power Station at the same site would be the world’s first major 100% hydrogen-fuelled power station, while Aldbrough Hydrogen Storage, on the East Yorkshire coast, would be one of the world's largest hydrogen storage facilities.