The Case for Coal Generation Sandy Rae, Energy Management Director

1. The Case for Coal Generation Sandy Rae, Energy Management Director

2. CHP Hydro Pumping Coal CCGT Cruachan (440MW) Longannet (2,304 MW) Cockenzie (1,152 MW) Rye House (715MW) Damhead Creek (800MW) Brighton (400MW) TOTALCAPACITY = 6,036MW ScottishPower - Generation c.4000 MW in Scotland 2

3. Committed to Environmental Improvements in Generation Whitelee wind farm (344MW)... ...largest in Europe 3

4. Energy policy considerations Focus on customer prices & affordability long term Affordable Energy security has to be a priority Secure & Flexible Environment remains high on the political agenda medium / long term Environment Potential for conflict between three main UK policy drivers Preferred strategy will balance security, environment & cost issues 4

5. 2020 GB Plant Mix Wind & Other Renewables 21GW Coal 18GW Hydro 4GW Other 7GW Nuclear 9GW CCGT & CHP 44GW Total Generation ~100GW UK Portfolio Mix 2009 GB Plant Mix Wind & Other Renewables 6GW Hydro 4GW Coal 28GW Other 10GW Nuclear 10GW CCGT & CHP 25GW Total Generation ~80GW 5

6. Case for Coal – Coal versus Energy Policy Drivers Secure & Flexible Environment • Need coal to fill energy gap eg nuclear closures • Avoid dependency on gas imports • Provides flexibility to back up intermittent wind Affordable • Uses existing sites, workforce & connections • Abundant coal supplies & supports UK coal mining • Bridge to low carbon economy via CCS • Environmental upgrades progressing 6

7. Environmental Upgrades SO2 Emissions: Over 90% In Progress • Flue Gas Desulphurisation NOx Emissions: 25% - 30% • Boosted Over Fired Air 2010 to 2015 c40% • Selective Catalytic Reduction CO2 Emissions: Up to 90% 2014 and beyond • Carbon, Capture & Storage 7

8. Securing a Future for Coal Plant – Enablers to Investment Decisions Government support Appropriate market design Country’s needs considered in planning and consenting Relevant transmission charging scheme Early clarity on future environmental legislation Early clarity on policy and regulation of CCS infrastructure Early clarity on the future of the ETS and future CO2 prices 8

9. Evolution Of Longannet • FGD reducing SOx emissions • Boosted Over Fired Air • Turbine upgrades • Life extension - improving efficiency and NOx emissions • Construction of 20-25MW biomass plant • Carbon Capture & Storage • Other developments 2015 onwards 2009 to 2015 Final Commissioning 9

10. Carbon Capture and Storage (CCS) We need to understand performance at commercial scale 10

11. ScottishPower’s UK CCS competition bid Government competition to pilot full scale CCS chain by 2014 Capture 85% of CO2 at 330MW CCS retrofitted unit at Longannet – pilot plant planned by May 2009 Over land/ Undersea Pipeline Central North Sea Transportation options include ship or utilisation of existing gas & oil infrastructure Central North Sea storage in depleted oil and gas fields with later options to extend to saline aquifer Ship Transportation Longannet Project far advanced giving us confidence in meeting any Government deadlines Consortium can deliver viable scheme & UK roadmap by 2014 11

12. Conclusions Clear case for coal generation to provide secure, affordable & flexible generation Existing coal, with continuing environmental improvements, is a bridge to a lower carbon future Need certainty, policy support & level playing field to ensure coal stations still operational when CCS becomes commercially viable ScottishPower is committed to proving viability of CCS through Longannet participation in UK competition 12