ScottishPower announced today that it has secured a five-year agreement with Scottish Coal in a deal that is the largest ever coal supply contract in Scotland.

A significant proportion of ScottishPower’s coal requirements will be met by the deal which will be worth up to £700 million - dependent on the amount of coal required. It is believed that the contract will create in excess of 100 new jobs in the Scottish coal industry.

Iberdrola Chairman and Chief Executive, Ignacio Galán, discussed the contract today with First Minister Alex Samond, and then met with Cabinet Secretary for Finance, John Swinney to discuss the agreement at an international investor event in Stirling.

Announcing the agreement Mr Galán, said:

“Through this agreement, ScottishPower is also demonstrating its support for Scottish coal, offering important opportunities for Scottish jobs and the Scottish economy, while reinforcing our commitment to coal generation in the Scotland.“.  
 
“Coal generation has a significant contribution to the security of electricity supply in the UK today. At the same time, Iberdrola is committed to developing the best technologies that will deliver low carbon generation in this country. Through our existing co-firing capability of biomass with potential advances in carbon capture and storage technologies, we are ready to provide the flexible generation needed to support the UKs’ growth goals in renewable energy and at the same time ensure security of supply moving forward”.

First Minister Alex Salmond said:

“I was delighted to discuss the details of this announcement with Senor Galan today.  This is exciting news. The announcement that coal is to supply one of Scotland’s major companies is a declaration of faith in coal as one of Scotland’s key indigenous fuels and shows that coal is a fuel of the future and not the past.
 
"On the first day I was elected First Minister I went to Longannet to discuss with Senor Galan their plans for a secure future for the Scottish coal industry. I am delighted that these plans are now coming to fruition. Today's development is a further milestone in securing the key natural resources of Scotland for generations to come. Scotland has substantial comparative advantages in every major energy resource which will dominate this century and it is vital that we put them all to good use. Clean coal, carbon capture, wind, marine renewables and hydro, all have a key role to play as we become one the energy powerhouses of Europe."

This week a consortium led by ScottishPower, qualified as an entrant to the UK Government’s Competition to develop the UK’s first commercial scale Carbon Capture and Storage (CCS) project.

It is envisioned that coal will come from existing and new Scottish Coal reserves in Fife, the Lothians, Lanarkshire and Ayrshire. Scottish Coal currently mines in 9 separate sites spread across the central belt of Scotland.

ScottishPower typically uses between 4 and 6 million tonnes of coal per annum at two coal-fired stations Longannet (2400 MW) in Fife and Cockenzie (1200MW) in East Lothian.

Brian Staples, Deputy Chairman of Scottish Resources Group which owns Scottish Coal, said;

“We are delighted to have concluded this supply agreement with ScottishPower. Scottish Coal will increase output to meet the tonnage requirements of the contract which in addition to protecting existing jobs will create in excess of 100 new jobs.

“It is very pleasing to see Scottish coal, mined by a Scottish workforce, being bought by a Scottish company to meet Scotland’s electricity demand.”

Longannet is the second largest coal-fired station in the UK and generates the equivalent of over 25% of Scotland’s annual electricity demand. It is currently being fitted with Flue Gas Desulphurisation (FGD) equipment which will remove sulphur dioxide from the emissions from three of its four units.

Following the completion of the £170 million FGD project later this year, Longannet will be able to burn greater amounts of higher sulphur Scottish coal.

ScottishPower is also completing a feasibility study into future investment options for both Cockenzie and Longannet that would either replace current technology or extend the lifespan of the plants.

Media information: Simon McMillan 0141 566 4875/ 07753 622 257