Regional overview

Our 13 North American assets have a net International Power-owned capacity of 6,549MW. Seven of the power stations are high efficiency combined cycle gas turbines (CCGTs) utilising state-of-the-art low NOx combustion technology. As a result these power stations operate with a very low environmental footprint. In October 2009, we completed the acquisition of AIM PowerGen Corporation, one of Canada's largest independent wind farm developers.

Environmental legislation
In the US there are currently state and federal programmes in development which would establish incentives for low carbon emissions. At the state level, the Regional Greenhouse Gas Initiative programme affects the north eastern and mid Atlantic states. The first auction of emission allowances was held in September 2008 and the scheme went into effect on 1 January 2009. A more comprehensive federal carbon legislation effort has stalled despite strong momentum during 2009. The Clean Energy and Security Act (Waxman/Markey Bill), that proposed the introduction of a cap and trade scheme for CO₂ emissions was passed by the House of Representatives in June, but was never voted on in the Senate. It is unlikely Senators will be receptive to a vote on such major legislation during 2010. We were an active participant in the Federal carbon legislative process in 2009 and will continue to work with industry groups to shape environmentally responsible legislation.

Examples of environmental initiatives
At Coleto Creek we have improved our particulate capture equipment by investing approximately US$40 million to replace the existing electrostatic precipitators with fabric filters (a baghouse). These show improved performance during start up and shut down and also capture mercury particles.

To read a case study on the baghouse at Coleto Creek please visit the case studies section.

At our Milford CCGT plant, effluent water from a local waste water treatment plant is utilised to provide cooling for the condensers. This re-use of low grade water saves approximately 650,000 gallons of water per day.

We have a wide portfolio of asset types across our European power stations. They have a net International Power-owned capacity of 6,923MW and range from conventional coal, oil and gas-fired plant to pumped storage and renewables such as wind, hydro and solar.

Environmental legislation
EU member states are committed to meeting existing EU-wide legislation designed to tackle climate change. Under the Kyoto Protocol the EU is planning an 8% reduction (from 1990 levels) in greenhouse gas emissions by 2012, and is seeking to achieve this through a number of measures. Firstly, the EUETS cap and trade mechanism is designed to promote the reduction of CO₂ emissions across European industry. In addition, the EU Renewables Directive sets individual national targets for the amount of electricity to be obtained through renewable sources.

In December 2008 EU member states agreed new, longer-term binding targets: a 20% reduction in greenhouse gas emissions by 2020 (again from 1990 levels) and 20% of energy use to come from renewable sources by 2020. These targets are apportioned between member states and implemented through new directives. From 2013 full auctioning of CO₂ allowances is to be implemented for the power sector across the EU, although certain central and eastern European countries will retain some free allowances (declining to zero by 2020), in recognition of their high dependency on fossil fuels and their low GDPs.

The major environmental regulatory measure in Europe for our assets, in addition to those for CO₂, is the Large Combustion Plant Directive. This is expected to be superseded by the Industrial Emissions Directive (IED) sometime in 2010 and this will take effect in 2016. Details of the IED are not yet finalised but we are monitoring developments closely.

Examples of environmental initiatives
We are committed to investing in our power stations in order to reduce environmental impacts. An example of this is a £145 million project that has recently been completed to fit flue gas desulphurisation (FGD) to our Rugeley power station. FGD was also installed at our Pego plant, in Portugal, during 2008. This technology is designed to capture more than 90% of the SOx emissions and will also substantially reduce the emissions of particulate matter.

To read more about FGD please visit the case studies section.

As part of our ongoing strategy to reduce emissions of CO₂, we are continuing to seek high-quality investment opportunities in renewables. Our European wind portfolio has an aggregate capacity of 1,210MW, making us one of the world’s major wind energy generators. We are actively seeking opportunities to further expand our renewable capacity organically.

To read more about wind power please visit the case studies section.

In 2008 we continued to expand our wind portfolio and made our first investment in solar power. This was completed in June 2008 with three projects comprising 90kW, 200kW and 1MW (peak) installations of photovoltaic panels. Located in Northern Spain, the Juneda PV project was developed through our Spanish Hydro business which is part of our joint venture with Mitsui. Operating under the Spanish renewables framework, the plants have secured a long-term index linked feed-in tariff for their output.

Our marine renewable energy subsidiary continues to explore site developments for the future deployment of Rolls-Royce backed, Tidal Generation Ltd (TGL) technology. TGL, with whom we have an agreement, are commissioning a prototype deployment at the European Marine Energy Centre, located in the Orkney Islands. The UK and European biomass generation sector is expected to grow significantly, driven by binding targets for both renewable energy and landfill diversion. International Power has identified a number of small-scale opportunities for market entry, working with credible developers who have existing project pipelines.

International Power has a net owned capacity of 2,454MW in our six Middle Eastern power stations which are all modern gas-fired plants using the latest low NOx combustion technology.

Environmental legislation
There is no major imminent legislation expected in the Middle East. Our projects in the region operate under long-term power purchase agreements (PPAs), and many of these have change of law protection, which would enable us to pass on any carbon costs to the offtaker.

Examples of environmental initiatives
In the Middle East most of our plants, in addition to generating electricity, also produce desalinated water. The desalination process is able to make use of low grade heat from the power station. The combined process can be very efficient. For example in our new Fujairah F2 plant in Abu Dhabi (currently under construction) we are using Alstrom GT26B gas turbine technology which, when taking into account the power it produces and the heat generated for the desalination process, has an efficiency of over 65%.

To read more about desalination, please visit the case studies section.

Our six Australian assets cover a wide range of plant types from brown coal to modern CCGT, through to wind power. They have a net International Power-owned capacity of 3,233MW.

Environmental legislation
The Australian federal government proposed an emissions trading scheme across most industrial sectors (the Carbon Pollution Reduction Scheme or CPRS) in late 2009. The government's targets are a minimum 5% reduction in CO₂ emissions (against 2000 levels) by 2020, with the potential for this target to change to 25%, pending a global agreement to cut CO₂ emissions. The scheme has now been delayed until after the end of the first Kyoto Protocol Commitment Period (end of 2012).

Examples of environmental initiatives
In order to help reduce some of our environmental impacts in the region we have implemented a number of initiatives including:

• At Hazelwood a pilot carbon capture and storage plant will be one of the world’s largest CO₂ capture facilities installed at a coal-fired power station – the first phase of the project went live in April 2009 and is successfully capturing 25 tonnes of CO₂ per day.
• A number of measures have been implemented to reduce the use of river and dam water, including a drainage recovery system, adjustments to the operation of the cooling towers and the installation of a new high efficiency air compressor station. Such measures have resulted in savings of 3,200 million litres per year and achieved a 16% reduction in the water required to produce the same electricity output.

Our five Asian power stations have a net International Power-owned capacity of 1,790MW. These power stations burn a range of fuels including gas, coal and oil and play a vital role in improving quality of life by providing much needed secure supplies of energy.

Environmental legislation
There is no major imminent legislation expected in Asia. Our projects in the region operate under long-term power purchase agreements (PPAs), and many of these have change of law protection, which would enable us to pass on any carbon costs to the offtaker.

Examples of environmental initiatives
The Paiton 3 plant, currently under construction, will be one of the first supercritical coal plants built in Indonesia, and also the largest. The development will allow the local low-sulphur coal to be burned at high efficiency. Supercritical technology typically can achieve efficiencies of between 42 and 44%, in comparison to around 40% for a typical subcritical coal plant.

During 2009 our Hubco asset commenced construction of a new run-of-river hydroelectric project in Pakistan. The 84 MW New Bong Hydro (Laraib) project will generate renewable energy from water released from the existing Mangla dam and is registered as a Clean Development Mechanism project under the United Nations Framework Convention on Climate Change.