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The two preferred bidders in the UK’s Carbon Capture and Storage Commercialisation Programme Competition have been announced today.
Press notice: 13/028
The two preferred bidders in the UK’s £1bn Carbon Capture and Storage Commercialisation Programme Competition have been announced today.
They are the Peterhead Project in Aberdeenshire, Scotland, and the White Rose Project in Yorkshire, England.
CCS technology, if developed at scale, could allow the safe removal and storage of harmful carbon emissions from coal and gas fired power stations and heavy industry, to help the UK meet its climate change targets.
Secretary of State for Energy and Climate Change, Edward Davey said:
“Today’s announcement moves us a significant step closer to a Carbon Capture and Storage industry – an industry which will help reduce carbon emissions and create thousands of jobs.
“These two are major infrastructure projects potentially worth several billion pounds and could support thousands of construction jobs over the next few years.
“We had four excellent bids and I’d like to thank each one of them for their hard work. We will now be working swiftly to progress our preferred two, while making sure we continue to provide the best possible value to tax payers.”
Energy Minister John Hayes said:
“We are working quickly to our goal of a cost competitive CCS industry - and these projects are just the start. In the past year we have demonstrated there is significant appetite from industry to invest in UK CCS, providing jobs and investment opportunities.
“It is my intention to work with industry, beyond these two projects, to ensure we have further CCS projects by the end of the decade – supported by the innovative changes we are making to the energy market to encourage investment in low carbon electricity.
“I am also very pleased that these two projects offer us the opportunity to ensure that both gas and coal generation have a hugely reduced impact on our carbon emissions.”
The two projects selected in detail:
Peterhead Project in Aberdeenshire, Scotland – a project which involves capturing around 90% of the carbon dioxide from part of the existing gas fired power station at Peterhead before transporting it and storing it in a depleted gas field beneath the North Sea. The project involves Shell and SSE.
White Rose Project in Yorkshire, England – a project which involves capturing 90% of the carbon dioxide from a new super-efficient coal-fired power station at the Drax site in North Yorkshire, before transporting and storing it in a saline aquifer beneath the southern North Sea. The project involves Alstom, Drax Power, BOC and National Grid.
The two preferred bidders were selected following a period of intensive commercial negotiations with four projects shortlisted from an original eight in October last year.
The Government will now undertake discussions with the two preferred bidders to agree terms by the summer for Front End Engineering Design studies, which will last approximately 18 months. A final investment decision will be taken by the Government in early 2015 on the construction of up to two projects.
Captain Clean Energy and Teesside Low Carbon, the remaining two bidders with whom the Government has been in discussion, will be appointed as reserve projects. These bids may be called to participate in the next stage of the competition if one or both of the preferred bidders fails to enter into a FEED Contract by the summer.
Notes for editors
- Front End Engineering and Design (FEED) studies are best practise for complex projects in the engineering and construction industry. FEED studies typically follow on from initial high-level plans, and allow project developers to refine designs and for example source quotes from suppliers. This gives greater certainty on costs before the project developer commits significant funding on construction.
- DECC expects the projects to proceed on the following timeline:
- By Summer 2013: Signature of FEED contracts with 2 projects
- By early 2015: Final Investment Decisions from DECC taken on up to 2 projects; construction commences
- Between 2016-2020: Projects become operational
- The competition was launched on 3 April 2012, with a deadline of 3 July 2012. Its objective is to identify and support projects that can contribute to reducing the costs of CCS technology so that it can compete with other low carbon technologies in the 2020s. On 30 October, DECC announced that four projects were being taken forward into a new intensive phase of negotiations. On 14 January 2013, DECC confirmed it had received revised proposals from all four projects. The detailed competition documentation (including information about eligibility criteria and evaluation) is available on the Contracts Finder website (search using CCS Commercialisation). More information is also available on the GOV.UK website.
- The Commercialisation Programme is one part of the Government’s boarder efforts to develop CCS technology, which includes a 4 year, £125m R&D Programme.
- Carbon Capture and Storage is a technology that has the potential to remove carbon dioxide from emissions produced by electricity generation and heavy industry and store it deep under the North Sea.
- Going forward, DECC will be working with EEF and other partners to ensure UK companies are aware of the potential supply chain opportunities from the proposed projects and the future CCS industry.