UK CCS Demonstration Competition

Brief description:

The UK CCS Demonstration Competition was launched in November 2007 to build the world’s first full scale CCS power plant in the UK. The criteria against which proposals will be assessed are likely to include the need for any project proposal to:
- be located in the UK; 
- cover the full chain of CCS technology on a commercial scale power station (capture, transport and storage); 
- be based on sound engineering design (reliable and safe) underpinned y a full front-end engineering and design study; 
- set out the quantum of financial support requested; 
- be at least 300 MW, and capture and store around 90% of the CO2 and thereby contribute at least an additional 0.25 Mt/yr of CO2 savings to the UK’s domestic abatement targets (relative to gas-fired power station of equivalent size without CCS); 
- start demonstrating the full chain of CCS at some point between 2011 and 2014; 
- address its contribution to the longer term potential of CCS in the UK, (for example, through the potential of shared infrastructure) and to the international development of CCS; and be supported by a creditworthy developer entity.

In the 2007 White Paper, the UK Government signalled support for up to three different demonstration projects. It was since decided (In the 2007 pre-budget report in October 2007) that the competition will be restricted to a single post-combustion coal-fired project. In May 2009, however, the Government again signalled a greater appetite for projects and the funding of up to four demonstration projects. It is our understanding that the competition for the single post-combustion project will go ahead as planned and that the three other projects will be announced separately. The 2007 decision to limit the competition to post-combustion was founded on the argument that post-combustion capture is the most relevant technology to the vast proportion of coal-fired generation capacity globally. The rationale is that a commercial-scale demonstration of this technology, as part of a full CCS chain, opens up huge possibilities, not just for UK but also for the world. The additional three projects can be pre- or post-combustion.

To incorporate an international dimension, project developers will be expected to include proposals for knowledge and know-how transfer to third parties. These will need to be sufficient to meet the Government’s aims to encourage the wider deployment of CCS in the UK, Europe and internationally, particularly in countries with significant future energy needs such as China and India.

The UK is working with the EU Commission to ensure that the development of CCS in the UK fits with the objective agreed at the European Council in March 2007 to have in place up to 12 CCS demonstration projects in Europe by 2015.

After the dramatic change to the competition’s design specifications was announced in October 2007 , the competition was officially launched 19h November 2007158 by Prime Minister Gordon Brown. The industrial players focusing on pre-combustion technology (Shell, Centrica, ConocoPhillips, Marathon, PowerFuel and BP) protested heavily, but in vain.

Further details of the Competition are as follows:
- There is no upper limit on the size of the power plant or the scale of the capture facility, however the Government will only fund the capture of CO2 (and the subsequent transport and storage) contained in the flue gases produced by the generation of 300-400 MW. 
- The CO2 capture plant will be required to capture around 90% of the CO2 in the flue gases dispatched to the CO2 capture plant. The precise rate will be a subject for negotiation. In certain limited circumstances a lower CO2 capture rate of 85% may be acceptable as a minimum, depending on the extent to which that would still achieve other Project objectives, but this could receive a lower mark in the evaluation process. 
- Although the Government would prefer the Project to demonstrate the full chain of CCS technologies on the flue gases of 300-400 MW by 2014, it is prepared to consider proposals for phased scaling of the Project provided that the full chain is demonstrated by 2014. If a Bidder intends to take a phased approach, BERR envisages flue gases being captured from 50-100 MW by 2014 with the associated CO2 being transported and stored. The flue gases of 300-400 MW would then need to be processed as soon as possible thereafter. BERR is willing to discuss alternative approaches to meeting these target dates.
- The Project Contract will set out the allocation of risks between the contracting parties. The allocation of these risks and the basis of any risk sharing will be the subject of discussions and negotiations between BERR and Bidders during the procurement process. The actual allocation of risks will be based on the principle that the risk will be allocated to the party that is best able to manage that risk. 
- The Project Contract will include a payment mechanism to provide financial support for the Project Developer to support the undertaking of this project. The payment mechanism will be structured so as to create incentives for efficient operation of the capture plant and successful abatement of CO2.

By the deadline 31st March 2008, the UK Government had received nine bids in the competition. On June 30th 2008, the Government announced the pre-qualification of four applicants:
- BP Alternative Energy Ltd. 
- EON UK Plc - Kingsnorth, 
- RWE/Peel Power/Dong, 
- Hunterston, and 
- Scottish Power - Longannet

BP subsequently decided to withdraw from the competition, so that there are only 3 bids left. namely those of Scottish Power (Longannet project), EON (Kingsnorth project) and RWE (Hunterston project). The projects are described in greater detail later in the chapter.

The CCS Demonstrator Competition was intended to be closed by year-end 2009, but the Government has conceded that the decision to pick a winner has been delayed and will not take place until the autumn of 2010 at the earliest. The Government still hopes to have the project operational by 2014.