The object of this work is to provide advice to BEIS on how to ensure that power CCUS can be an investable proposition and, how the generic Contract for Difference (CFD) could be appropriately adapted to support deployment of CCUS power plants. An important consideration will be to explore how flexible and/or baseload generation can be incentivised via the CFD.
Power CCUS is eligible for a CFD as stated in the Contracts for Difference (Definition of Eligible Generator) Regulations 2014, and this would have been the mechanism that could have awarded a CFD to the projects that participated in the CCS Competition. However, due to the cancellation of the CCS Competition, the CFD for power CCUS was not completed. In addition, unlike renewable energy projects in the electricity system (and similar to new nuclear) CCUS is not part of the allocation round framework, and so could currently be awarded a CFD only on the direction of the Secretary of State (e.g on a bilateral basis or through a specific competition) .
Based on the experience of the CCS Commercialisation Competition (2012-15) the generic CFD will need to be tailored if it is to support power CCUS projects , . For instance, there is a need to consider fuel price fluctuations as well as consideration of whether the CFD for power CCUS should evolve over time as the number of CCUS facilities in receipt of subsidy increases. An assessment of the suitability of the CFD for power CCUS will form part of the work, with proposals (if any) for alternative mechanisms to be made at a high level.
The successful supplier will be required, where appropriate, to consider industry-led work on this topic, and to incorporate the findings of such work into their analysis.
Please ensure you review all attached information to ensure a full understanding of this requirement. All attachments can be found with the RFx attachments tab within the Emptoris System.
This contract will be awarded based on the evaluation criteria set out in the ITQ document.