One project is Net Zero Teesside Power (NZT Power), which aims to be the world’s first gas-fired power station with CCS. The other is Northern Endurance Partnership (NEP), which consists of CO₂ transportation and storage infrastructure to serve three initial carbon capture projects on Teesside. It also feeds the H2Teesside and Teesside Hydrogen CO₂ Capture projects. Beyond those three Track 1 projects, the East Coast Cluster includes another 13 projects in Teesside and 12 in the Humber.

The combined cycle gas turbine electricity generating station could produce up to 742 MW of flexible, dispatchable low-carbon power. Up to 2mn t/y of CO₂ will be captured at the plant, and then transported to secure subsea storage sites beneath the North Sea via infrastructure provided by NEP, NZT Power says. NEP’s total initial CO₂ sequestration capacity is 4mn t/y.

BP will provide operating services to NZT Power and holds a 75% stake in the project, while Equinor holds 25%. BP will also provide operating services to NEP, holding a 45% stake in that project, alongside Equinor which holds a 45% interest and TotalEnergies which has a 10% stake, according to a UK government statement.

Louise Kingham, Senior Vice President Europe and Head of Country, UK for BP, says: ‘These projects represent another step forward for BP’s overall investment plans in the UK. They harness the skills, talent and determination of an established industrial region and apply them to the UK’s own energy transition.’

The former CEO of the Energy Institute adds: ‘We’re proud of the potential of these projects to help stimulate economic growth by supporting thousands of jobs and helping UK companies prosper through the vast supply chains involved, while creating the infrastructure to help major industrial companies with their decarbonisation plans.’

This announcement comes as the North Sea Transition Authority (NSTA) awarded the first-ever carbon storage permit to the NEP store. It also marks a significant milestone as Ofgem takes over as the regulator for the CCUS economic licence. In addition, The Low Carbon Contracts Company (LCCC) will also play a vital role as counterparty to the CCUS business models – the Dispatchable Power Agreement (DPA) and the Revenue Support Agreement, the government said.

The DPA is a contractual framework based on the Contracts for Difference (CfD) standard terms and conditions but adapted to enable natural gas fired power with CCS, according to NZT Power.

NEP has also been granted government approval to progress development engineering of the Humber Carbon Capture Pipeline (HCCP), the proposed onshore infrastructure project that would transport CO₂ from future selected carbon capture projects in the Humber region. That could support a total of an average of 23mn t/y of CO₂ across Teesside and the Humber, NEP reports.  

Building work on the two projects will be completed by nine engineering, procurement and construction contractors across eight contract packages with a combined value of around £4bn. Wood, which has won a contract for integrated project management, said that the current execution phase for both NZT Power and NEP involves beginning the final stage of detailed engineering, and concluding procurement and preparations for construction and commissioning activities.

In reaction, Richard Power, Partner and energy industry disputes lawyer at global law firm Clyde & Co, comments: ‘Today’s confirmation of financial close for the East Coast Cluster CCUS projects is a major step for the UK’s energy transition and net zero pathway. However, it is likely to be controversial and technologically, legally and economically risky.’

‘Critics of CCUS argue it is a fig leaf – it is an excuse to prolong the use of fossil fuels rather than phase them out as quickly as possible. But the counter-argument is that renewables cannot provide a complete substitute for hydrocarbons, and for hard to abate industries, CCUS offers a relative immediate, practical solution to greenhouse gas emissions.’

‘Technologically, the challenge is to build and operate the CO₂ capture, transmission and storage equipment and infrastructure which operates efficiently and safely, at scale. Legally, the challenge is to develop a legal and regulatory framework that creates a CCUS economy, incentivising private investment by creating a market for the capture and storage/use of CO₂. The UK government has done this via a regulated market for licenced operators, with a CfD-style contractual mechanism that provides market entrants with a guaranteed level of income to remove some of the pricing risks of this nascent market. CfDs worked to stimulate the UK’s offshore wind market, but the question is whether the same model will work effectively to support a different technology with potentially different market dynamics.’

‘Furthermore, as with most energy projects, and especially those involving hydrocarbon-based energy, it remains to be seen whether legal challenges will be launched by environmental groups, which could hold up development even if ultimately unsuccessful.’

In related news, on 20 December the LCCC announced the signing of the first three of 11 hydrogen production contracts under the UK’s Hydrogen Allocation Round 1 (HAR1). They are the Cromarty, Whitelee and West Wales projects, which once operational will have a combined capacity of 31.8 MW. The Hydrogen Production Business Model builds on the CfD scheme, adapting it to a new sector and technology.