CCS Demonstration Competition: Documentation/Q & A
The contract notice for the CCS demonstration project has been published in the Official Journal of the European Union.
Competition Q & A (last updated 29/01/08)
Project Developers can use this website to put questions to the CCS Demonstration team via the CCS Demo mailbox. This facility will be available up until the deadline for submissions of pre-qualification questionnaires. Questions put to this mailbox and asked at Industry days are answered below:
- Are there any legal requirements to have a minimum number of bidders in the competition process? Would this number change throughout the process?
Under the Negotiated Procedure, an Invitation to Negotiate should be sent to a minimum of 3 bidders, on the basis that there are 3 appropriately qualified bidders. If there are not three appropriately qualified bidders, it may be possible to go forward with 2 bidders but we would need to consider our options based on the facts at the time. As set out in the PIM BERR retain the right to reduce the number of bidders at various stages of the procurement process.
- What information submitted by bidders will be shared throughout the process?
BERR has general obligations of transparency and equal treatment towards all Bidders during the procurement process and in this context would expect to share information submitted to it, including questions and issues raised by Bidders, with all Bidders. This will be unattributed. However, BERR also recognises the importance to Bidders of adequately protecting confidential or commercially sensitive information. Bidders are referred to the Important Notice at the front of the Project Information Notice (PIN), where it is stated that they should clearly identify, in any document they submit during the procurement process, any information communicated which is considered confidential or commercially sensitive, stating the reasons why it considers it to be so. As indicated, BERR will consider issues of disclosure in the light of its obligations under the Freedom of Information Act 2000 and the Environmental Information Regulations 2004. Further details may be outlined in the Invitation to Negotiate and discussed with bidders prior to detailed discussions being undertaken so that all parties are aware of the approach to be taken to bidder IP and solutions.
- How does the Freedom of Information Act affect this confidentiality?
The Freedom of Information Act 2000 (“FOI”) provides a number of exemptions to the duty it places on public authorities to disclose information. Among these are exemptions relating to information which is subject to a duty of confidentiality or which could prejudice commercial interests if disclosed. None of these exemptions provides a blanket of protection against disclosure of entire documents; instead, they protect particular kinds of information which may be contained within them. Moreover, the exemption relating to prejudice to commercial interests is also subject to an overriding public interest test, meaning that, even if disclosure would prejudice a party’s commercial interests, it could nevertheless be disclosed by a public authority if the balance of the wider public interest falls in favour of doing so. The balance of the public interest may alter, for example, over time, so a decision taken in relation to a request received six months from now may not be the same as a decision in relation to a request received in six years’ time.
- How would Government compare a bid based on EOR with those based on carbon storage?
A bid incorporating EoR would be assessed against the same evaluation criteria as all other bids. Assessment will not favour EOR (or other) bids because of differences in tax treatment.
- Is there any guidance on the behaviour of companies with regards to the formation of consortia?
Companies are free to bid in consortia – the only guidance we have issued stipulates that Applicants who seek to require any organisation to deal exclusively with their consortia may be disqualified from further participation in the Project.
- You have given 15 years as an indication as to the length of the supported phase of the project – what happens then?
Our hope is that, due to changes in the economics of carbon, regulatory requirements or other key determinants, the project will be able to continue to operate as a commercial proposition without the need for Government support.
- On Page 9 of the PIM, it states that support will be provided for the demonstration period, which will be at least 15 years. Can this be clarified further?
To reliably demonstrate the full chain of CCS technologies, the demonstration will need to run for a certain amount of time. We anticipate that this will be for at least 15 years, but would like to discuss this with Bidders during the Negotiation Stages.
- Will there be a requirement to have an element of UK procurement in the process?
No – the only requirement relating to the UK is that the project must be located in the UK with CO2 storage offshore within UK waters (and therefore subject to the regulatory regime proposed in the Energy Bill which will be introduced in this session of Parliament). There are various requirements under EU procurement rules which restrict discrimination on national grounds.
- Do you require all the consents to be in place by the end of the process?
No. But during the Negotiation Stages we will be discussing with Bidders their plans to ensure they gain all required consents in time to allow the demonstration of the full chain of CCS by 2014. The deliverability of the plan is likely to be important in the evaluation of Bidders submissions.
- What are the exclusion criteria under the Public Contracts Regulations?
The exclusion criteria are set out in Part 7 of the PQQ document
Back to top
- Government has been discussing State Aid for the demonstration project with the EU – is this discussion based principally on benefits for the environment, or on benefits for other member states?
Discussions on State Aid have primarily focused on environmental benefits, although there has been some discussion about the demonstration project being a ‘project of common European interest’.
- What are the likely outcomes of the State Aid submission for the demonstration project? What is the earliest point the submission can be made to ensure the greatest clarity for project developers?
We are keen to move forward quickly on this issue and have already met with officials from DG COMP. We will be working hard with the European Commission to progress their understanding of CCS and our project as far as possible and expect to have a series of informal communications with them throughout the competition. We will make the formal State Aid submission as soon as we have selected a preferred bidder.
- Is it important to address value for money in a State Aid submission?
The value for money that a project will deliver will be one of the key elements in the State Aid submission.
- What happens if the project is not granted clearance under the State Aid rules? Who bears the risk of this happening – Government or the project developers? What happens if the competition is successfully challenged on State Aid grounds?
BERR is working hard to ensure that the State Aid process runs smoothly for the CCS demonstration project, and we believe that there is a low probability of the submission being unsuccessful. In the event that State Aid approval has not been granted by the time the contract is signed then provision will be included making it specifically subject to such approval. We consider it highly unlikely that there would be a successful challenge on State Aid grounds as we are working closely with the Commission to ensure that our support for the project is acceptable under the State Aid rules.
- The EU is currently working up a ‘package’ on CCS – when will this be published, and what is it likely to cover?
We understand that the European Commission is planning to publish a package of work in late January, which will include draft Directives on the EU-ETS and the storage of carbon dioxide. Also published in the same package will be a Communication on the early demonstration of carbon capture and storage.
Back to top
- If the selected project runs over budget, who would be responsible for the additional costs?
Risk allocation and the basis of risk sharing will be discussed during the Negotiation Stages. The final responsibilities and allocations of risks will be determined during the negotiation process and defined in the contractual requirements. In practice there are likely to be a number of areas where risks will be shared as well as allocated to particular parties. The contract will determine how cost overruns are dealt with.
- Page 9 of the PIM states that ‘Government [will] fund up to 100% of the additional capital and operating costs incurred by the project developer’. What does this mean?
BERR will contribute up to 100% of the funding of those aspects of the overall costs of construction and operation of the Project which relate exclusively to the achievement of BERR’s objectives, i.e. the additional capital and operating costs incurred in relation to successfully demonstrating the capture, transport and storage of CO2. BERR will not subsidise the construction or refurbishment of the power station or the generation of electricity, except to the extent that operation of the power station is directly impacted by the capture process.
- Are there any regulatory reasons that would prevent funding for the CCS element of the demonstration reaching 100%?
No. In terms of State Aid clearance, funding for the demonstration will be considered on its own merits under the Treaty. The treaty provides for up to 100% funding (please refer to the answer to the answer to Finance – question 2 for a description of the costs we are willing to support).
- Support for the demonstration is likely to involve some form of upfront capital grant and ongoing revenue support. Will claw-back mechanisms apply to both of these types of support?
The exact nature of the clawback mechanisms will be the subject of negotiations with Bidders. We currently envisage that such arrangements will apply to both types of support but would be triggered by different sets of circumstances.
- Is it conceivable that payments could be made by Government before abatement of carbon has begun?
Yes. We propose providing some of the support in the form of a capital grant, to be paid on the achievement of project milestones, which will be reached before the capture plant is operational. The detail of this will be discussed during the Negotiation Stages.
- The indeterminate cost of leasing arrangements with Crown Estates is an unacceptable unknown. What will BERR do to resolve this?
Crown Estates will be closely involved in the competitive process and the details of the leasing arrangements will be discussed during the negotiation stages.
Back to top
- Taking a phased approach may mean greater uncertainty in the costs for the second phase. How will the Government handle this?
We will expect Bidders to provide certainty around the costs of the Project in their Final Bids. The risks associated with unknown factors that may affect cost and how those risks are allocated will be discussed during the Negotiation Stages.
- What does ‘as soon as possible thereafter’ mean in reference to a timescale for achieving the full levels of capture required?
If the project cannot achieve full levels of capture by 2014, we would expect that the Bidder plans to reach those levels within a relatively short time period. The exact timing of the different phases will be discussed during the Negotiation Stages.
- Do you expect that companies will be able to refine their original design between the initial phase and full-scale operation?
Given this is likely to be the first project of its kind and therefore involve significant learning we can see that companies may want to refine their design. How this is handled in contractual and payment terms will be discussed during the Negotiation Stages.
- The PIM document indicates that the shipping of carbon dioxide is acceptable –is this seen as a short term measure?
Not necessarily – we see shipping as a viable long-term method of transportation under the appropriate circumstances. It will be up to bidders to determine what they consider to be the best approach for their specific project.
- In the last paragraph of section 4.4 (page 29) the PIM refers to ‘the majority of the life of the Project’. What is the definition of this?
This sentence refers to the expectation that if a phased approach is taken, the initial phase will only last a short period of time. The exact timings associated with different phases would be the subject of discussion during the Negotiation Stages.
Back to top
- How important is 2014 as the date for the start of operations in relation to other requirements?
The demonstration of the full chain of carbon dioxide capture and storage by 2014 is a key objective of the Project.
Back to top
- The regulatory regimes that would affect this demonstration are currently uncertain – will they be resolved by the final bid stage?
The Energy Bill, to be introduced in this Parliamentary session, will contain clauses that set out the framework for the UK regulatory regime for the storage of carbon dioxide offshore. We will be publishing a consultation on the detail of our proposed regime in early 2008 with the aim of having the required secondary legislation in place by April 2009.
We expect a proposal from the European Commission for a European Union Directive covering carbon dioxide storage to be published in January 2008. It is difficult to anticipate when the Directive will be agreed, but it is likely to be at least 2010 before it is transposed into UK law. The approach we are taking will put the UK in a position where we can regulate the storage of carbon dioxide before EU legislation is finalised. We will work closely with the European Union as the Directive is developed. This will ensure a flexible approach so that any modifications to our regime which may be required once the Directive is adopted are kept to a minimum.
- OSPAR has yet to be ratified – this will be necessary to store carbon dioxide offshore. What progress has UK Government made on this?
The precise timing of ratification of the necessary OSPAR amendment is still uncertain as this is likely to be influenced by national and European regulatory developments, but the process is expected to take at least two years. Before ratification, it will be possible to use purpose built structures or injection direct by pipeline as methods for injecting CO2 into an undersea storage facility. However, the re-use of existing offshore energy structures in order to store CO2 under the seabed will not be permitted (unless for Enhanced Oil Recovery purposes). We will seek to ensure that the OSPAR Convention is ratified as soon as possible.
- On what basis will the Health and Safety Executive and the Environment Agency be involved in the competition process, and will they have the resources to cope?
We are working closely with both HSE and the Environment Agency throughout the competition. Resourcing is a matter for those organisations.
- Will HSE or other regulatory agency insist on a CO2 pipeline/shipping rupture demonstration to measure the effects of CO2 dissipation?
HSE does not anticipate every competitor carrying out their own CO2 pipeline rupture demonstration. However, there is a need for appropriate scale experimental work to provide HSE and duty holders with a thorough understanding of how CO2 behaves during foreseeable large scale releases. HSE is happy to work with industry on joint research initiatives.
- Should the capture facility be operational on only part of the capacity of the plant, will there be a requirement for the rest of the plant to be ‘capture ready’?
To ensure that CCS can be deployed efficiently once it has been demonstrated, we will be consulting this year on how best to ensure any new build fossil fuel plants can be retrofitted with carbon capture technology – the results of this consultation will be taken into account in specifications for any portion of the demonstration plant that does not operate with CCS.
Back to top
- Should we submit a PQQ alone, or enter into other companies who wish to submit a bid?
Companies and other forms of business organisation are welcome to submit PQQ responses alone or with other business organisations as a consortium. Both approaches are equally valid provided a full response to the PQQ is submitted.
- What type of companies do you expect/encourage to submit PQQs for the CCS project?
We are open to any type of business organisation responding to the PQQ, provided they can answer the questions fully.
- Can a company with CO2 capture technology alone be qualified, given that it does not have any power generation assets or solutions for transport and storage?
A PQQ response needs to demonstrate that the Applicant has the capability to deliver the full project (power generation with carbon capture, transport and storage) themselves, is part of a consortium that has the capabilities to deliver the project or has a credible plan to build a consortium with all the capabilities to deliver the project.
- What is a "credible" enough with respect to a plan for being part of a consortium?
If an Applicant does not have business organisations within their consortium to deliver the full project they need to demonstrate how the gaps will be filled by completing Table 1.10 and the questions at the start of Parts 3 and 4. The responses to these questions will then be evaluated.
- If we are disqualified on the basis of lacking a "credible" plan for partnering to deliver the total CCS chain would we then still be excluded if we at a later stage enter into partnership with another applicant, e.g. an energy company that has been qualified?
No, not necessarily. Applicants that are invited to participate in the next stage of the competition are able to bring additional business organisations into their consortium. But any new business organisations that will be undertaking one of the Key Roles will be evaluated against the relevant questions in the PQQ.
- The PQQ refers to ‘Key Subcontractors’ – are there any criteria that establish when a subcontractor is considered key?
A Key Subcontractor is an organisation, which is not a member of the Applicant, but which has direct responsibility to the Applicant in undertaking a Key Role. The Key Roles are identified as construction and operation of the facilities for power generation, capture, transport and storage elements, and management of project delivery. The Applicant should consider what information he considers appropriate to give BERR sufficient confidence that the Applicant has a credible plan to put in place a project organisation structure capable of successfully executing the Project in the appropriate timescale.
- If an Applicant has the option of partnering with more than one CO2 capture Key Role provider, can the PQQ be submitted with multiple providers in this role, enabling a final selection to be made at a later date?
An Applicant may not submit multiple providers for the same Key Role with a view to selecting one of those providers for the Key Role at a later stage. The purpose of the prequalification process is to assess whether the Applicant has the necessary economic and financial standing and technical ability and capacity to carry out the project. If BERR is unable to identify which of the entities put forward for the carbon capture Key Role the Applicant would select, we would not be able to score the prequalification response.
The prequalification questionnaire recognises that changes may occur within an Applicant’s bidding structure (p13 prequalification questionnaire) and Applicants are invited to discuss any changes with BERR in advance.
If an Applicant wishes to propose more than one Key Role provider for a particular role because a provider has yet to be identified, it should adhere to the process set out in paragraph 1.13 of the prequalification questionnaire regarding incomplete bidding entities.
It is possible for an Applicant to propose joint responsibility for Key Roles (paragraph 1.5 of the prequalification questionnaire). For example in the case of CO2 Storage the Applicant might propose separate entities for injection and storage. In this situation both entities would be evaluated.
- Signatures are asked for at the beginning of every section for each party contributing towards a particular section of the PQQ. In the case of the ‘lead’ applicant (who must effectively complete all sections) is it necessary to sign seven times or can one overall signature be provided? Can this be extended to one signature for each contributing party to cover the entire document?
Signatures for each of the sections of the PQQ are required from all parties completing that section.
For Section 5: Should a company be divided into a number of ‘business units’ (with accreditation, training and statistics varying across these units) does BERR require responses to questions 5.1-5.19 for each of these business units (i.e. the entire company) or only those units involved in the project development and potential construction/operation?
BERR will only require responses to questions 5.1 - 5.19 in respect of those business units that have a Key Role, i.e. are involved in the construction and operation of the facilities for power generation, capture, transport and storage elements and management of project delivery.
- Part 3 p40 states that 'In the event that a Key Subcontractor or Relevant Company has not been identified to undertake particular Key Role(s) the questions identified in the table below must be completed, by the Applicant, in relation to each such Key Role'. Does this mean that questions in the table should explicitly not be completed if a key subcontractor or relevant company has been identified to undertake particular key roles?
Where Key Subcontractors or Relevant Companies are identified, such Subcontractors or Relevant Companies need to fill in the relevant sections. The applicant only needs to contribute in respect of a Key Role for which a Subcontractor or Relevant Company has not yet been identified.
For example if Company A has been identified to undertake the key role “Management of Project Delivery – Construction” and Company B has been identified to undertake the key role “Management of Project Delivery – Operation” then Company A would need to complete and certify Part 3 questions 3.1 to 3.8 while Company B would need to complete and certify Part 3 questions 3.9 to 3.16. The Applicant would not be required to complete and certify any of Part 3.
- Does footnote 5 apply to section 2.16 as well as 2.13?
Yes
- For section 2.13 can examples that address just the design side be included?
Yes, but in this case please refer to section 1.13 on page 23 of the prequalification document.
There are only 3 large scale CCS projects in operation globally. A number of large scale CCS projects have completed all the feasibility and design stages but have not been implemented due to current economic constraints. Can these projects be used as examples in PQQ Section 2.13?
Yes – please refer to footnote 5 on page 35 of the prequalification document.
- In section 1.9 is it no more than 5 most relevant examples across the whole bid, or should each key subcontractor and relevant company name 5 examples each?
The latter - each key Subcontractor and Relevant Company should provide no more than the 5 most relevant examples.
Back to top
(239KB)
(796KB)
