The Captain Clean Energy project in Grangemouth, Scotland, missed out on a share of £1 billion the government had lined up to kickstart commercial scale CCS.
However, the developers are in talks with government on getting support through the contracts for difference (CfD) regime.
Ian Phillips, director at CO2 Deep Store, which is involved in the project, said they were seeking a guaranteed “strike price” for their power that is “directly competitive with offshore wind”. That will depend on government agreeing to underwrite some of the low probability, high impact risks, as with nuclear power.
Offshore wind is due to get £155/MWh under the subsidy regime, dropping to £140/MWh in 2018/19.
The developers have “considerable confidence” they will secure a CfD in the next 12 months, Phillips added, speaking at a Westminster Energy Environment and Transport Forum event.
The cost of CCS projects can vary widely, however, as the sector is still relatively immature. In particular, the network infrastructure needed depends on the location.
Bill Spence, business opportunity manager at the Peterhead Project, which was one of two projects to secure a share of the £1 billion, said he did not expect it to immediately compete with more established sectors.
Peterhead, a collaboration between SSE and Shell, is just starting front-end engineering and design studies. These will take years, so it is “too early to say” what strike price will be needed.
It involves repurposing oil and gas assets with an estimated lifespan of 10 years. “When you have to defray the costs over 10 years it is more expensive,” said Spence.
While the costs involve can look high, industry figures and government cite research by the Energy Technologies Institute showing that cutting carbon out of the energy mix by 2050 will cost £32 billion more without CCS.
The industry is aiming to bring the levelised cost of electricity down to £100/MWh for projects taking final investment decisions in 2020. Government expects to see 13GW of power with CCS by 2030.
Spence said: “We are going to have to get down the cost curve and up the learning curve faster than renewable technologies.”