Department for Business, Energy and Industrial Strategy

Invitation to Tender for Phase 1 Scoping Study for the BEIS CCU Demonstration Programme

Tender Reference Number: TRN1393/11/2017

Deadline for Tender Responses: 2:00 PM Monday 22ndJanuary 2018

Department for Business, Energy and Industrial Strategy

Date:4thDecember 2017

The Department for Business, Energy and Industrial Strategy (“BEIS”) wishes to appoint a Supplier to undertake a Scoping Study for Phase 1 of the Carbon Capture and Utilisation (CCU) Demonstration Programme. This is the first phase of the up to £20m CCU Demonstration Programme announced in the Clean Growth Strategy[1].

Enclosed are the following sections:

Section 1 (page 3) Instructions on tendering procedures
Section 2 (page9) Specification of requirements
Section 3 (page22)Further information on tendering procedure
Section 4 (page 25) Declarations and information to be provided:
Statement of Non-Collusion
Form of Tender
Conflict of Interest
Standard Selection Questionnaire
Code of Practice for Research
Annex A: Pricing breakdown
Annex B: Code of practice for research
Annex C: Terms and Conditions for Contract

To apply for this tender please register on the following website Please contact the Delta Helpdesk on 0845 270 7050 for any registration queries. Please upload your proposal before the deadline via BIP Solutions Delta Website.

Please read the instructions on the tendering procedures carefully as not complying with them may invalidate your tender. Your tender must be returned by 2:00 PM22ndJanuary 2018, clearly marked as “TENDER”.

I look forward to receiving your response.

Yours sincerely,

Nick Bevan,

Industry & CCUS Innovation Team

Page 1 of 58

1.Indicative Timetable for Tender Exercise

2.Submitting Tenders

3.Conflict of Interest

4.Terms and Conditions of Contract

1.Indicative Timetable for Tender Exercise

The anticipated timetable for this tender exercise is as follows. BEIS reserves the right to vary this timetable. Any variations will be published on BIPSolutions Delta website or circulated to all organisations who have registered an interest in notifications.

Tender Timeline / Date
Advert and full invitation to tender issued / 4thDecember 2017
Deadline for questions relating to the tender / 4PM 15thDecember 2017
Responses to questions published / 22ndDecember 2017
Deadline for receipt of tender / 2:00 PM 22ndJanuary 2018
All suppliers alerted of outcome / 2nd February 2018
10 day standstill period / 2nd – 12th February 2018
Contract awarded on signature by both parties / 12thFebruary 2018
Contract start date / See above.

The contract is to be for a period of approximately 6 calendar months ending 31st August 2018 with a possible extension of up to 3 months, unless terminated or extended by the Department in accordance with the terms of the contract.

2.Submitting Tenders

The maximum page limit for tenders is15 pages (excluding declarations).

It is no longer necessary to send hard copies of your proposal and declarations. However if you would like to send hard copies of these (in addition to the version uploaded), pleasefeel free to also send 3 hard copies of your proposal and declarations by the tender deadline addressed to:

Nick Bevan, Industry & CCUS Innovation Team, Floor 6, BEIS, 1 Victoria Street, London SW1H 0ET. Envelopes/packages should bear no reference to the tenderer by name and must be clearly marked as “Tender”.

For questions on the procurement process please contact .

If you require further information concerning the tender process, or the nature of the proposed contract, email . All questions must be submitted by 4PM 15thDecember 2017. Should questions arise during the tendering period, which in our judgement are of material significance, we will publish these questions with our formal reply by 22ndDecember 2017,and circulate – unnamed - to all organisations that have expressed an interest in bidding. All contractors should then take that reply into consideration when preparing their own bids.

The Department may amend the enclosed tender documents prior to the deadline for receipt of tenders. Any amendment will be numbered, dated and issued. Where amendments are significant, the Department may, at its discretion, extend the deadline for receipt of tenders.

Tenders will be received up to the time and date stated, and not considered after the deadline. Those received before that date and time will be retained unopened until then. Tenders should remain valid for a period indicated in the specification of requirements.

The Departmentshall have the right to disqualify you from the procurement if you fail to fully complete your response, or do not return all of the fully completed documentation and declarations requested in this ITT. The Departmentshall also have the right to disqualify you if it later becomes aware of any omission or misrepresentation in your response to any question within this invitation to tender.

You will not be entitled to claim from the Department any costs or expenses that you may incur in preparing your tender whether or not your tender is successful.

The Departmentreserves the right to withdraw this contract opportunity without notice and will not be liable for any costs incurred by contractors during any stage of the process. In the event a tender is considered to be fundamentally unacceptable on a key issue, regardless of its other merits, that tender may be rejected. By issuing this invitation, the Department is not bound in any way and does not have to accept the lowest or any tender, and reserves the right to accept a portion of any tender unless the tenderer expressly stipulates otherwise in their tender.

3.Conflict of Interest

The BEIS standard terms and conditions of contract refer to conflict of interest and require contractors to declare any potential conflict of interest to the Secretary of State.

For research and analysis, conflict of interest is defined as the presence of an interest or involvement of the contractor, subcontractor (or consortium member) which could affect the actual or perceived impartiality of the research or analysis.

Where there may be a potential conflict of interest, it is suggested that the consortia or organisation designs working arrangements such that the findings cannot be influenced (or perceived to be influenced) by the organisation which is the owner of a potential conflict of interest. For example, consideration should be given to the different roles thatorganisations play in the research or analysis, and how these can be structured to ensure an impartial approach to the project is maintained.

The process by which this is managed in the procurement process is as follows:

During the bidding process, organisations may contact BEIS to discuss whether or not their proposed arrangement is likely to yield a conflict of interest.Any responses given to individual organisations or consortia will be published on BIPSolutions Delta Website (in a form which does not reveal the questioner’s identity). Any organisation thinking of submitting a bid, should share their contact details with the staff member responsible for this procurement, to ensure they receive an update when any responses to questions are published.
Contractors are asked to sign and return Declaration 3 to indicate whether or not any conflict of interest may be, or be perceived to be, an issue. If this is the case, the contractor or consortium should give a full account of the actions or processes that it will use to ensure that conflict of interest is avoided. In any statement of mitigating actions, contractors are expected to outline how they propose to achieve a robust, impartial and credible approach to the research.
When tenders are scored, this declaration will be subject to a pass/fail score, according to whether, on the basis of the information in the proposal and declaration, there remains a conflict of interest which may affect the impartiality of the research.

Failure to declare or avoid conflict of interest at this or a later stage may result in exclusion from the procurement competition, or in BEIS exercising its right to terminate any contract awarded.

4.Terms and Conditions of Contract

The BEIS Standard Terms and Conditions of Contract will apply to this contract. These are attached to this invitation to tender in Annex C.

For the purpose of this ITT, BEIS Standard Terms and Conditions of Contractare amended as follows:

Clause 18 (3)

The Contractor shall effect with a reputable insurance company a policy or policies of insurance providing an adequate level of cover in respect of all risks which may be incurred by the Contractor in respect of the indemnities provided under the Contract, which in any event shall not be less than £1,000,000, and shall at the request of the Authority produce certificates evidencing that such policies are in place.

Clause 18 (7)

Except in relation to death or personal injury as referred to in Condition 18(1), and subject to Conditions 18(5) and 30(6) the amount of liability under this clause shall be limited £1,000,000, or such other sum as may be agreed in writing between the Head of Procurement on behalf of the Authority and the Contractor.

Page 1 of 58

1.Background

2.Objectives, Work Required and Outputs for Phase 1

3.Information Management

Ownership & Publication

Storage and Transfer

4.Quality Assurance

5.Timetable

6.Working Arrangements

7.Required Experience and Expertise

8.Consortium Bids

9.Budget

10.Evaluation of Tenders

a.Criteria

b.Scoring Method

c.Contract Clarification Process

d.Feedback

1.Background

The Clean Growth Strategy (CGS)[2] highlights the value of the UK deploying carbon capture, utilisation and storage (CCUS) from 2030. There is a broad international consensus that CCUS has a vital future role in reducing emissions. This could be across a wide range of activities such as producing lower-emission power, decarbonising industry where fossil fuels are used and/or industrial processes as well as providing a decarbonised production method for hydrogen which can be used in heating, industry and transport. This makes CCUS a potentially large global economic opportunity for the UK. The International Energy Agency estimates there will be a global CCUS market worth over £100 billion - with even a modest share of this global market, UK GVA could increase to between £5 billion and £9 billion per year by 2030[3].

However, the current technology is expensive and there are only 21 large-scale plants operating, or in construction, across the world – of which 16 rely on revenue from providing carbon dioxide for enhanced oil recovery[4].

While we have explored ways to deploy CCUS at scale in the UK since 2007, the lack of a technological breakthrough to reduce the cost of CCUS and the cost structures and risk sharing that potential large-scale projects have demanded has been too high a price for consumers and taxpayers. It is clear from the relative lack of deployment of the technology that other governments have reached a similar conclusion.

The cost of carbon capture is a key element of CCUS, making up for example approximately 35% of the cost of deploying CCUS in the power sector, see figure 1.

Figure 1: Levelised cost of gas-fired power production with post combustion capture for a project commissioning in 2025[5]

To encourage early learning and cost reduction, capture technology can potentially be deployed commercially at an intermediate scale (approx. 30,000-70,000 tonnes of CO2 a year). At this scale the CO2 can be commercially utilised for industrial processes, allowing for example, the cost of demonstrating the technology to be partially funded by the host site having to pay less for the CO2 they currently use. BEIS believes the price range for purchasing tens of thousands of tonnes of food-grade CO2 is between £80-120 per tonne of liquid CO2[6].

The early demonstration of carbon capture on these first projects will begin learning about the optimal way to configure the plants, and will provide crucial operational data on performance and degradation. These plants will act as the “lead unit” for the demonstration of the technology, providing tens of thousands of hours operation. By de-risking the technology at this scale, this will encourage the technology to be used in similar projects in the UK and internationally, e.g. potentially enabling a pipeline of projects where novel configurations, processes, materials and technology to follow to act as an early market pull to accelerate carbon capture technology development and the development of a CO2 utilisation market in the UK.The focus on capture technologies, in the CCU programme, are for those that can be developed, scaled andeventually used for large “mega-scale” (>1Mtpa CO2) CCUS projects.

CO2 utilisation is an evolving subject in the UK and internationally, to complement this ITT BEIS is publishing two reports that have been preparedby ECOFYS[7] and the Royal Society[8]. By establishing more carbon capture at UK industrial sites this should improve BEIS’ and Industry’s understanding of the opportunities for further CCU in the UK.

It is for this purpose that BEIS has allocated up to £20m of the £100m funds allocated for Industry and CCUS Innovation to fund the design, construction and demonstration of CCU in the UK. The CCU Demonstration Programme, announced in the Clean Growth Strategy, will be progressed as three phases:

Phase 1 will be the commissioning of a 6month Scoping Study (this ITT), for a third-party engineering supplier to work with participating companies that wish to capture and/or utilise the CO2, or provide the necessary equipment. The supplier will produce site-specific design estimates for deploying CCU technology to a cost accuracy of at least ±30%. Where appropriate a range of design estimates will be examined for each host site to study different technologies, options for commercial use of the CO2, and plant configuration;
The design estimates will be used to allow BEIS and the project developers to confidently determine if the CCU projects should progress to a design study (Phase 2); and
Ultimately construction and demonstration of up to two CCU projects (Phase 3);
Phase 2 & 3 will provide grant-funding[9] for project applicants to complete design and construction respectively. Companies wishing to apply for funding for Phase 2 and 3 will be expected to participate in Phase 1 by working with the successful supplier in the production of these design estimates for BEIS. If BEIS cannot gain sufficient confidence in the evidence collected and produced in Phase 1 it will not progress the programme into Phase 2 and 3;
The timing of Phase 2 and 3 will be guided by the outputs pf Phase 1, but currently the programme envisions 9 and 19 months respectively. Figure 2 is an illustration of the schedule for the full CCU Demonstration Programme;
During Phase 1 a decision will be made if Phase 2 and 3 can be allocated funding as a single award after Phase 1. With funding being offered to some projects to complete both design and construction, and other projects only receiving funding for design. This will allow projects receiving funding for both Phase 2 and 3, to have up to 23 months to complete the project, with funding ending by 31st March 2021;
BEIS and the Phase 1 supplier will hold an Industry Engagement Day in February/March for companies interested in participating in the three phases of the programme. This will allow the CCU programme to be discussed, for questions to be asked and answered, and for companies to become aware of potential partnerships;
If BEIS progresses the programme into Phase 2, it will procure, in a separate invitation to tender, the services of a third-party supplier to act as its technical advisor for the full duration of phase 2 and 3 to support in the monitoring of the grants funded.

Figure 2: Illustrative programme for full CCU Demonstration programme

2.Objectives, Work Required and Outputs for Phase 1

The overall purpose of the Phase 1 Scoping Study is for the supplier to work on BEIS’ behalf with companies that wish to participate in the CCU Demonstration Programme to produce site-specific cost estimates that will allow BEIS to assess the merit of co-funding projects to design, construct and demonstrate CCU at UK industrial sites. For each participating host site considered a range of plant configuration, technologies and other options will be considered to ensure a comprehensive analysis of options have been considered.

The work required of the supplier and deliverables have been sub-divided into the followingwork streams:

Work stream 1: Selection of the participating companies

Engaging with companies interested in participating in the CCU Demonstration Programme, namely host sites, CO2 users and equipment providers. For tendering purposes assume a single Industry Engagement Day is required, which can be held at BEIS;
Support BEIS in producing an assessment criteria for which host sites and participating companies are selected to participate further in the Phase 1 study;
Production of an enquiry document, to enable the supplier to collect sufficient information to produce site-specific cost estimates in work stream 2. This information gathering will be aided by site visits as discussed in work stream 2;
The supplier will produce a market study on the current market for CO2 in the UK. The market study will examine current users and suppliers of CO2, how the CO2is produced and the likely cost of production. This evidence will be used to complement the site specific-cost estimates to understand what a CCU project will need to achieve to be financially viable for a private sector investment.

Work stream 2: Production of cost estimates

Production of site-specific cost estimatesof the capital and operating expenditure for capturing and utilising CO2. The cost accuracy of the estimates will need to be of the highest fidelity, being at least ±30%, and be of a quality to determine the business case for the individual projects progressing. For tendering purposes please produce three cost schedules, each cost schedule consist of a number of cost estimates per host site, that examine the most promising capture technology, CO2 utilisation options and plant configuration. Please include travel for 2 trips per host site:

Cost schedule 1, assuming up to five cost estimates are produced for two host sites participating in the study.;
Cost schedule 2, assumingup to three cost estimates are produced for five host sites participating in the study;
Cost schedule 3, assuming up to five cost estimates are produced for five host sites participating in the study;

Tenders will be assessed against Cost schedule 2;