Natural Gas with CCS: Market Coordination & Design
The Natural Gas with CCS sector would benefit from project standardization and opportunities to get the relevant players together in the same room
Details
Core information and root causes
Context
The underlying technology and project designs for Natural Gas with CCS have moved well past the R&D and FOAK stage but are not yet sufficiently de-risked to achieve consistent bankability. There are no standardized commercial contracts for CCS power and variation between projects, which increases transaction costs and negatively affects learning curves.
Industry Observations & Insights
“Project developers need enough reps to achieve learning curves. The theory of the case for us in the early procurement and market making that we're trying to do is, through the early projects, try to bring these technologies down the cost curve. A lot of what is entailed with that is technology and optimization of the technology, but a lot of it is soft costs. If it's the first time the crew has ever built a project for this, the first is going to cost more than the tenth time. There are any number of different “learning by doing” opportunities that need to happen enough times for the cost curve to start to come down.” -Natural Gas Buyer (Hyperscaler)
“I suspect for something at an earlier stage like CCS where there is a lot of cost curve to come down, some sort of commercial contract standardization could probably help. Because you can cut out a lot of the fluff from the negotiation and the due diligence and get everyone kind of iterating on the same set of approaches and tools” -Natural Gas Buyer (Hyperscaler)