Amidst the UK Government’s newly unveiled plans for Great British Energy, the energy transition is the front runner for many organisations and individuals as addressing the climate emergency, and meeting 2050 targets, become increasingly urgent priorities.

Significant progress has been made through the UK’s development of carbon capture, usage and storage (CCUS) industry clusters. These clusters use new and existing infrastructure to produce low carbon hydrogen, while carbon dioxide emissions are captured and then transported deep underground for permanent storage. This in turn helps to decarbonise the production of a wide range of products used across the UK, moving the country towards its net zero goals.

CCUS industrial clusters will have an undeniable impact on the energy transition and enhancing the planet for future generations. However, as these kinds of facilities haven’t been delivered in the UK before, questions have been raised over what constitutes best practice in financing and procuring for these initiatives in the future. As the HyNet Hydrogen Production Plant 1, one of the first landmark projects from the CCUS clusters, moves towards achieving Final Investment Decision (FID), I’ve outlined an overview of key points which may improve the efficiency of resourcing future clean energy projects of this scale.

Improving the tender process

As a first of its kind project, the interests of owners, operators, lenders, investors and governments need to be closely aligned from the outset. Where there’s no existing blueprint for this type of scheme, getting the allocation of risk right is a top priority for all parties. A great deal of consideration is required to identify how to apportion technical and commercial risk when most contractors haven’t previously worked on hydrogen projects.

Through prioritising the demonstration of deliverability, and bringing everyone involved along on the journey, consultants can foster trust, the vital ingredient for effectively bringing programmes to the point where FID can be achieved. During the contracting process, consultants can provide the necessary input to help prioritise and create a strategy that all parties find acceptable. All parties should be engaged with clear communication to create a balanced situation which is beneficial to everyone when it comes to risk allocation. This should also take account of the necessary flexibility and forward planning for what may happen in the event of cost changes during the project.

Cost optimisation

One of the significant challenges in achieving net zero emission target is the requirement of huge capex investment. While there has been continued support from the Government on financial assistance to sustain the initial development of CCUS initiatives, it becomes equally important on the part of project developer to optimise the cost at each stage of development to make such initiative self-sustainable on a longer horizon. In this pursuit, all key stakeholders, including the Government, government entities, the project developer, technology partners, contractors and suppliers should aim to collaborate and devise a contracting strategy that brings a win-win proposition to all. As is usually said, any reduction in energy wastage is energy saved, likewise any reduction in green house emission will pave the way in reduction of climate temperature rise and so help future generations to live a healthier life.

Communication in complex environments

Communication is always a significant challenge on any large-scale project or programme, but when managing a large group of stakeholders in the newer clean energy field on a first of its kind initiative, keeping the lines of communication open so that the right people are talking is even more important than usual.

At the outset, senior leaders from each party involved should identify their own and/or company aims and goals and identify any blockers or potential siloes and collaborate to break these down as soon as possible. This will ensure the establishment of the most time-efficient way through the initial stage of formulating and agreeing contracts. As the contracting process moves forward, it’s vital to have nominated individuals from each organisation who are aware of all relevant communications and can prioritise the continued flow of information. The best way to efficiently move forward and achieve the maximum benefit for all parties is for these individuals to prioritise frankness and transparency to share information, as well as actively listening to each other’s opinions and suggestions to ensure that any issues are identified and addressed at the earliest opportunity.

Unchartered waters in delivering clean energy facilities

Addressing climate change is the construction industry’s greatest challenge, and organisations globally are investing extensive time and resource into decarbonising the delivery of projects and programmes. However, CCUS schemes are still a relatively new concept to the industry, and more needs to be done to bring contractors on board, despite the perceived risks.

Confidence should grow as the industry sees the first hydrogen plant being successfully constructed. It’s vital that teams include ‘lessons learned’ sessions as a way of building on best practice and think ahead to address any potential challenges that could arise on future projects.

The progress made to date as the industry moves towards achieving FID at the UK’s first hydrogen production plant is significant, and the process undertaken will set a new standard for other similar projects to follow in the future. If teams prioritise fostering transparency between parties across the supply chain, especially with regards to apportioning technical and commercial risk, that will be a great starting point for success. Additionally, as the deliverability of these schemes becomes clearer and clearer across the industry, procurement processes should gradually improve, allowing similar facilities to be constructed to the highest standard and supporting vital climate change goals.