Risk sharing and requirements for CCfDs in CCS – The pending issues to reach the Prinos CO2 market test

The comprehensive "reading" and recording of the risks that accompany the supply chain of the CCS value chain is a prerequisite for the emitters to be able to open up to the full scope of the discussion on contracts for difference (CCfDs), which in turn will practically pave the way for final investment decisions.

In particular, as competent sources with knowledge of the matter point out, the quantification of the risks that may arise during the maturation of the projects and given that this is a new technology with little to no previous experience in the Greek market, constitutes basic material that in turn will determine the approach of the companies during their negotiations with the Greek Ministry of Environment and Energy for the formation of the CCfDs scheme. "We need full visibility of the risk to talk about CCfDs", as it was stated characteristically.

Although the relevant discussions are still at an early stage, both the emitters and EnEarth, the implementing body of the "Prinos CO2" project and a subsidiary of Energean, seem to share the approach in favor of a single line to the Ministry regarding contracts for difference, which of course requires a preliminary examination of the risks that may arise throughout the entire supply chain.

For their part, as reported by competent sources, the emitters have proceeded to commission a relevant study, the results of which will be used to formulate the proposal to the Ministry, with the general timetable calling for a first meeting with the political leadership to be planned immediately in order to establish, at least in the first phase, the basic general outlines of the scheme, so that further specialization can follow in the immediate future.

In any case, as market sources with knowledge of the matter underline, the initiative of the movements at this stage belongs to EnEarth as the operator of the underground carbon dioxide storage facility in Prinos, with it being called upon to document proposals and risk management methods. As for these risks, they concern cases where the initially determined data may change, such as the availability of the storage facility, any delays in implementation or changes in the available storage capacity.

It is noted that both parties, emitters and EnEarth, are in constant communication for the further maturation of the project with the immediate next steps concerning the notification to the emitters, possibly next week, of two important texts. The first concerns the "initially estimated capacity" where the capacity of Prinos in full development phase is determined and confirmed for 2.8 million tons of CO2 per year. According to the foreseen procedure, this text should be submitted to HEREMA as the competent body for CCS, to follow a public consultation of at least 3 weeks and then to be approved, completing the list of regulatory documents.

The second text concerns the "Joint Development Agreement" which in turn will mark the countdown to the announcement of the first phase of the market test. According to existing data and taking into account the relevant "bureaucratic" procedure that is required to be followed in this case as well, the "market test" is expected to begin around the end of May or the beginning of June.

Additionally, EnEarth plans to proceed with the "update" of the Storage Permit and the Environmental Impact Assessment, in order for them to cover the entire capacity, since the existing respective approved texts concern the first phase of development of the project with a defined storage capacity of approximately 1 million tons of CO2 per year. In this direction, EnEarth plans to submit a new application for the Storage Permit, while a new Environmental Impact Study will be prepared, which will require a new Environmental Impact Assessment.

In conclusion, a "common ground" in the discussions that have been taking place throughout this period and are expected to intensify in the coming period, including the political leadership of the Greek Ministry of Economic Affairs and Investment, is the need to run the relevant procedures in order to keep the timetable that provides for the final investment decisions by the emitters for their projects within the first quarter of 2027 "alive".

Otherwise, and in the absence of maturation steps, the risk of the schedule partially deviating remains, with a final margin around the end of 2027, when the emitters' projects will also have to submit a Final Investment Decision in order not to lose the Innovation Fund's funding.  

source: energypress.gr

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