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Carbon capture for power plants remains vague

13 March 2025

Commentary
Jennifer Aguinaldo
Energy & technology editor

All GCC states have ongoing projects and plans to procure new thermal power generation plants.

The new thermal power plants will displace capacity from ageing liquid fuel-fired fleets, particularly in Saudi Arabia. For the rest, these plants are expected to help boost the security of supply as peak demand increases and intermittent renewable sources expand in line with energy diversification and carbon reduction strategies.

The lack of clear provisions for carbon capture, utilisation and storage (CCUS) solutions is a major sticking point holding back many international utility developers from continued participation in new projects and tenders in light of their 2045 or 2050 net-zero carbon emissions targets.

Most independent power projects are backed by offtake agreements that last up to 20 to 25 years. Given that these facilities typically require three years for construction, the power-purchase agreements activated upon the start of a plant’s commercial operations will be in force until around 2048 to 2053.

Despite robust discussions on the topic, none of the recently tendered contracts in the region reached mutually acceptable, clear paths to capturing, storing or reusing carbon emissions.

So far, available measures for decarbonisng these plants involve using more efficient gas turbines or gas turbines that can accommodate blended natural gas and hydrogen; reopening carbon capture talks once the power stations start operation and a clearer framework emerges; or shortening the concession period by a few years to avoid missing the 2050 net-zero targets.

It is also worth mentioning that the costs and complexity involved in thermal plus CCUS projects contrast with the least-cost energy transition being pursued by the region’s utility stakeholders.

For instance, the UK’s 742MW Net Zero Teesside (NZT Power) project – along with its carbon storage and transport infrastructure – will require an investment of $4bn, easily quadrupling the existing costs for non-CCUS power stations in the GCC.

Despite the staggering cost, however, NZT Power has reached financial close –  with building work starting by midyear for a 2028 start-up date – on the back of a plan to capture up to 2 million tonnes of CO2 a year, which will then be transported to secure subsea storage sites beneath the North Sea.

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Chinese contractors win record market share; Cairo grapples with political and fiscal challenges; Stronger upstream project spending beckons in 2025

Distributed to senior decision-makers in the region and around the world, the March 2025 edition of MEED Business Review includes:

> GULF PROJECTS INDEX: Gulf hits six-month growth streak
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Jennifer Aguinaldo

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