Tender for contract on subsidy for carbon capture, transport and storage

Description

With the Danish Climate Agreement for Energy and Industry of 22 June 2020, a majority of the Danish Parliament decided that carbon capture and storage is to be an important element in achieving Denmark’s climate policy objectives. This prompted the setting up of technologically neutral and market-based funds (CCUS funds) of DKK 16 billion scheduled for deployment between 2024-2048. The funds are deployed in two phases. This tender concerns the first phase. The DEA considers the deployment of funds for the first phase and conclusion of the contract to be a subsidy scheme encompassed by the European Commission’s Guidelines on State aid for climate, environmental protection and energy 2022. The designation of the contract as a services contract in section II.1.3) etc. does not change this. The competitive bidding process for the first phase is conducted as a negotiated procedure in accordance with the rules and principles of section II of the Danish Public Procurement Act. Lot 1: On 7 June 2022 the DEA dispatched Contract Notice no. 2022/S 111-312435, published 10 June 2022, as amended by notice 2022/S 128-365765 and 2023/S 023-064608, concerning a contract pursuant to which the recipient of the subsidies (“the Operator”) shall ensure and be responsible for capture, transport and permanent storage of CO2 (“the Contract”). In July 2022 the DEA adjusted the time schedule for the tender procedure and made clarifications to reflect that the subsidy is subject to VAT. In August 2022 the DEA prequalified three tenderers to submit negotiation offers (so-called first Indicative Offers “INDO”) (see https://ens.dk/ presse/tre-selskaber-er-praekvalificeret-til-byde-paa-ccus-puljen) and in Autumn 2022 the DEA conducted negotiations with the tenderers regarding the tender documents and the offers in accordance with the procedure (a negotiated procedure). Based on the negotiations and comments from the tenderers, the DEA made changes and clarifications to the tender documents. The DEA released the revised tender documents to the tenderers on 28 November 2022 while requesting a second Indicative Offer from the tenderers. In January 2023 the DEA conducted negotiations with the tenderers regarding the revised tender documents and the offers. On 27 January 2023 the DEA released the revised tender documents while requesting a Best and Final Offer (“BAFO”) from the tenderers. The DEA made the revised tender documents released on 28 November 2022 and 27 January 2023 publicly available with track changes on the website stated in section I.1). On 24 February 2023 the DEA dispatched voluntary ex ante transparency notice no. 2023/S 043-127149, published 1 March 2023, with the wish to promote transparency regarding the process and the changes and clarifications made in connection with the negotiation phase. At that time no decision had been made concerning the award of the Contract. This notice is sent in continuation of notice no. 2023/S 043-127149 as the DEA has now made its decision concerning the award of the Contract. As stated in notice no. 2023/S 043-127149 the changes and clarifications include for example adjustment of the amount, regulation for inflation and possibility of substitution of the performance and warranty guarantee, when a parent company guarantee is required (the Contract, clause 8), when insurances must be obtained (the Contract, clause 9), use of a temporary storage site (the Contract, clauses 14.1.2-14.1.6), exemptions from confidentiality (the Contract, clause 12), transfer of the Contract within the Operator’s group (the Contract, clause 13.1), adjustment of the liability cap (the Contract, clause 16.4), regulation concerning other state aid etc. during the Contract (Appendix 6, clause 3.1.11), and adjustment of the penalty structure, including use of the Accumulated Production Balance and levels related to the Minimum Quantity (Appendix 6, clauses 5.2.7-5.2.9 and 5.6). The changes and clarifications also include adjustment to the provision on extension of time (the Contract, clause 6.2), the DEA’s right of termination for cause in case of Delay (the Contract, clauses 15.5 and 15.6) and the date for commencement of operation of the carbon capture plant itself (Appendix 3, General Requirement R-15). The DEA has furthermore clarified certain matters relating to for example the Operator’s personnel (the Contract, clause 5.4), the Operator’s reporting (the Contract, clause 5.7.1), the DEA’s right to share Deliverables with third parties and third parties’ right to use the Deliverables (the Contract, clause 7), the Operator’s obligation to submit correction plans (the Contract, clause 15.2.2), the termination for convenience in relation to an amendment of the Danish Heating Supply Act (clause 19.2.1) and the performance and warranty guarantee (Appendix 11). The DEA has adjusted the time schedule for the tender procedure and reduced the minimum frame during which the tenderer must maintain the BAFO.