The first engineering contracts have been awarded for the Net Zero Teesside Power's carbon capture, utilisation and storage (CCUS) project.

On behalf of its partners, bp, awarded the contracts for both the multimillion-pound flexible gas-fired power station with CCUS capabilities and the Northern Endurance Partnership's facilities which will gather and compress CO2 and export it offshore for storage.

Technip Energies and General Electric consortium – led by Technip Energies and including Shell and Balfour Beatty – and Aker Solutions Doosan Babcock and Siemens Energy consortium, led by Aker Solutions and including Aker Carbon Capture were the two selected contractor groups.

The groups will each deliver a comprehensive Front End Engineering Design (FEED) package, led from their UK offices, over the next 12 months. Following this, they will then submit proposals for the execution phase. As part of the Final Investment Decision expected in 2023, a single consortium will be selected to take the project forward into construction.

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The scheme is the Government's preferred project to lead the UK's net zero ambitions and will see up to 10million tonnes of CO2 emissions captured each year – equivalent to the emissions associated with the annual energy use of three million UK homes – and store it under the North Sea via a series of pipes. The scheme aims to be up and running within the next five years and could create 5,500 direct jobs during its construction and add £450million to the economy each year.

Tees Valley Mayor Ben Houchen said: "Just days after local firm Thompsons carried out a large-scale explosive demolition project, and we lodged plans to clear the site on Teesworks where Net Zero Teesside Power will sit, we now have this incredibly welcome news.

"This announcement shows how fast our plans are accelerating to deliver this game-changing facility on Teesside. Net Zero Teesside Power is a flagship project to put our region front-and-centre in delivering the cleaner, safer and healthier industries of the future.

"It has been recognised by Government as a key project needed to drive the UK’s net zero ambitions and it will also put us on the map for other businesses looking for locations for their own low-carbon projects. What’s more, it'll do all this while creating the thousands of well-paid, good-quality jobs people from across Teesside, Darlington and Hartlepool people deserve."

Louise Kingham, bp's UK head of country and senior vice president of Europe said: "Moving to Front End Engineering Design is a major step forward for Net Zero Teesside Power and the development of the Northern Endurance Partnership. This first-of-a-kind project has the potential to deliver enough low carbon, flexible electricity to power around 1.3 million homes, and can help secure Teesside's position at the green heart of the country’s energy transition."