Energy from waste's home front

Written by: Gev Eduljee, SITA | Published:
Ferrybridge Multifuel 1

Optimism for growth in the EfW sector has been dampened of late, thanks to a lack of clear government policy and poor planning, which could leave the UK unable to process its residual waste as we move away from landfill and exports shrink, writes SUEZ external affairs director Gev Eduljee

Pinning down growth in the energy from waste sector is rather like reading tea leaves for all the precision we can muster. With so many factors at play, and with EfW infrastructure able to operate for decades, the Green Investment Bank (GIB) was correct in stating in its 2014 report, The UK Residual Waste Market, that there is “no substitute for project specific analysis”, where prospects for growth and the viability of a long-term business case are assessed in depth relative to a scheme’s intended catchment area.

But even a project-specific analysis needs to draw on a macro view of EfW’s general direction of travel in the context of the policy levers that drive the sector as a whole. In 2011/12, optimism for the sector’s growth potential abounded with the introduction of support mechanisms such as contracts for difference and the renewable heat incentive.

A less settled assessment has emerged since.

Eunomia’s ‘Residual Waste Infrastructure Review’ for June 2015 cautions that the UK will experience overcapacity from about 2017/18 as residual waste tonnages fall and approved facilities are built out. Conversely, the GIB’s assessment chimes with those of the main industry players.

Bearing in mind we still landfill some 35 million tonnes of municipal and commercial/industrial (C&I) waste despite a respectable recycling rate, there are still growth opportunities to be had.

SUEZ’s own assessment suggests a significant EfW capacity gap in 2015-2020, reducing thereafter as new planned capacity is delivered. The assumption here is that EfW is applied both to residual household waste and to residual C&I waste: presently, EfW facilities catering for the latter are virtually non-existent.

For anaerobic digestion, SUEZ believes that between 2015 and 2020 there is likely to be a fine balance between installed capacity and feedstock availability, with local overcapacity a real possibility.

Furthermore, should food waste minimisation campaigns be more successful, this will further reduce the infrastructure required between 2020 and 2025, potentially halving the tonnage to be treated. The GIB’s recent report, The UK Anaerobic Digestion Market, concurs, detecting a shift to agricultural feedstock as “the segregated food waste market tightens and tariff degression occurs”.

Thermal EfW market

A credible case for some domestic growth in the thermal EfW market can be made. From a virtual standing start five years ago we exported 2.37 million tonnes of refuse-derived fuel (RDF) in 2014, with similar amounts anticipated for 2015.

Simply put, we are moving waste away from landfill and producing residual waste faster than the rate at which we are building domestic treatment capacity for it. But the perception that we are over-building has influenced policy decisions – for example, Defra’s withdrawal of PFI credits from five EfW projects.

That at least two of these projects have thus far obtained alternative funding shows that their business cases were solid and credible.

This perception is belied by the export of RDF to satisfy energy, and especially heat, demand overseas, in the form of community heating. This is residual waste tonnage we could have treated in the UK if the capacity was available.

Then, despite higher recycling performance and the anticipation of tougher targets, there are signs that total waste production is on the rise once more as the economy slowly recovers, putting pressure on installed treatment capacity.

The European Commission’s plans to significantly limit landfill by 2030 will also drive residual waste towards other management options, of which EfW in some form is by far the most viable at scale.

So on paper at least there is some room for optimism. But how likely is it that this potential for growth will be realised in practice? The mood music is ambiguous at best.

First, the commercial landscape for thermal EfW has changed. Large EfW plants fed with municipal waste and supported by anchor contracts under the PFI regime have all but run their course.

Obtaining project finance for plants dedicated to C&I waste has become more stringent, reflecting the enhanced feedstock risk perceived by lenders.

Developers are expected to put up a greater proportion of the project finances as equity, with debt linked to the contracted element of the waste.

This makes financing of plants majoring on C&I waste more challenging, on top of the other hurdles faced by developers, such as gaining planning permission. The GIB and Foresight have stepped into the funders circle, for example by part-funding the new EfW facility at Forth by Lanark and the gasification plant at Hoddesdon, the latter to accept RDF currently being exported. To the extent that a risk linked to the C&I element of the feedstock remains, the GIB appears to have accepted a degree of commercial risk in supporting these projects.

Second, the well-intentioned efforts by policymakers to respect the waste hierarchy and particularly to make use of the heat output from EfW plants have if anything made the deployment of EfW (particularly thermal) plants more difficult.

Prospects for EfW-generated heat

Despite extensive mapping of major energy demand dating back to the regional development agencies (for example, by Advantage West Midlands in 2008) and the current heat maps hosted by the Department of Energy & Climate Change and the Scottish Government, the prospects for EfW-generated heat have not greatly improved.

Requiring EfW plants to achieve good-quality combined heat and power (CHP), and restricting siting to those locations that make best use of recovered heat (as in Scotland’s heat policy statement of June 2015), count for nought when our waste and (particularly) energy planning policies do not support the most efficient use of heat.

EfW facilities are either sited too far away to provide cost-effective community heating, or even if they are within reach of population centres they are unable to connect up.

Co-location of an EfW plant adjacent to an industrial offtake or an industrial complex is relatively rare – the proposed 550,000 tonne per year K3 CHP plant at Kemsley being one example – although symbiotic developments like this are an obvious way to make the most of the energy we generate. Even here, industrial plant closures can impact the business rationale for a nearby EfW facility.

Without local authority support for community heat networks as an anchor for heat contracts, we will continue to make desultory use of this form of energy.

Add to this the market distortions that can occur through the renewable obligations and contracts for difference favouring particular types of combustion technology, and the prognosis is for a challenging EfW market.

Three big schemes are anticipated in the run-up to 2020. Ferrybridge Multifuel 1 is now operational, while planning permission for the similarly sized FM2 is currently under consideration.

And the proposed CHP plant at Kemsley has received planning permission, an environmental permit and a contract for difference; operations are expected to begin in 2018.

All these plants will operate on RDF, are either attached to existing power stations or to a major energy user, and will in aggregate bring an additional 1.5m tonnes of EfW capacity to market. Barring any future game-changing policy levers such as higher landfill tax or a severe restriction on landfilling, a cautious outlook for domestic EfW growth is in order.

Smaller scale

Beyond other opportunities for co-location and multi-fuel energy generation (and they could be relatively few) it is likely that solutions that are at smaller scale, less capital intensive, less constrained by siting considerations with regard to energy offtake, and with greater operational flexibility, particularly when dealing with residual C&I waste, will be favoured – in other words, energy conversion technologies.

RDF and solid recovered fuel (SRF) production from residual municipal and C&I waste are two such technologies.

The export market for RDF is under pressure as spare thermal capacity in Europe’s EfW plants is used up and other countries consider RDF exports of their own, competing with exports from the UK.

If we are not incentivised to build adequate domestic EfW capacity for the residual waste we move out of landfill, we may be pushing residual waste treatment in the UK into a cul-de-sac entirely of our own making.

We still have a mountain to climb to get EfW the recognition it deserves in policy and planning circles.

- Book a place at the International EfW conference in London on February 24-25 2016, and be part of the EfW debate. Visit

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