Utility Week

6 | 12TH - 18TH APRIL 2019 | UTILITY WEEK News Inside story S upport services and construction com- pany Interserve went into a pre-pack administration last month and its disas- trous venture into energy-from-waste (EfW) plants was cited as one of the main factors behind its financial woes, a•er it admitted that the cost of quitting the EfW sector would amount to almost £200 million. As the fallout from the company's dra- matic demise continues, and details of the true cost of its EfW investments unfurl, the saga has placed the economic viability of the process under the spotlight. EfW is seen as a sustainable alternative to landfill, using household, commercial and non-hazardous industrial residual waste le• a•er recycling and composting efforts as fuel to generate electricity. The landfill tax, first introduced in 1996 as a policy to help meet landfill diversion targets, has been the key driver of the switch from landfill to EfW as the preferred route for disposal of residual waste. But could Interserve's problematic foray into the sector now help pave the way for a cooling of enthusiasm for EfW? Certainly, official figures suggest the sec- tor is in rude health; there were 40 EfW facil- ities in the UK in 2017, up from 26 in 2014, and between them they have an operational capacity of handling 12 million tonnes of waste a year, according to analysis by Tolvik Consulting. In 2018 it is expected that, for the first time, the tonnage of residual waste sent to EfW in the UK will exceed the ton- nage sent to landfill, a figure predicted to rise to nearly 16 million by 2022. Experts are confident that the appetite among both investors and developers for EfW projects remains strong, particularly when they are structured correctly – ideally through a long-term waste supply agreement with one or more local authorities, covering the majority of the facility's capacity. "There's a strong business case for EfW because plants get paid for avoiding sending waste to landfill – gate fees – as well as for generating energy," Tom Palmer, principal consultant at Cornwall Insight tells Utility Week. "I don't think the investment commu- nity will be shocked or worried by Interserve – it says more about the management of the company rather than those specific projects." The right projects Ali Lloyd is senior principal consultant in Pöyry's UK renewables and waste team, providing commercial and valuation advice to EfW developers and investors on projects including the Cory Riverside project, Wheela- brator's UK portfolio, and the Dublin EfW facility. Lloyd believes a bigger challenge is the supply of good new projects rather than availability of finance. Most local authorities have already entered into long-term contracts with EfW facilities for disposal of residual household waste," Lloyd explains. "There are still some volumes of waste going to landfill, but much of this is commercial and industrial waste, which is generally contracted over shorter terms. This makes building new facilities to take this waste more challenging, because the owner must bear more risk." Technical issues with alternative and potentially more efficient forms of EfW – notably gasification and pyrolysis – are more of a concern for investors. Unlike incineration, gasification requires the preprocessing of waste material and it is precisely this large mix of waste that house- holds throw away that has proved difficult for the newer technologies to handle. "They are the projects that have o•en failed," Palmer says. "It costs lots of money and there are issues in getting the technol- ogy to work, which has made investment committees a bit wary of them. But if tradi- tional EfW works, why not continue doing that, subject to emission standards and local authority need." The Energy Technologies Institute (ETI), a public-private partnership between global energy and engineering companies and the British government set up to accelerate the development of low-carbon technologies, concedes that the technology and commer- cial risks of gasification are too high for typi- cal investors and developers. The burning issue for energy from waste Energy from waste has taken a PR hit following struggling contractor Interserve's disastrous financial forays into incinerator plants. But is this a true reflection of an energy source seemingly on an upward curve, asks Rachel Willcox?

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