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Board goes where private sector fears

LWaRB head of infrastructure and investment Charlotte Eddington:

LWARB continues to see its role as making sure that London’s infrastructure requirements are delivered ahead of the economic curve so that the opportunity for early landfill diversion is not missed. Investments occur where it is demonstrated that all of a project’s finance cannot be secured from the private sector.

LWARB invests on commercial terms, albeit taking a risk position that the private sector may not currently be willing to take to catalyse development.

Specifically, new and emerging waste technologies and merchant treatment capacity (projects with short term or no feedstock contracts) have suffered from a lack of bank debt in order to meet leveraged equity returns, as they are regarded as high risk.

Debt support is generally only forthcoming for technologies that have a proven track record or for projects with secured feedstock contracts. Projects with small capital requirements, such as AD and reprocessing plants, are also unattractive to banks as the due diligence required cannot be justified when compared to the total investment.

LWARB has supported innovative technology solutions, merchant projects and those plants that have a relatively small capital requirement, thereby helping to deliver projects that would otherwise not reach financial close.

In future other projects similar to those that LWARB has supported may well be delivered without public sector intervention.  However, for the time being, LWARB is successfully enabling development of projects that were being stifled by the lack of risk appetite by private sector financiers.

BOX:

LWARB supports requirements for equity investment via the London Green Fund, to which it has been a major contributor. The Waste & Recycling Urban Development Fund is run by fund manager Foresight Group.  For more information visit www.foresightgroup.eu. For LWARB’s Business Plan for 2011/12 – 2014/15 visit www.lwarb.gov.uk

TABLE:

The following projects have demonstrated they are capable of delivering on and aligning with LWARB’s requirements. They have either been given funding or are in the ‘pool’ awaiting backing.

 

Project SponsorProject typesCapacity (tonnes per year)LocationStatus of project
Coronation NurseryAnaerobic digestion15,000EssexPool
ConfidentialAnaerobic digestion25,000South LondonFunding committed
TEG GroupAnaerobic digestion30,000Barking and DagenhamFunding committed
BiossenceThermal treatment100,000HaveringFunding committed
PowerdayMaterials reclamation facility800,000Hillingdon
 
Pool
Green TechPlastics processing25,000Enfield
 
Funding committed
Keltbray Hunts Heat and Power LtdThermal (Biomass)30,000Barking and Dagenham
 
Pool
Advanced Recycling Technologies Ltd MBT/MHT 360,000NewhamPool
Closed Loop RecyclingPlastics processing25,000DagenhamPool
Orchid Environmental LimitedMBT/MHT160,000BexleyFunding committed
Total 1,570,000  

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