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Derby municipal gasification plant gets GIB backing

A Shanks’ subsidiary has secured an investment from the Green Investment Bank (GIB) for a municipal gasification plant in Derby, the first project of its kind in the UK to be funded via project finance.

The plant will be part of a £145m development at Sinfin Lane in partnership with Derby City and Derbyshire County Councils for a 27-year PPP contract worth as much as £950m.

The project will be developed by Resource Recovery Solutions, a joint venture between Shanks and Interserve Group. The contract includes a mechanical biological treatment facility and the running of the councils’ household waste recycling centres.

The gasification technology will be provided by Energos.

The GIB has committed £64m to the project alongside Germany’s Bayerische Landesbank and Japan’s Sumitomo Mitsui Banking Corporation for a total of £195m.

The bank noted it was the first time a municipal gasification plant was funded through long-term project finance, which is a loan structure that relies primarily on the project’s cash flow for repayment allowing companies to fund major developments off balance sheet.

“The innovative financing of the project creates an important demonstration effect that will, in the long run, help to lower the cost of finance for innovative, green technology of this type,” said Shaun Kingsbury, chief executive at the GIB.

Peter Dilnot, group chief executive at Shanks Group, also noted the importance of gasification as an investment opportunity.

“The contract is an important part of our growth strategy for the UK Municipal Division and the introduction of gasification technology also adds an important dimension to the Group’s portfolio of clean waste-to-product technologies,” he said.

The facility is expected to be completed by April 2017. It will process over 35,000 tonnes of waste per year, diverting 98% of residual waste from landfill generating 12MW of electricity, enough to power 14,000 homes.

Shanks said the electricity will be supplied to the national grid, offsetting the cost of waste treatment to the councils.

Cllr Joan Dixon, Derbyshire County Council’s cabinet member for jobs, economy and transport, said:  “This waste treatment facility will give us certainty about the cost of managing waste in the future, help us to manage our budgets and protect us from future rises in the cost of landfill.”

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