A claim that the UK could reach overcapacity for residual waste treatment from 2015 has been put back two years, largely because developers are struggling to secure investment.
Six months after waste consultancy Eunomia warned that the UK would reach overcapacity from 2015-2018, it has revised the forecast to 2017 or 2018, citing challenges in securing long-term feedstock contracts, strict lending criteria and competition from EfW plants in Europe.
Eunomia said the main reason projects were not coming to fruition was because developers were having difficulties raising finance, not problems with planning. In a statement, it said: “The difficulty raising finance appears to be having an impact on the number of projects being initiated.”
According to data and analysis in Eunomia’s fourth bi-annual report, there are now 21.3 million tonnes of residual waste capacity with planning consent but not underway.
Since November 2012, 2.7 million tonnes of residual waste treatment capacity have been consented but construction had started on only one million tonnes or so. Another one milllion has effectively dropped out by bring refused planning permission or withdrawing from the process.
Adverse conditions have also seen a net reduction in the level of capacity in planning of 3.1 million tonnes since last November. Only 0.6 milllion tonnes had entered the planning system in the past six months.
Adam Baddeley, principal consultant at Eunomia and report lead author, told MRW: “Developers are seeing that in some areas there is less opportunity for accessing waste due to availability issues. But they are also seeing how much is in consenting at the moment and thinking, ‘if these guys are not able to reach financial close and access feedstock then we are certainly not going to proceed with planning applications when we are going to stand little chance of coming to operation’.”
Baddeley said that available commercial contracts for feedstock were not “the kind of long-term contracts people need to meet lending criteria”.
Baddeley added: “We also think our [previous] report influenced the market slightly in that people have seen that there are challenging times ahead in accessing waste and this has affected the ability to take plants forward and get finance.”
Despite revising its overall UK predictions, the consultancy stated: “Some regions are already close to ‘overcapacity’ with the West Midlands and North East appearing likely to have more treatment capacity than residual waste in 2014.”
Matthew Farrow of the Environmental Services Association (ESA) urged that any projections over future capacity be “treated with caution”.
He said: “As Eunomia acknowledge, risk-averse financial institutions and the challenge of securing long term feedstock contracts mean that many projects with planning permission may not reach financial close and construction. Equally, factors such as plant down-time and reliability need to be taken into account in assessing whether the system as a whole has sufficient treatment capacity.”
“With half of our waste still going to landfill, the waste management industry’s willingness to make investment plans for landfill alternatives is to be welcomed,” he added.
- MRW reported that Eunomia’s last publication caused debate in the industry on the issue of overcapacity.