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An end to grand projects in the UK?

The funding landscape for large waste projects in the UK has altered in the past few years. In 2015, the government stepped back from funding new ventures in the waste sector, citing satisfactory progress in the reduction of the amount of waste going to landfill. According to the Treasury’s National Infrastructure Development Plan 2016-2021:

England is currently on track to meet the existing landfill diversion 2020 targets. As such the government is not currently planning to fund any new waste infrastructure projects beyond those already in the Pipeline. (p.64)

This Pipeline consists of four government-funded projects, as of February 2019. Three are currently under construction, while one has to have a public funding figure confirmed. The largest is the new WtE facility in Sutton, south London. This has a total public funding commitment of £191.1 million, although most of this has already been spent; the final tranche of £20 million is slated for 2018/19. The only ongoing government funding commitment for 2019/20 is a WtE plant in Gloucestershire. This is due to be fully operational in mid-2019. It received £50 million in 2018/19 and will receive a final £25 million in 2019/20. The third project (and only remaining PFI deal) is a gasification and anaerobic digestion facility in Shepperton, Surrey. At the time of writing, this is partially operational and due to come fully on stream later in 2019. It has received £102.2 million from government, the last being £8.9 million in 2018/19.

The one proposed funding project is a new WtE plant in Hoddeston, Hertfordshire. This was first announced by Veolia and Hertfordshire County Council in 2016, but work has been delayed by planning difficulties. As of May 2019, the government had yet to make a decision regarding it.

The government is not backing out of the sector altogether, of course; see Ian’s article this week on the CfD scheme, which continues to establish a government-backed minimum tariff for electricity generated by selected sites, albeit with limited success so far. But the level of central government investment is undeniably lower. Contrast the 2016 document with the 2010 National Infrastructure Plan, which talked about over 30 waste sector projects to receive funding:

In order to meet EU landfill diversion targets the Government will continue to support a programme of 21 contracted waste PFI projects and 11 projects still in procurement, at an estimated cost of £95 million in 2014-15 and £120 million a year from 2017-18. (p.36)

This could of course change back – who knows who will be running the UK Treasury in a few months’ time – but for the time being at least, the PFI/PPP pipeline is pretty much dry.

It would be wrong, however, to think that the UK market is drying up totally. It’s probably fair to say that the government’s focus has been on London and the south, but there’s plenty of private interest across the country. In 2019 so far, AcuComm has reported on seven new WtE plants planned across the UK. If all are built, these would generate around 210 MW of electricity and have a waste thoughput of 2.8 million tonnes per year. That is perhaps a big if; only one of those is currently under construction; a relatively small plant in Royal Wootton Bassett.

The most recent plan to be announced highlights some of the uncertainties. A new 410,000 tonne per year WtE facility is being mooted by Wheelabrator for Leeds, on the site of the former Skelton Grange power station. But it’s not wholly new. Biffa originally proposed such a plant in 2011, but the project was shelved in 2015. Wheelabrator has increased the size of the plant from Biffa’s proposed 300,000 tonnes, and hopes to reach financial close in 2020.

Where should investors and suppliers look, therefore? It may well be that smaller projects – such as the one in Wootton Bassett – offer a more certain return as investment shifts to the riskier private sector. If this trend continues it may well be that the UK is heading for a focus on more local and sustainable solutions rather than grand projects which can all too easily fall foul of planning, construction and – perhaps now – greater funding problems.

The map below shows all the currently-planned WtE facilities in the UK, as held in the AcuComm database. How many will make it? Click here to explore them all online.

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