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Waste not, want notINTRODUCTION: Viridor Waste Management's chief executive Colin Drummond talks to Steve Hobson about the huge potential of energy from waste(Utility Week Via Acquire Media NewsEdge) Founded in 1956 and acquired by South West Water (now Pennon Group plc) in 1993, Viridor Waste Management is one of the top five waste companies in the UK, with profits growing by over 20 per cent a year since 2000. Unlike most other water companies, which are selling off non-core businesses, Pennon executive director and Viridor chief executive Colin Drummond says the water and the waste companies are an ideal fit. "We are both long-term environmental and infrastructure businesses that have to deal with similar regulators," he says. "So we fit together very nicely." While Viridor is a complementary business to SWW, the two do not live in each other's pockets. "We work with Thames and Southern on sludge, and on and off with SWW," says Drummond. "But inter-company trading is under 1 per cent of our turnover. Indeed, Ofwat's requirement for arm's length trading almost makes it more difficult to work with our sister company." Current moves to increase landfill taxes and the need to boost renewable energy output mean Drummond sees a major opportunity in energy from waste. "Today 30 per cent of total UK renewable output is waste related, with 24 per cent from landfill gas power generation and the rest from waste incineration," he says. "That is higher than wind, so although wind is very high profile, waste is in fact the UK's major source of renewable energy. The future potential is even bigger. The Institution of Civil Engineers says 17 per cent of electricity could theoretically come from waste, as opposed to 1.5 per cent at present." Burning waste to generate electricity is more expensive than burning fuels such as gas and coal, because of the smaller scale and strict regulations governing emissions from waste incinerators. But this extra cost is offset by the rising gate fees paid for disposing of waste that would otherwise be sent to heavily taxed landfill. "If you look at the government's targets under the Landfill Directive, the best estimate is that 25 per cent of municipal waste will end up in energy from waste by 2020," says Drummond. "As well as planning, one thing that is holding us back is that, to maximise total energy generated from waste, what we want is combined heat and power. We are pretty bad at it in the UK." Viridor is rapidly expanding both its landfill gas and energy-from-waste capacity. Its existing landfill generating capacity is around 80MW. It is now building a 37MW energy-from-waste incinerator close to Heathrow airport in a joint venture with Grundon Waste Management. A similar sized plant is planned under the Greater Manchester Waste PFI for Runcorn in Cheshire. This will be a joint venture with Ineos Chlor and John Laing. Runcorn will be a combined heat and power (CHP) plant, with the heat load going to the Ineos chemical works on the same site. "There have been long negotiations to get this through but it is worth the effort," Drummond says. "There aren't many plants in the UK with such a heavy heat and power requirement." Viridor has also been granted planning permission for another CHP energy-from-waste incinerator in Exeter, which will potentially supply heat to a local industrial park. "As a country we need to look more laterally and see if we can take the heat to run greenhouses, swimming pools or district heating. Waste procurement is tough enough as it is, and getting a housing estate or swimming pool beside it is going to be even tougher, but that sort of thinking is going to be necessary to solve our energy crisis," he says. Currently, energy-from-waste incineration does not qualify for Renewable Obligation Certificates (Rocs), which limits its exploitation. Nevertheless, Drummond says, "the economics are there to support a considerable expansion in energy from waste". The problem is that planning remains a "huge barrier". The current Planning Bill may smooth the way for new power plant over 50MW but few waste incinerators will break this threshold. "Planning is always difficult in the utility industry and I'm not sure the Infrastructure Planning Commission is going to make life any easier," he says. Capturing and burning methane gas generated from landfill sites to generate power is a double win for the environment, because methane is a powerful global warming gas (21 times as potent as carbon dioxide) as well as a useful source of energy. Drummond estimates UK landfill gas capacity is around 700MW, and unlike energy from waste the upfront costs of installing the generators are relatively small. All landfill generation schemes accredited before 1 April 2009 will continue to receive one Roc per MWh, though Drummond says it is "slightly unfortunate" that this will be reduced to a quarter Roc for schemes accredited after April 2009. This will slow down the introduction of higher cost marginal capacity. As well as its landfill gas engines, Viridor has four anaerobic digestion plants in various stages of planning approval. "This is a particularly good way of generating energy from food waste, especially as it attracts double Rocs," says Drummond. He does not expect the 17 per cent theoretical target will ever be achieved, however he does believe that 5 per cent of the UK's electricity could readily come from waste, particularly if the government expanded Roc accreditation to energy-from-waste plant. "That is well worth having," he says. "Fundamentally, there is a lot of energy in waste."n n Copyright ? 2008 Reed Business Information - UK. All Rights Reserved. |