Waste-to-Energy: A Neglected Renewable Energy Source in the UK and USWaste-to-Energy: A Neglected Renewable Energy Source in the UK and US In an era marked by an urgent need for renewable energy solutions, the United Kingdom and the United States have surprisingly overlooked the potential of waste-to-energy (WTE) technology. As policymakers prioritize wind and solar power, WTE remains largely neglected, despite its significant advantages and global success. Benefits of WTE Plants Compared to wind and solar, WTE plants offer several key benefits: * Reduced land footprint: WTE facilities require less land than wind or solar farms, allowing for the preservation of agricultural and natural areas. * Waste consumption: WTE plants consume waste generated in the surrounding area, reducing the reliance on landfills that contribute to greenhouse gas emissions. * 24/7 operation: Unlike wind and solar, WTE plants operate continuously, ensuring consistent energy production regardless of weather conditions. * Landfill elimination: By diverting waste from landfills, WTE plants contribute to the gradual elimination of these environmental hazards. Global Success of WTE While the UK and US lag behind, countries like China, Japan, Thailand, and Brazil have embraced WTE technology. China alone boasts over 300 WTE plants, with significant annual growth in capacity. Europe also has a substantial number of WTE facilities, including smaller biomass operations. Barriers to WTE Adoption in the UK and US The reluctance of the UK and US to adopt WTE can be attributed to several factors, including: * Cost: Building WTE plants requires substantial capital investment, making them less cost-effective than wind and solar in the short term. * Lack of awareness: Energy policymakers may not fully understand the benefits and potential of WTE technology. * NIMBYism: Local opposition to WTE plants based on concerns about potential environmental impacts can hinder their development. Addressing the Barriers Overcoming these barriers requires a multi-pronged approach: * Government incentives: Tax credits, subsidies, and other incentives can make WTE plants more financially viable. * Public education: Raising awareness about the benefits and safety of WTE technology can reduce public opposition. * Technology advancements: Continuous research and development can improve the efficiency and cost-effectiveness of WTE plants. Conclusion By embracing waste-to-energy technology, the UK and US can significantly enhance their renewable energy portfolio while reducing their reliance on landfills. With its numerous benefits and global success, WTE deserves a more prominent role in the energy transition. It’s time for policymakers to reconsider their approach and unlock the full potential of this neglected renewable energy source.
In approving the development of a 2,800-acre wind farm across prime agricultural land in the east of England, the UK Secretary of State for Energy Security and Net Zero, Ed Miliband, has confirmed what those who understand renewable market dynamics have known all along: That the UK’s energy transition policymaking has been flawed and rivaled by incompetence from the outset. With the focus on wind and solar, the most environmentally impactful renewable of all, waste-to-energy (WTE), has been completely overlooked to the point where a hugely expensive but necessary price is about to be paid.
COMMENTARY
British energy policymakers must know that, MW for MW, the footprint of WTE plants require less land (or sea) than wind or solar. Meanwhile, they consume waste from the area they serve, send it back as electricity or bio-fuels, operate 24/7/365 (except for regularly scheduled maintenance outages) regardless of weather conditions, and progressively eliminate landfills, which account for 11% of the world’s methane emissions. It is widely known that methane is one of the most potent of all greenhouse gases, so we have to assume that those policymakers, British or otherwise, know it too.
This article does not argue against either wind or solar, both of which have their place in the energy mix, but relying on just these two technologies has left the UK firmly parked in the renewables stone-age. Continuing down this path, with wind and solar farms taking up huge chunks of the landscape on what is basically a small island, will not just affect food security but degrade the entire environment in many ways.
If we look further afield to China, we see that they have many wind and solar farms, but they also have more than 300 WTE plants compared to the UK’s 53 and the US’s 75 (mostly in the northeast of the country). Few of the UK and US plants are remotely near the size or capacity of many of their Chinese counterparts. Notably, China has increased WTE by 26% annually over the past five years.
Japan also has more than 300 WTE plants and other countries around the world have been progressively adding more and more WTE facilities to their energy mixes. Thailand has plans for 79 WTE plants and there are 17 units proposed in Indonesia. Brazil is also working toward a fundamental shift in energy strategy through the roll-out of dozens of WTE plants. Even mainland Europe has 500 plants, although it is true to say that a good many of those are smaller biomass operations.
So, why is it that, particularly, the US and UK are so far behind the global WTE curve? It might be the considerable cost involved, with a meaningful WTE plant costing upwards of $100 million, with many running into the billions. But building and financing a WTE plant has become a matter of process. A brownfield site is required, usually adjacent to a landfill and often provided by the local municipality. Of course, a power purchase agreement (PPA) is needed, which, in the UK is usually the National Grid, and in the US, the regional or state grid.
Across the global institutional and private capital markets there are trillions of dollars available for investment in WTE and other renewables projects. It is a simple statement of immutable fact that any local authority or municipality in the world, including in the UK and US, can build its own WTE plant, be it $100 million, $1 billion, or more, get 100% finance (usually a mix of debt and equity) on very competitive terms, and leave themselves free and clear of any financial liability whatsoever. This is because investors lend against the track record and financial stability of whoever the PPA is with, with the assets and balance sheet of the borrower coming in a distant second.
UK and US grids will always be regarded in the “A” or better credit agency rating region by investors, meaning funding is virtually assured. Most critically, all project financings are transacted through special purpose vehicles (SPVs), because the investment funds themselves need to accommodate, in turn, the tax and other jurisdictional considerations of their investors. These investors are overwhelmingly private debt/equity, hedge, alternative investment, and similar funds, along with family offices, asset managers, and others.
The upshot is that the SPV leaves the project owners, be they public or private sector, completely free and clear of any financial liability whatsoever. Knowing all this, is it now time for, particularly, UK and US energy policymakers to take another look at their briefs?
—David Rose is chairman of Project Finance Exchange (PFX), a global private capital marketplace for the promotion of and investment in projects across many sectors including infrastructure and energy.
