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In this new section, Would It Work Here, RFP Eco Build looks at projects from around the world to see whether the same techniques could work in other geographies to solve similar problems. It is the largest waste management contract undertaken in Europe – around £3.8bil over the contract term of 25 years.
In a PPP deal that links sustainability and a business opportunity we determine that Greater Manchester Waste Disposal Authority in England’s project that turns waste into energy is an infinitely do-able solution to the increasing trash problem in Asia.
It is an unfortunate fact that human consumption produces waste and to date the most common response is to put it into gigantic holes in the ground. Commonly known as landfill. In many places we don’t even bother making the hole first. While in poorer countries this practice has led to armies of the under privileged sustaining their own existence by living off this trash it is hardly an ideal solution. So when at the high-level conference Infrastructure Asia Conference and Exhibition held in Jakarta Corey D’Abreo, Editorial Director of UK-based media company Infrastructure Focus outlined how Manchester City had entered into a PPP (Public Private Partnership) agreement to turn waste into power heads nodded that this could indeed work here in Asia.
PPP
For those unfamiliar with the concept, PPP is where government and a private entity undertake to work together on a project where the government need to deliver some infrastructure or service for the greater good. At the risk of oversimplifying, whether building a dam or operating a toll road, the public sector aim to have spent less and got a better outcome than if they had handled the job themselves, while the private sector aim to make a return on investment usually through some toll or fee on an ongoing basis.
“PPP can bring the most value to cash-strapped and experience-needy governments whose populations need infrastructure to develop.”
In developed countries PPP’s can work very well as there is plenty of experience in running them from both government and the private sector. If the private side has done their sums right, they can count on the anticipated return. In developing countries or where the rule of law is weaker PPPs can present risks from a political and legal perspective. But in those countries PPP can bring the most value to cash-strapped and experience-needy governments whose populations need infrastructure to develop. In particular, energy crises coupled with increasing consumerism makes the trash to power story particularly compelling.
The Deal
So the Manchester example comes at an opportune moment. According to D’Abreo the contract was structured so that the private sector partners would
* Design, build, finance and operate (DBFO) waste reception, treatment and disposal facilities capable of processing 1.5 million tonnes of municipal solid waste (MSW) per year.
* Procure a number of waste facilities as well as services to dispose of residual waste
Preferred bidder was a consortium comprising a 50/50 Joint Venture between Viridor Waste Management Limited and John Laing Infrastructure Limited, with private chemicals group Ineos Chlor coming in to run the Combined Heat and Power Plant at Runcorn in Cheshire where residual waste that cannot be recycled will be processed into power. It is the largest waste management contract undertaken in Europe – around £3.8bil over the contract term of 25 years. According to international law firm Pinsent Mason who advised Viridor Laing (Greater Manchester) Limited on the financial close of the project after “more than two years of intensive negotiation” between the Greater Manchester Waste Disposal Authority (GMWDA) and the consortium.
Closed in April 2009 the deal triggered a £640 million construction programme to provide waste services for over 973,000 households in the Greater Manchester area, totalling around 1.3 million tonnes of material each year. Through this contract the GMWDA will divert more than 75 percent of Greater Manchester’s waste away from landfill and create more than 5,000 jobs for the North West region of the UK. Planning permission has already been granted for 20 out of 23 project sites, with construction expected to take five years.
While the contract cost works out at £1 per resident per week the GMWDA point out something that heads of Asia’s municipal authorities would be well to advise their taxpaying public: the cost of the project compares favourably with the cost of a “do nothing, build nothing” option which would cost an extra £2 a week mostly in Landfill Tax and penalties.
David Hardy, Director of John Laing PLC, which provided a portion of the financing through a consortium of international banks said: “This is a fantastic example of how the public and private sectors can work together, particularly in the current tough financial and economic environment, to create forwardthinking solutions that will benefit communities across the region.”
D’Abreo outlines the technological details of the 23 facilities operations, which aim to achieve up to 50 percent recycling and composting of household waste by 2020 and eventually diverting 75 percent of Greater Manchester Municipal Solid Waste (MSW) from landfill. There will be two Mechanical & Biological Treatment (MBT) plants treating over 200,000 tonnes of MSW per year and a Materials Recovery Facility (MRF). Stipulated in the brief was also the anaerobic digestion of the organic and high-calorific fractions. Digestate will be matured to produce a compost like material for landfill or Dewatered and dried using waste heat to produce a low calorific value fuel for further energy recovery. Metals, glass, aggregates and grit will be recovered for recycling. The Ineos Chlor combined heat and power (CHP) plant uses the biogas and solid refuse derived fuel (RDF) to generate green electricity, which at full capacity can process 420,000 tonnes of waste and produce 270,000 MWh of electricity and 500,000 tonnes of steam per year.
Would it work here? The verdict:
Its complex stuff but the expertise exists and it certainly fills a need. In his closing remarks D’Abreo states simply: “Landfill needs to go somewhere!” Dealing with MSW in this way significantly reduces land resource and acquisition issues associated with landfill. With organic and paper fractions of MSW in low, middle and high income countries significantly larger than other waste fractions, such as plastics, MBT and Energy-from-Waste (ERW) CHP becomes very attractive.
While “local and regional energy problems persist in many developing countries energy derived from ERW CHP can be part of the solution”. These technologies help to address both the logistical and environmental problems associated with increasing landfill issues. While the cost of the technology is too high for many governments “Involving the private sector through attractive, long term PPP contracts can secure their investment, expertise and make this possible”.
More details of the deal structures can be found at the websites of Pinsent Masons, GMWDA and John Liang.
