Confirmation of interest in the UK has come from the Chinese-owned German-based business EEW Energy from Waste Ltd which is examining the UK energy from waste sector for acquisition opportunities.
Interest from China in the UK comes after some speculation earlier this year that a Chinese company could buy Biffa, with the UK waste business now opting for a Stock Exchange listing instead.
However, the Chinese attention has now switched to UK energy from waste plants and the potential to acquire one or more. The move comes in the wake of the approval by Prime Minister Theresa May for China’s involvement in the EDF Hinkley Point nuclear power project.
Purchases in the UK are likely to be made via Germany’s EEW (with the initials originally standing for E.ON Energy from Waste). EEW was bought by Chinese firm Beijing Enterprises Holdings Ltd (BEHL) for 1.4 billion euros (approx. £1.2 billion) in February this year. In June 2016 the Chinese-owned Silk Road investment fund acquired a 25% stake in the business.
Chinese Premier
The involvement of the Chinese in the energy from waste sector is a boost to Germany which is moving away from nuclear power. As a sign of the importance of the Chinese involvement, the Silk Road Fund agreement with EEW Energy from Waste Ltd and BEHL was signed in the presence of Chinese Premier Li Keqiang and German Chancellor Angela Merkel in June 2016.
At the signing, the Silk Road Fund said that it intends to make “equity investment in EEW and work with relevant parties, to support the solid waste treatment business in China, Germany and other parts of Europe. Silk Road Fund supports the introduction of the cutting-edge technologies and material expertise to China, so as to enhance the operational efficiency of China’s solid waste treatment industry and promote the development of the country’s circular economy.”
Speaking to letsrecycle.com last week, Dr Thomas Obermeier, head of development for EEW, said that the company was interested in the UK.
Dr Obermeier said: “We have watched the decision by the UK to step out of the EU. But we continue to have links and we have 43 clients in the UK.”
He reflected that EEW had unsuccessfully bid for PFI energy from waste work in the UK, including for the new Edmonton plant in north London and the Arc 21 project in Northern Ireland.
2% rate
Expressing the company’s interest in a UK acquisition, he said that the company’s owners wanted it to grow.
“We are interested in seeing if there are interesting brownfield projects in the UK, that is existing plants.” Dr Obermeier explained that the term ‘brownfield’ in German parlance means an existing facility rather than a planned one although he would not rule out construction of a new energy from waste plant.
But, he emphasised that for the company to buy within the UK, the plant would have to do more than just generate electricity. “You cannot compete on the power market with waste to energy but on steam and heat, yes.
“Combined heat and power is for our plants the most efficient way, especially for those that supply steam for industrial processes. Environmentally, this is the better solution in terms of energy from waste.”
Shanks
Dr Obermeier pointed to the company’s facility at Delfzijl in north east Holland. This was recently in the news with Shanks agreeing to supply 100,000 tonnes of RDF per annum under part of a 10-year deal, according to Shanks, worth £50 million. The agreement will see the development of a third combustion line at Delfzijl.
EEW says that its plant at Delfzijl has been producing power from waste since 2010. “Today it generates 126,000 megawatt hours of power and 749,000 megawatt hours of process team”, securing the requirements of companies nearby.
Among its 43 supply agreements with the UK, EEW has supply agreements with Veolia with the French-owned UK business rapidly increasing its RDF export activities.
Referring to its energy from waste work, EEW uses the term “energy recycling” and says it has a yearly energy recycling capacity of around 4.7 million tonnes of waste.
Related links
Beijing Environmental Holdings Ltd
How can anyone say that EFW (EnergyFromWaste) schemes are a real investment? It makes no sense when the issue in such projects requires gate fees and huge subsidies just to balance the funding books?
We know that all around the world gate fees are disappearing simply because there are no need for them. Process treatment options are around that can be devised and built around waste to processing plants that are a quarter the cost of the equivalent as incineration or gasification and these can exist with a zero gate fee right from the start and even without any feed-in-tariffs or other renewable subsidies. After all there are no need for gate fees when the ROI – Return on Investment – can be achieved within less than 5 years even when borrowing rates are 7.5% let alone 2%. And with the right combination of energy mix and designs the out-dated incineration gasification plants which are highlighted here are a headache right from the start. No one in their right mind as a Waste Manager in Local Government would dare squander Tax Payers’ money on a project where gate fees are already as low as say €10-00 (sorry £10-00) per tonne when the current norm in these developments showing up now can exist with £Zero gate fees. This issue has come up before and it will not go away.
Frankly – Biffa or EEA should take note here that this idea of relying on Gate Fees for the business case is ridiculous and the recent folly of local authority Waste Managers and Waste Management spending money like no tomorrows has gone. We saw a recent project financial (in fact more than 5 or 6) recently paraded across investers/banks where the IRR of 55+% in year 5 was so strong that the Waste Management Authorities (in the EU and one also in China) was so astounded that they have and are proposing to abandon any future incineration and its equivalent as gasification plant forthwith.
With this the case in the EU what now for this deal?
Perhaps the Chinese Invester should take note! And more importantly EEA should also take note since they are selling a false promise of returns against a business with no future.