The council told letsrecycle.com it was “extremely happy” with the progress it had made in procuring the contract, which it is now planning to finance itself, after abandoning its original aim of securing £85 million of government PFI funding.
With planning permission already in place for a 150,000 tonne-a-year capacity facility to be built at North Hykeham, the council's assistant director for environment, planning and transport, Richard Belfield said the project was on track – despite a slight delay from the December 2009 date it had expected to receive detailed submissions from the bidders.
“Detailed proposals were received from the three remaining bidders in January this year, but this has not affected our overall programme to be operational by mid-2013,” he said.
The council hopes to narrow the shortlist to just two in late April, before appointing a preferred bidder by September 2010 and beginning construction in late 2010 or early 2011.
The planning permission secured by the council in July 2009 was based on its own design, or “base case”, for the facility, but Mr Belfield explained that each of the remaining bidders had submitted two proposals – one in line with the base case and one further “variant case” proposal.
Heat
The facility is expected to generate 11 megawatts of electricity for sale to the National Grid treating household and, potentially, commercial waste, and the council revealed that it had also asked all the bidders to design their proposals to include combined heat and power (CHP) provision.
Outlining the potential for heat to be exported, Mr Belfield said: “The site we have chosen sites adjacent to Teal Park (Lincolnshire's newest and largest commercial and industrial development site) and the Lincoln Housing Growth corridors.
“We fully intend to look at developing a district heating scheme in the future utilising the heat from our EfW facility,” he added.
Financing
Lincolnshire originally opted to build an EfW facility at North Hykeham in June 2008 (see letsrecycle.com story), and had submitted a business case to Defra in a bid to secure £85 million in PFI funding towards the capital costs of financing the project.
Mr Belfield explained that the council had originally believed that, while the PFI route was more expensive than funding the project itself, that amount of support would result in a net saving of £60 million over the contract lifetime.
However, he said: “Unfortunately, Defra considered the county's proposals needed to be redeveloped and re-submitted to align with their very onerous guidelines. This meant that the county would be deferred to Defra's Round 4.”
He explained that Defra has also told the council that there was insufficient funding for all the projects competing in Round 4 – which, as of now, is the last round of waste PFI-funding available – and, as a result, it was led to believe there “was a high risk it would not receive funding as the council's project focused on meeting Lincolnshire's needs rather than regional need”.
The council made the decision to abandon its PFI attempt in September 2008, due to a combination of that high risk, the “extensive” delay of up to 18 months involved in having to re-apply for funding – and the consequences of that, and the “state of chaos” in the world's financial market, and the impact this was having on PFI-style projects.
Instead, Mr Belfield said, the council was now looking to prudential borrowing to finance its project. Prudential borrowing can generally be made by councils in the form of a loan obtained from Treasury-run body the Public Works Loan Board.
Traditionally, Defra has advocated the use of the PFI to finance large-scale waste treatment infrastructure, but, with current PFI funding running out and difficulties in raising finance for large projects, avenues such as prudential borrowing are expected to become increasingly important.
The project is being managed by the Lincolnshire Waste Partnership – which is made up of the county council and Lincolnshire's seven district councils.
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