MVV signs first major UK waste contract

Just three months after being named preferred bidder for the Partnerships (SWDWP) 25-year PFI contract in January 2011 (see letsrecycle.com story), the companys subsidiary MVV Environment Devonport Ltd last week (Friday March 25) achieved financial close on the deal. It represents the firms first major inroad into the UK waste management market.

Subject to planning consent, the contract will see MVV build, operate and maintain a combined heat and power (CHP) incinerator in the North Yard of the Devonport naval base in Plymouth the largest naval base in Western Europe. It will deal with up to 245,000 tonnes of residual waste a year from Plymouth, Devon and Torbay councils, which together make up the SWDWP.

Steam and electricity produced from the plant will be supplied to the naval base under a 25-year energy services agreement with the Ministry of Defence making this the first new-build PFI project with CHP from the outset.

This is expected to provide significant environmental and economic benefits, according to MVV. And, because the plant will use CHP technology, the company also hopes the energy produced will qualify for government support in the form of Renewables Obligation Certificates (ROCs).

Paul Carey, managing director of MVV Environment Devonport Ltd, told letsrecycle.com today (March 29) that the deal had been concluded quickly because it involved corporate finance rather than project finance meaning that money was borrowed from MVV Environment Devonports parent company, MVV Umwelt, rather than banks.

He said: We are very pleased to have so quickly concluded all the negotiations and achieved financial close last Friday which is very shortly after we were appointed preferred bidder on January 6th.

We were very impressed with the speed at which our client and their advisory team worked in order to bring the project to financial close.

For commercial reasons, MVV said it could not disclose the value of the deal but said it would be investing approximately 250 million (220 million) in the project. The SWDWP has previously indicated that the deal would be worth in the region of 796 million.

Planning

Construction of the facility is subject to planning consent. MVV is planning to submit a planning application to Plymouth city council in late Spring 2011.

Mr Carey said the company was confident of getting planning permission because CHP was in line with national and local policies and objectives.

However, as it was based at the dockyards, he explained the proposed site was also near to houses which meant the process would need to be handled delicately.

SITA UK, which had also been bidding alongside MVV to develop an EfW plant at the naval base on behalf of the SWDWP, withdrew from the bidding process in January 2010 over planning complexities (see letsrecycle.com story).

If planning permission is achieved, the EfW plant is due to come online in mid 2014.
Mr Carey explained that the EfW plant would be MVVs first incinerator in the UK and also its first outside of Germany, where the company has five plants in operation.