Waste treatment overcapacity likely in 2014

But, Eunomia said that difficulty raising finance appears to be having an impact on the number of projects being initiated as only 0.6 million tonnes of new capacity entered the planning system in the last six months. In addition, because of strong competition on the continent and the lack of long-term feedstock contracts the chances of reaching financial close on a merchant plant have decreased.

In the fourth edition of its bi-annual Residual Waste Infrastructure Review, the Bristol-based firm says the West Midlands and North East are likely to reach overcapacity next year while the rest of the UK could be in the same situation by 2017/18.

Eunomia said: Some regions are already close to overcapacity, with the West Midlands and North East appearing likely to have more treatment capacity than residual waste in 2014.

However this does not include potential future capacity which has yet to enter the system, which may result in earlier overcapacity. However, Eunomia said it is unlikely the UK would ever reach this level of overcapacity, as demand for new facilities would fall.

Capacity

At present, according to the report, the UK has around 18.2 million tonnes of residual waste treatment capacity and produces approximately 27.5 million tonnes of residual waste from local authority collected and commercial and industrial sources.

This capacity is made up of 39 dedicated incineration facilities, six gasification facilities, 28 pre-treatment facilities (using either mechanical biological treatment or autoclave technologies), 11 waste incineration directive compliant biomass facilities and eight cement kilns processing solid recovered fuels (SRF).

A further 21.3 million tonnes of residual waste processing capacity is in the planning stages but has not yet commenced construction. Eunomia said based on residual waste quantities staying the same, if all of this capacity were to become operational there would be overcapacity of 12 million tonnes. Planning consent is also being sought for a further 2.1 million tonnes.

Finance

On the topic of finance, the report says there is a slow-down in new capacity reaching financial close due to challenging lending criteria, which a large proportion of merchant plants are struggling to meet.

Adam Baddeley, principal consultant at Eunomia and lead author of the report, commented: The development pipeline for residual waste treatment is becoming increasingly complex, and the picture is changing not least because of the information that we are making available through our Review.

With a lack of long-term bankable feedstock contracts to meet tight lending criteria, along with strong competition from incinerators on the continent, the prospects for reaching financial close on pure merchant plant have worsened. The risk of overcapacity remains, in some regions more strongly than others; but at a national level, these influences suggest that we may not reach full capacity until around 2017/18.

Planning

Eunomia has previously said that planning is not the barrier to the development of waste infrastructure that many believe it to be (see letsrecycle.com story), and in the last six months 2.7 million tonnes of capacity has been consented while one million tonnes has moved into the construction phase. However, a further one million tonnes has exited the planning process without obtaining consent either having been withdrawn or refused.

This follows the withdrawal of PFI credits from three major waste infrastructure projects in the north of England, after the Department for Environment, Food and Rural Affairs (Defra) decided they were not needed to meet 2020 landfill diversion targets (see letsrecycle.com story).