Under a PPP contract signed in 2013 that runs until 2041, the WLWA works with West London Energy Recovery Ltd and waste management company Suez to handle and process West London’s waste (see letsrecycle.com story).
The disposal authority’s contract with Suez sees residual treated at the Severnside Energy Recovery Centre (SERC), an energy from waste (EfW) plant in South Gloucestershire.
According to figures covering April 2021 to the end of March 2022 which will go before a WLWA meeting tomorrow (25 March), the waste disposal authority predicts it will end the financial year with a total surplus of £9.36 million.
The WLWA says this forecast is “principally reflected” by its expected income from its PPP contract, alongside waste transfer and disposal costs being lower than anticipated.
Emma Beal, managing director of the WLWA, told letsrecycle.com that her organisation received “the lion’s share” of any unexpected income generated by the SERC.
However, she added that electricity prices were low when the plant began operations nearly a decade ago, and since then it has not been usual for the WLWA to receive any income.
Ms Beal said: “This is quite an unusual situation. It’s mainly due to the increased value of electricity, but there’s also things we’ve been working on together to optimise the plant.”
Transfer and disposal
Meanwhile, the WLWA says waste tonnages and transfer and disposal costs are now at “similar levels” to prior to the pandemic.
And, Ms Beal said it was more normal for there to be an underspend on forecasted transfer and disposal costs over the course of a year.
She said the WLWA predicted waste flows each year based on borough forecasts and “focused hard” on waste reduction and increasing recycling.
She told letsrecycle.com: “It’s quite usual for us to have a higher budget and a lower reality.”
PPP
Under the PPP contract, the residual waste of 1.7 million people from West London is delivered to one of two rail-linked waste transfer stations in Ruislip and Brentford, operated by Suez.
From here, the waste is transported in sealed containers by rail to the SERC.
Suez began operating the SERC in December 2016 following a three-year construction and commissioning programme (see letsrecycle.com story).
The plant has a consented capacity of 400,000 tonnes a year. It is capable of exporting around 34 megawatts of power, or enough electricity to power the equivalent of 50,000 homes.
West London Energy Recovery, the company formed to build and operate SERC on behalf of the WLWA, has three main shareholders: I-Environment Investors, Foresight Group, and Suez.
These shareholders also receive a proportion of any income, though the WLWA receives more.
Market prices
Last year, Suez told letsrecycle.com that it generated about 120 GWh of electricity a month via its EfW plants and landfill gas (see letsrecycle.com story). In 2019, it generated enough electricity to power 438,000 homes.
Explaining in October 2021 how Suez set the price for the electricity it generated, Stuart Hayward-Higham, the company’s technical development director, said: “What we do is we try and marry risk with opportunity. So, we hedge, we buy forwards.
“We’d sell all the power for a year ahead from a particular plant. That means that that price is locked in.
“If the price drops, we’ve covered off that, and if the price goes up, we don’t get all benefit. What we do as a business is we have a hedged position.
“Some of the power’s sold long and at a fixed price, and some of it is sold short at the market price.”
West London
The WLWA is responsible for the disposal of controlled waste collected in its area by its six constituent boroughs: Brent, Ealing, Harrow, Hillingdon, Hounslow, and Richmond upon Thames.
The authority and boroughs manage approximately 650,000 tonnes of waste each year.
In the 2020/21 financial year, the WLWA had a household waste recycling rate of 38.3%.
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