This follows an £8.1 million rebate in 2021/22, as the authority benefits from a share in excess revenue generated at the Severnside Energy Recovery Centre from higher electricity prices.
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, an energy from waste (EfW) plant in South Gloucestershire.
A report noted by the authority on Friday, 24 March, shows that the authority is due to make £9.4 million from this contract in 2022/23, though this is to be confirmed in June.
The report reads: “PPP income for the year has been estimated at £9.4 million. The volatile electricity market and impact of any windfall tax create some uncertainty in this estimate and the value will only become clear in June 2023 when figures are finalised and paid over to the Authority. At that time two thirds will be passed on to boroughs in accordance with the Finance Strategy.”
The £9.4 million forecast is based on market electricity prices continuing at the present high rates and allowing for a 25% windfall tax.
The forecast income comprises of WLWA’s share of income from increased volumes of third party waste from Suez’s other customers delivered at SERC as well as the windfall gain from higher electricity prices.
‘Investing and initiating’
Emma Beal, managing director of the WLWA, told letsrecycle.com: “West London Waste Authority has made a provision to share excess revenue from higher electricity prices with our Boroughs. Collectively we are investing in and initiating changes to the accepted model of how waste and resources are managed to further our vision of a carbon neutral West London.”
The report also showed that from an operational “day to day” activities perspective, the overall performance for the period shows an underspend of £1.2 million compared to budget. This was boosted by higher trade waste volumes due to a closure of a rival company, and reduced waste volumes.
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.
Windfall
WLWA is not alone in receiving a rebate via its waste disposal contract as electricity prices soar.
The North London Waste Authority announced a £10.2 million rebate for its member councils in February on the back of a £4.75 million windfall in November (see letsrecycle.com story).
The exact rebate received will depend on the risk share arrangements. Those selling electricity on the spot market tend to benefit more from higher prices seen at the moment, while local authorities in a ‘gainshare’ mechanism will benefit.
However, this can be riskier when power prices are as low as they have been in recent years.
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