$400m waste project gets new backing

Phoenix Energy has announced major changes to its planned waste to energy project at Kwinana, with Macquarie Capital becoming lead sponsor and two European groups negotiating to take on construction and operations.

Phoenix and Macquarie have entered exclusive negotiations with Spanish infrastructure and renewable energy company Acciona and waste management company Veolia to design, construct and operate the facility.

This comes after Phoenix failed to complete agreements with its previously announced engineering and construction partners, including Mitsubishi ad BGC Contracting.

The Acciona-Veolia consortium includes German environmental technology company Keppel Seghers.

Its involvement comes after another German company, Martin GmbH , chose to withdraw from the project.

Phoenix's Melbourne-based managing director Peter Dyson said there was a high expectation the project would proceed.

“Very confident, for the first time in the eight years of this project,” he told Business News.

“The negotiations are much more advanced.”

Mr Dyson said preliminary groundworks at the Leath Road site, including environmental and groundwater testing, would commence in mid-January 2018.

That would enable the mobilisation of construction crews for the 2nd quarter of 2018.

He anticipated the plant would commence commissioning in the 4th quarter of 2020, and be fully operational in the 2nd quarter of 2021.

Macquarie Capital was initially engaged three years ago as debt arranger and was subsequently appointed financial adviser.

It became co-sponsor early last year and has now assumed lead responsibility for final delivery of the $400 million project.

Today’s update comes four months after parent company Macquarie Group completed the £2.3 billion purchase of the UK government’s Green Investment Bank.

Macquarie said at the time that the Green Investment Bank will remain one of the leading investors in green infrastructure in the UK and Europe, including waste-to-energy, with scope to expand internationally.

Macquarie has been able to draw on the expertise in Green Investment Bank to help progress the Kwinana project.

The Phoenix project is one of two large waste-to-energy projects planned for Perth.

The second project, also costing about $400 million, is led by Swiss company Hitachi Zosen Inova with local partner New Energy Corporation and international investor Tribe Infrastructure Group.

The Eastern Metropolitan Regional Council selected the HZI consortium as its preferred tenderer in September.

The HZI plant is to be built in East Rockingham and will divert 300,000 tonnes of waste from landfill.

The Phoenix project is underpinned by 20-year waste supply agreements with eight local councils in Perth’s southern suburbs, including the Rivers Regional Council and the City of Canning.

They will supply up to 400,000 tonnes per year of residential (post-recycling) waste to the plant, which will have energy generation capacity of 40 megawatts.

The Kwinana project has received development approval and all final environmental approvals required from Western Australian Government agencies to construct the plant.

There will be approximately 800 jobs created during the construction phase and approximately 60 full-time operational roles.

Mr Dyson said the Kwinana plant will provide consistent and dependable energy from a renewable source that will also deliver benefits to metropolitan Perth by reducing the waste going to landfill.

Chairman of Rivers Regional Council, Fred Riebeling said that whilst it had taken longer than anticipated to reach this point, the confidence shown by members of the group will ensure that the community will benefit substantially over the long term from this innovative project.