$511m waste project to proceed

Construction of Western Australia’s second large scale waste-to-energy project will begin this month near Rockingham after the development consortium reached financial close just before Christmas.

The equity investors in the $511 million project include UK-based John Laing Group, which is investing $51.5 million, Swiss technology provider Hitachi Zosen Inova (HZI), and Spanish engineering giant ACCIONA.

The project is also backed by two federal government agencies, with the Australian Renewable Energy Agency providing an $18 million grant and the Clean Energy Finance Corporation providing a $57.5 million subordinated loan.

The new investors join three existing backers of the project – private WA company New Energy Corporation, Abu Dhabi-based investor Tribe Infrastructure Group, and HZI, which established a development consortium in 2016.

The project encompasses the design, construction and operation of a waste-to-energy facility in the East Rockingham industry zone.

The facility will process about 300,000 tonnes per year of waste from municipal, commercial and industrial sources, and generate 29 megawatts of baseload energy. About 25MW will be sold to a single (unnamed) customer under a power purchase agreement.

It will also recover around 70,000tpa of ‘bottom ash’, which will be further processed for use in road bases and other construction materials.

An engineering consortium comprising ACCIONA and HZI will build the facility over 35 months, employing around 300 workers during construction.

HZI will supply the specialist equipment while ACCIONA will be in charge of civil construction, the water and steam cycle plant, the installation and erection of HZI’s equipment and the balance of the plant.

The engineering, procurement and construction (EPC) contract is believed to be worth about $400 million, with the balance primarily being development costs and interest expenses during construction.

Global company Suez, in partnership with HZI, will operate the facility over 20 years, with up to 50 operations staff employed on an ongoing basis. 

The financial close, announced on December 24, came 10 months after construction of the state’s first large scale waste-to-energy facility began nearby at Kwinana.

The $700 million Avertas Energy facility, formerly known as Phoenix Energy, will process 400,000t of waste and generate 36MW of electricity.

ACCIONA has been contracted to build the Kwinana facility, as well as that at East Rockingham.

The two WA facilities are the only large scale waste-to-energy projects anywhere in Australia, but follow the development of dozens of similar facilities in other countries.

The WA government has welcomed both projects, as they will create jobs and reduce the amount of waste going to landfill.

That’s despite the state government's waste strategy, released last year, ranking waste-to-energy as its least preferred waste treatment option.

Local councils across Perth currently send about 950,000t of waste to landfill each year, though the waste-to-energy facilities will only be able to accept ‘residual’ waste that cannot be reused or otherwise recycled.

A notable difference between the East Rockingham and Avertas Energy projects is their waste supply contracts with local councils.

The East Rockingham project, which will source waste from the Eastern Metropolitan Regional Council and the City of Cockburn, has opted for ‘waste-arising’ contracts.

New Energy Corporation chairman Enzo Gullotti said this meant councils would only pay for the capacity they used and would not be penalised if they successfully implemented waste reduction schemes.

“This is a win for the environment and represents real value for money, for ratepayers who will be protected from the rising cost of landfill, particularly through the State’s landfill levy,” he said.  

The facility will use proprietary moving grate combustion technology supplied by HZI. Its technology has been successfully installed in over 600 projects worldwide, with this being the first in Australia.

“For HZI this project marks our entry into the Australian market and introduces our world renowned and leading technology to Australia – something we’ve been working on for a long time,” HZI Australia managing director Marc Stammbach said.

Suez Australia & New Zealand chief executive Mark Venhoek said the group had a global portfolio of 55 energy-from-waste facilities but East Rockingham was its first in Australia.

“Energy from waste is currently the missing link in Australia’s waste management hierarchy and will play a key role as we move towards a circular economy,” he said.

“This will significantly accelerate the improvement of waste treatment practices in the Perth region as well as reduce the city’s environmental footprint.”

CEFC waste sector lead Mac Irvine said recycling and recovery of energy from waste offered a much better solution than landfill in cases where waste could not be avoided or reduced.

“Under the waste hierarchy, disposing of waste in landfill is the lowest order use of waste,” he said.

“EfW facilities create a higher order use for waste because they divert waste from landfill as well as recover energy from it. 

“They also recover other materials like metals, glass and aggregates that can be recycled to form part of a wider circular economy. This all leads to significant emissions reduction.”

The CEFC cited data from the Department of the Environment and Energy, showing that Australia produces about 67 million tonnes of waste a year, with more than 21mt ending up in landfill.

Data from the Waste Authority of WA shows this state has an even lower diversion rate. WA produced 4.6mt of waste in 2017-18 and 50 per cent of this was dumped in landfill.

The legal adviser to the East Rockingham project was Ashurst while Tribe Infrastructure was the financial adviser.