Yes, solar and wind are cleaning up the grid, but a new report from the CEFC is a reminder to investors and industry of the value in what gets thrown away.
Nothing is worth nothing, so why throw anything out? That’s the belief the Clean Energy Finance Corporation is running with in its report Energising Resource Recovery: the Australian Opportunity. The report, prepared with Arup, identifies a potential investment pipeline of between $4 billion and $7.8 billion to 2025 across Australia’s waste, bioenergy, recycling and resource recovery sectors.
The energy-from-waste and biofuels sectors are set for steady growth over the next three to five years, says CEFC associate director and acting head of waste and bioenergy Mac Irvine, with energy-from-waste expected to make up a significant portion of the investment pipeline.
Energy-from-waste projects under construction include the 38MW Avertas plant and 29MW East Rockingham plant, both south of Perth in Western Australia and both supported by CEFC funding. Other developments are progressing in Victoria and NSW, such as a facility at paper-maker Opal’s Maryvale mill in Victoria, the Western Sydney Energy and Resource Recovery Centre (a joint-venture between Cleanaway and Macquarie), a couple of gasification projects approved in Victoria and projects in early stages in Queensland. “We anticipate a few of those reaching financial close with the next 12 to 24 months,” Irvine says.
Pay at the gate
A large part of the economic success for an energy-from-waste project is derived from opportunity cost. If feedstock wasn’t being combusted to generate heat or electricity it would have to be taken to the tip, where landfill levies range between $20 a tonne in Tasmania to $146 a tonne in NSW. “The primary revenue generator of these projects is typically the gate fee,” Irvine says. “A project is looking to provide an alternative to landfill.”
Sending rubbish to an energy-from-waste plant should work out as a cheaper disposal option for a council or large business. If it isn’t, some councils may be happy to pay more to send it to an energy-from-waste facility because it is a better environmental outcome than landfill. Irvine would be surprised if councils started to charge less to take rubbish. “Most states and territories are either implementing a levy where it was previously zero or increasing that year-on-year.” There isn’t harmonisation across Australia on levies but who’s to say that won’t happen.
For a energy-from-waste project to be bankable there would need to be some volume of contracted waste, Irvine says. Avertas, for example, has a 20-year contract with a local council and another feedstock agreement with O&M contractor Veolia. At East Rockingham, deals have been struck with local councils and Suez. “Neither of those projects was fully contracted from a waste perspective, but there was enough to underpin the economics of the project,” he says. “Developers will make a decision as to whether or not they try to raise capital on a merchant project – that is, uncontracted – or a contracted or partially contracted basis.”
Energy-from-waste and bioenergy facilities can provide baseload or dispatchable generation, a useful complement to solar. Energy will often be in the form of heat or electricity – sometimes both. Plant owners who make use of the heat or steam from large-scale energy-from-waste facilities will get the best efficiency out of them, as energy is lost in running a turbine for electricity production, Irvine says.
Bioenergy projects tick more than one box for owners, where end products heat, electricity or gas qualify them as providing dispatchable storage. Anaerobic digestion has the ability to store between three and four hours worth of energy depending on tank sizes, Irvine says. “When people say storage they typically think of batteries, but with bioenergy – whether it’s anaerobic digestion or wood pellets – there is the capability to provide storage, too.”
Biofuels is a broad definition that includes dry, liquid and gaseous forms, but two simple variables dictate much of the outcome for investors. “Any time you can increase your volume of [feedstock] contracting and your length of contracting – at the right price – the less risk associated with that project and the higher likelihood of attracting capital,” says Irvine, pointing out that different feedstocks and different outputs have their own challenges.
Brisbane-based company Utilitas is busy finding industrial sites that would suit the development of “biohubs”, solutions where the feedstock is located close to bioenergy technology and the output is used onsite or nearby. “It’s a case of trying to internalise all of the requirements of the project as close to the source as possible,” he says. A good example is wastewater treatment at an anaerobic digestion facility to produce electricity or heat used onsite, an application used by Sydney Water.
The CEFC has already invested $90 million with Cleanaway Waste Management and in the Avertas Energy waste-to-energy plant in Western Australia, among $400 million committed to bioenergy, recycling and energy-from-waste.
As a result of reusing and recycling material before they enter the waste stream, the report found emissions from landfill can be cut by up to 60%.