Opportunities for financing the Sheffield Energy Recovery Facility via low interest loans have influenced the city council’s decision to scrap its 35-year contract with Veolia.
Councillor Bryan Lodge, Sheffield’s cabinet member for Environment, told letsrecycle.com that “historically low interest rates” had been a factor in its decision to reprocure its arrangements last month.
Councillor Bryan Lodge, cabinet member for Environment at Sheffield city council
The councillor’s comments follow Sheffield city council’s plan to end a 35-year private public partnership (PPP) deal in April 2018 – with a view to securing smaller, ‘new and improved’ contracts (see letsrecycle.com story).
The contract, which was valued at £1.3 billion when it began in 2001, was not due to expire until 2036.
Sheffield
Cllr Lodge said: “We had been working with Veolia to identify savings of £4 million per year through the Integrated Waste Management Contract. It has been a very, very good service, but after 16 years the world has moved on.”
He added: “Penalties have been factored into the equation but we still think this will deliver savings. The big thing for us is the financing of the EfW, which is done through repayments to Veolia, and it is now cheaper for us to borrow privately. I think all councils are looking now at their arrangements, as we have been doing for a number of years, now the high cost of borrowing can be brought down.”
Contracts
The council now intends to tender a smaller, seven-year contract for collections alongside a five-year contract for the operation of the Sheffield ERF, as well as management of the city’s district heating network.
According to Cllr Lodge, the council is in talks to link the existing heating network to E.ON’s low-carbon network in the Lower Don Valley, powered by the 30MW Blackburn Meadows biomass plant.
The move could see Sheffield receive government funding to link the systems and expand the service.
Operations at the Sheffield ERF would continue to be outsourced in the long-term future
While the council’s goal is to bring waste and recycling collections in-house at the end of the seven-year contract, Cllr Lodge has acknowledged operations at the ERF will need to be outsourced.
Income
In a waste services review report to the cabinet issued last month, the council explained it was seeking ‘a significantly higher share of income’ from energy generated by the plant.
But it also warned the council could struggle to broker third party waste agreements to feed the facility, and would not have the technical expertise to manage operations.
Cllr Lodge said: “It’s a set of circumstances that have led us to this position. We think we can renegotiate these contracts in smaller chunks which will allow us to get the right service for Sheffield.
“However, nothing has been signed and sealed, these services are still subject to negotiation. If Veolia can come up with an offer we could still be interested. That door has not closed.”
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Source: letsrecycle.com Waste Managment
