Suez has begun operating the Severnside Energy Recovery Centre (SERC) in South Gloucestershire, after a three-year construction and commissioning programme.
The facility forms the core part of the waste management company’s Public Private Partnership (PPP) contract with the West London Waste Authority.
The project, delivered in partnership with Aberdeen Asset Management and the ITOCHU Corporation, is part of a £760 million 25-year contract to recover energy from west London’s residual waste which was signed in 2013. Construction was by EPC contractor Hitachi Zosen Invova (HZI) and Sir Robert McAlpine with cladding by Mersyside Cladding Solutions.
The plant, which has a consented capacity of 400,000 tonnes a year, will treat residual municipal waste from the London Boroughs of Brent, Ealing, Harrow, Hillingdon, Hounslow and Richmond-upon-Thames. It will export around 34 megawatts, or enough electricity to power the equivalent of 50,000 homes.
Suez noted that with measures to support recycling in the individual boroughs, the facility will enable the West London Waste Authority to divert 96% of residents’ waste from landfill.
Since the partnership began formally in November 2013, around £244 million has been invested in new infrastructure including the new Energy from Waste (EfW) plant at Severnside, a new mainline rail connection and sidings, electrical grid connection and Incinerator Bottom Ash (IBA) processing facility. The project also included the modernisation and refurbishment of two existing rail-linked waste transfer stations in west London, with new food, green and bulky waste handling facilities.
Residual waste will be transported 110 miles to the Severnside Energy Recovery Centre by rail from the two transfer stations, in Brentford and Ruislip.
Councillor Bassam Mahfouz, Chair of West London Waste Authority said: “In just three years following our award winning procurement Suez has quickly and efficiently delivered the Severnside Energy Recovery Centre. Our partnership will deliver our ambitions of diverting almost all of our waste from landfill, continue to encourage increased recycling at local borough level, and achieve savings for west London whilst creating a new, valuable energy source. We and the boroughs of Brent, Ealing, Harrow, Hillingdon, Hounslow and Richmond-upon-Thames will continue pushing on towards our ambitious target of 50% recycling by 2020 knowing that 96% of residual waste is being used to create renewable energy.”[gallery_placement]
David Palmer-Jones, chief executive of Suez Recycling and Recovery UK said: “We’re delighted to round off 2016 on a high note by beginning operations at SERC on schedule, exactly three years after we broke ground at Severnside… and we very much look forward to serving west London’s residents for years to come.”
According to the West London Waste Authority the contract price “will be lower than the prices paid to principal contractors in previous years.” This means that the Waste Transport and Disposal (WTD) budget will therefore be reduced compared to those years.
However, according to the Authority’s draft budget for 2017/18, off-setting the reduced WTD, the Authority will start to see new expenditure resulting from the SERC.
Draft budget notes stated: “This includes business rates, depreciation charges and financing costs of loans from boroughs funding the construction. The Premises, Depreciation and Financing budgets will therefore be higher. 2017/18 will see the full year impact of these costs compared to 8 months of costs in 2016/17.”
On the contract, the authority notes that as a PPP arrangement, the new price will be subject to concession accounting rules. It explains: “The contract is effectively a means of financing the construction of an asset with financing costs embedded within the price for waste disposal. The accounting rules require that this is separated out and treated as a financing cost in the accounts. This will further reduce the WTD budget and increase the Financing budget.”
In terms of borrowing, the WLWA reports that it will have fully drawn down funds in 2016/17 from the loan agreements it has in place with four boroughs for this project with all interest to the start of full service commencement being rolled into the loan debt. “The loans are at arm’s length and from a borrowing perspective the boroughs are like any other lender with the loan agreements specifying the relationship with the Authority and including a rate of interest of 7.604%.”
Source: letsrecycle.com Waste Managment