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9 January, 2019
Australia's thermal Waste to Energy (WtE) market took a giant leap forward in October, with the Kwinana WtE project reaching financial close. Strong growth of the Australian WtE market is anticipated, making now an opportune time to take a look at the upcoming pipeline of WtE projects and consider some issues that may be helpful for developers to keep in mind for their projects.
The WtE pipeline
While the Kwinana project is the first WtE project to reach financial close in Australia, several other thermal WtE projects are currently in various stages of development and procurement across Australia. These include:
- Australian Paper Project;
- East Rockingham Project;
- Swanbank Energy from Waste Facility; and
- Ballarat Waste to Energy Project.
Research indicates that there is capacity in the Australian market for up to 25 thermal WtE plants and, with both federal and state governments willing to support WtE projects, there is plenty of room for project proponents to play in.
Click here to read more about each of these projects.
To date, support from government has come in the form of cash grants, channelling revenue from waste levies and increased land taxes into feasibility studies and project development. In Queensland, for example, the 2018 budget reintroduced a waste levy to support WtE gate fees and established a new A$100 million fund designed to support waste recovery and recycling. This money will be used to fund infrastructure or machinery on a dollar-for-dollar basis up to AU$5 million, provide incentives for the development of new large-scale facilities, and support feasibility studies for innovative waste management projects.
The federal government is also providing support by way of direct lending, with federal government agencies, the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation joining commercial lenders to finance the Kwinana project.
The next project likely to close in Australia will be the East Rockingham facility (also in Perth). However another project for developers and market participants to watch is Australian Paper’s (AP) planned 600ktpa project, to be co-located with AP's paper mill at Morwell in Victoria. In November, AP’s project became the first EfW project in Victoria to be issued a works approval by the Environmental Protection Authority (EPA), confirming that the project will meet the EPA’s stringent emissions standards. In addition, all indications are that the local community is supportive of the project – a key factor for success of a WtE project.
Planning for success
As is the case in other jurisdictions, a key milestone for an EfW project is the granting of a development approval from the local planning authority. Many planned facilities around the world have failed to clear this hurdle for one reason or another. Looking at the reasons why development approvals have not been granted can be a useful exercise, both for the project proponents (particularly if they are considering resubmitting an application for the same project) and market participants generally, so that sponsors can learn from the outcomes and adjust their own proposals to ensure the best chance of success.
Earlier this year, planning approval for Dial-a-Dump's proposed 550ktpa/68MW facility in an industrial park in the Sydney suburb of Eastern Creek was refused. While not the desired outcome for Dial-a-Dump, the reasons for the refusal identify a number of issues for project sponsors to keep in mind at the planning stage in order to maximise a WtE project's prospects for success.
Click here to read about these issues, covering:
- The importance of public acceptance;
- Choosing a suitable reference facility; and
- Further information.
Ros O'Mally, Partner, Hogan Lovells
ros.omally@hoganlovells.com
