Powering through waste: Investment opportunities & risks in the Energy from Waste sector – WebEx session, 9 March 2020
It looks to be a busy year for investors in the UK Energy from Waste (EfW) sector. Assessing the risks and returns from these investment opportunities requires a detailed appreciation of both the residual waste and energy markets – each with their own dynamics.
The majority of EfW revenues come from gate fees, which can be contracted long term or merchant. The UK has historically faced a residual waste treatment shortfall as consenting in some regions has hindered new development, resulting in a boom in exports of Refuse Derived Fuels to other EU countries. A number of factors could affect this picture going forward: Certain EU countries are introducing taxes on waste imports & carbon, the Government continues to target an increase in recycling through mandatory food waste collections, and landfill sites continue to fill and ultimately close.
The remainder of EfW revenues come from energy markets – primarily the sale of electricity into the wholesale market, and for some sites also the sale of heat. GB wholesale power market prices are currently depressed as a result of low gas prices, but are expected to recover as the LNG glut clears and prices rebound. EfWs can also access additional revenues from the Capacity Market – which again has seen low prices in the latest auctions but should recover as ageing coal and nuclear plants retire. Furthermore, there are opportunities to optimise EfW energy revenues by providing flexibility to the grid and stacking these additional revenue streams.
In this webinar, Tolvik partnered with Aurora Energy Research to address the following questions:
• EfW economics: What are the key revenue streams for an Energy from Waste plant?
• What is the current status of the residual waste market?
• What is the treatment capacity shortfall and how is this likely to evolve?
• What is the outlook for gate fees in the UK?
• What is the outlook for power revenues from EfW plants, and what are the key sensitivities and risks?
• How can EfW plant operators optimise assets to maximise their returns?
• What are the key risks to investors in EfW plants and how can they be managed?
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