Cornwall Insight and the UK EfW market

As the UK has continued its evolution towards decarbonisation, one of the lesser talked about success stories has been in energy from waste (EfW). 

EfW in the UK has grown to around 50 operational plants processing around 12mn tonnes of residual waste (but with capacity to potentially process nearly 14mn tonnes). In electricity capacity terms, EfW grew from 680MW at the end of 2014 to 1.2GW in 2018 and over the same period anaerobic digestion (AD) more than doubled to 502MW. The combined generation from EfW and AD is now over 6TWh and therefore provides around 2% of the UK’s electricity mix. With new projects set to commission in the coming months, including those supported under the first allocation round of the contract for difference (CfD), this will continue to grow.

But there are significant challenges too. There have been several delays to commissioning for new plant, and technology issues especially for new processes outside incineration. Some operational players have also suffered from outages and reliability issues, resulting in reduced waste processing and electricity output.

Over the past five years, Cornwall Insight has been working closely with a number of EfW players to provide a range of commercial, regulatory, due diligence and project support. This has typically focused on the power generation and offtake elements, which have typically provided between a quarter and a half of plant revenues.

Below we have split out the areas of support provided.

Revenue stream assessments

We have focussed on revenues available from power sales, including:

  • Long-term assessments of capture power prices for EfW
  • Long-term assessments of Capacity Market (CM) clearing prices (T-1 and T-3/4)
  • Site specific embedded benefit (and network charges) forecasts
  • Long-term assessments of subsidy, as appropriate, including Renewables Obligation (RO) and CfD

Revenue stabilisation/ subsidy schemes

We have supported a range of EfW plants through subsidy schemes, including:

  • CfD bidding strategies and CfD contract compliance
  • RO accreditation
  • Renewable Heat Incentive (RHI) accreditation
  • CM prequalification and bidding strategies

Routes to market

The options to achieve value from exported power have evolved and in particular, we have noted a marked improvement in terms available in power purchase agreements (PPAs). The support we have provided include:

  • Route to market options appraisals
  • Investment support
  • PPA tendering and assessments
  • Direct trading market entry
  • Private wire developments

Regulatory

In an ever-changing landscape, the majority of consulting projects we’ve undertaken for EfW have included at least some elements of regulatory support, including:

  • Regulatory impact assessments (including the Targeted Charging Review and other network charging workstreams)
  • Generation/ supply licence applications and exemptions

If you’d like to understand more about the work we’ve been doing in EfW please get in contact with our Head of New Business, Ben Hall at b.hall@cornwall-insight.com.

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