Everyone has been banging on ad nauseam about how landfill tax will affect the behaviour of businesses, but there are good reasons to think that the next couple of years will finally see one of the food industry's most viable waste-handling alternatives take off in a big way. According to those in the industry, waste-to-energy projects will soon be cropping up all over the place.
Of course, landfill tax remains one of the big drivers, especially after then-Chancellor Gordon Brown upped the stakes in last year's budget by flagging up this April's tax hike from £24 to £32 per tonne. But the landfill price rise issue has now been joined by other factors.
For example, EU leaders agreed at the 2007 Spring European Council in Brussels to cut greenhouse gas emissions by 20% by 2020. And if other developed nations agree to reduce their emissions, that target may rise to 30%. This, combined with the requirement for 20% of the EU's energy needs to be met from renewable projects, has intensified interest in waste-to-energy.
As part of the drive to meet these commitments, the UK's forthcoming Energy Bill will massively increase the potential rewards for companies generating renewable energy in novel ways. Along with its tax-based 'sticks', the government hopes that this 'carrot' will get the waste-to-energy bandwagon moving more quickly.
"The traditional driver was always the cost of landfill, but pressure to deal with climate change is growing fast. It's already more important now than it was last year," says Michelle Thomas, who heads the clean energy and sustainability group at law firm Eversheds. "Now the Energy White Paper [the precursor to the imminent Energy Bill] is changing the way that the government subsidises renewable energy, making it much more lucrative."
Thomas foresees change happening quickly: "I think the situation will be significantly different in 10 months' time," she says.
Waiting for the Energy Bill
Paul Danks, sales manager for waste-to-energy company Inetec, says that many companies are waiting for the Energy Bill to become law before they look to secure finance for new projects. "The new measures aren't having much effect yet. They will do, but it could be three months or six months down the line. I can't see the legislation not coming, but until it's actually there we can't guarantee to the financial people that there will be an increased revenue stream," he says.
The key change is in Renewables Obligation Certificates (ROCs). Renewable energy producers receive ROCs based on the number of megawatt-hours of electricity they generate. The big energy retailers then buy certificates to help meet their government-set targets for renewable energy, and this generates extra revenue for the renewables project.
Until now, all renewable energy schemes have received one ROC per MWh, but the Energy Bill will change that. From 2009, ROCs will be banded to encourage rapid development of the more novel forms of renewable energy. So established technologies such as sewage or landfill gas will get only 0.25 of a ROC/MWh, while emerging technologies will get two ROCs/MWh. Crucially, these emerging technologies include some that are eminently suited to treating waste from various points in the food chain.
To get an idea of how much this is worth to a project, a ROC currently trades for roughly £50, effectively doubling the income from the electricity generated. Of course, supply and demand will come into play, so doubling the ROC allocation for a project may not double the ROC income. "There will be more ROCs around with the banding, so each ROC may be worth less," says Jake Prior, operations director with anaerobic digestion specialist Andigestion. "But I'd still expect two to be worth £35/MWh each."
Anaerobic digestion will be a double-ROC technology under the new system, as will gasification, pyrolysis and biomass burning with combined heat and power (CHP). Encycle's £80M merchant plant (see Food Manufacture, June 11, 2007) will also attract double-ROCs for using the proprietary technology developed by parent company Inetec.
What does the future hold?
There is a general consensus that food companies should already be considering their options, but opinions are divided about what form any future projects will take.
First, there is a bewildering array of candidate technologies, some of which are only suited to massive, merchant plants, while others might be more viable for local or even on-site facilities. The Food Processing Knowledge Transfer Network (KTN) recently published an overview of the technologies and methods that might be used, including incineration, gasification, pyrolysis, refuse-derived fuels, biomass-to-liquid processes, biohydrogen fermentation, bioethanol fermentation, anaerobic digestion and transesterification of waste edible oils.
The report concludes that "... there is the general feeling that technologies on the market are large-scale and unsuitable for the needs of individual companies. Small-scale or bespoke systems tend to be priced too highly and ... this scenario is likely to continue until the demand for such systems increases and brings down prices. Alternatively, there is the possibility of groups of neighbouring production sites collaborating on projects to establish centralised plants and processing wastes collectively."
So should food manufacturers and major retailers be looking to invest in facilities, either individually or as joint ventures, or are merchant plants the way forward?
Thomas believes that local joint ventures will form a big part of the answer. "Huge plants are not going to be the norm," she says. "Instead, you can deal with food waste yourself or pull together a joint venture in which each waste producer has an equity stake in the company, but hands it over to a renewable energy firm who basically runs the project."
Others are doubtful about the ability of food companies to partner up in this way. But the £100M Rose Energy poultry litter power station currently underway in Northern Ireland is a joint venture between Moy Park, O'Kane Poultry and Glenfarm Holdings and seems to be going ahead successfully. Thomas argues that if the poultry producers can do it, why shouldn't manufacturers further along the food supply chain?
David Woolgar, projects manager for anaerobic digestion company Greenfinch, also expects waste producer joint ventures to be a popular strategy, partly because it will enable companies to enjoy economies of scale. "It costs around £1.7M to build a 5,000t/year anaerobic digestion plant, but the cost of a 10,000t/year plant is nowhere near double that," he says.
Waste coming in from more than one company also minimises the impact of any disruption in the food and waste production process. "You know what waste stream is normally there, but if there's an upset, can you accommodate changes to that backbone waste stream over, say, a week?" he asks.
Finally, Woolgar points out that for anaerobic digestors in particular, a diverse feedstock will give a more robust population of bugs, and diversity is something that a single producer might struggle to provide.
Prior believes that the UK model is likely to follow the European example, where things are already more advanced: "Generally, what we've seen in Europe has been centralised plant. You can combine different materials that wouldn't be digestible on their own. Also, there are hygiene issues associated with keeping waste on site, and a food factory would be reluctant to bring in waste from other sources, so off-site solutions will be the way to go."
Andigestion already runs Britain's biggest digestor at Holesworthy, which produces between 60 and 70% of the electricity currently generated from food by anaerobic digestion. He says that the company would be looking to process at least 30,000t/year of waste in any future merchant project.
Economies of scale
Even if food manufacturers do nothing but ship their waste to a merchant processor, the increasing availability of waste-to-energy solutions promises to provide environmental credentials to be proud of, while the new ROC banding should mean significantly lower gate prices in future.
But if on-site waste processing still appeals, the consensus is that most producers will be looking at plants that are too small to generate significant electricity. Even though it won't attract ROCs, a more viable solution for smaller waste streams is to forget the electricity and focus on generating your own heat for use around the site.
"Electrical generation is only really viable at around 2MW and above," says Matthius Grundmann, technical director for gasification and advanced combustion company Bioflame, which builds bespoke solutions of any size. "If it's going to be any smaller, the most efficient use of rubbish is to use the energy to meet your on-site steam requirements." FM
Key Contacts
- Andigestion 01409 253861
- Bioflame 01751 472831
- Eversheds 0845 4979797
- Food Processing KTN 01664 503640
- Greenfinch 01584 877687
- Inetec 01656 746439