Putting Waste to Work in a Land Down Under : IN DEPTH: Australia’s First Waste to Energy Plant

Australia has been slow on the uptake of waste to energy. Now, following China’s ban on imports, a 40 MW waste to energy plant near Perth has the all-clear to proceed. It could be the first of many...

With suggestions that some ancient shell middens date back as far as 60,000 years, Australia is home to some of the oldest known waste sites on Earth. But since those days of pre-history, the nature and quantity of waste has changed – a lot.

In modern times, with its huge, mostly empty landmass, landfill was for decades the easy option for Australia. However, over recent years, the country has drastically improved its waste management systems and it now recycles over half of its waste. But this still leaves a major problem - nearly 50% is still being disposed of in landfill.

Now, driven by rising landfill taxes and China’s import ban, waste to energy plans which had been slow to get off the ground are gaining momentum. Following financial closure and the awarding of construction, operation and technology supply contracts in October this year, a new 400,000 tonne thermal treatment facility is to be built in Kwinana, around 40km south of Perth in Western Australia.

“After years of planning, the City is absolutely delighted to confirm Australia’s first thermal waste to energy facility will be built in Kwinana, providing huge benefits to our community by enhancing the prominence of the Kwinana Industrial Area as the premier place to invest in Western Australia, with significant flow on effects expected for our local economy,” says Mayor Carol Adams.

“The facility will also realise a number of environmental benefits with the facility estimated to reduce the amount of waste going into landfill and the amount of carbon emissions being released into the atmosphere, which is a primary goal not just for Kwinana but for all Local Governments.”

Once operational, it is expected that the plant will divert almost a quarter of Perth’s residual household, commercial, and industrial waste from going to landfill - a reduction of 400,000 tonnes of carbon emissions per year.

One Project, Many Partners

On 18 October last year, it was announced that financial close had been reached on the project. It is to be developed under a new partnership model, known as ‘assetco-opco’. The approach makes use of each partner’s complementary expertise to deliver sustainable solutions to local authorities.

The project is being been co-developed by the Australia-based financial investment group, Macquarie Capital and the renewable energy firm Phoenix Energy, with co-investment by Dutch Infrastructure Fund (DIF), which has acquired a 60% shareholding in the project through two of its funds: DIF Infrastructure IV and DIF Infrastructure V.

An Engineering, Procurement and Construction (EPC), contract which includes a 36-month construction period starting in October 2018, has been secured by Spanish sustainable infrastructure firm Acciona. The plant is anticipated to be in commercial operation by October 2021.

Veolia Australia & New Zealand has been selected to operate and maintain the facility, which will be the first of its kind in the country. The Kwinana project adds to Veolia’s existing Woodlawn Bioreactor Facility located in New South Wales, which currently manages around 20% of Sydney’s organic waste, capturing methane to generate clean energy for up to 30,000 homes.

Under a deal worth around €70 million, Keppel Seghers will provide the core equipment, design, and technical services for the plant's furnace, boiler and flue gas treatment.

“We’d been in contact with Acciona, which is the contractor for this project and we made a deal with them which was in several phases,” explains Benoit Englebert, Sales & Business Development Manager at Keppel Seghers. “First we made a budget and then a binding price. At the beginning there were several competitors, then there were two competitors, and then we were the preferred bidder. After that, we developed a contract with Acciona and Acciona with the municipality.”

Meanwhile, law firm MinterEllison advised Phoenix Energy and Macquarie Capital on the land tenure arrangements with the State Government of Western Australia. Partner Lee Rossetto says that the realisation of the project is the end result of a decade’s work and “an important step for waste management in Australia and a great boost for the WA economy and local jobs”.

Finance

Macquarie Capital and DIF will provide AU$275 million of equity finance, and Macquarie Capital will also continue to be responsible for delivery of the facility. A group of financial institutions and the Clean Energy Finance Corporation (CEFC) will provide AU400 million debt finance for the facility. The CEFC will commit up to AU$90 million as part of its Sustainable Cities Investment program, which invests in clean energy and energy efficient technology solutions in cities and the built environment.

The Australian Government’s Renewable Energy Agency, ARENA, will also provide a grant of AU$23 million. This project builds on around AU$270 million mobilised for waste to energy and bioenergy projects through ARENA and the CEFC, as part of a suite of industry growth initiatives.

The facility is to be located in the Kwinana Industrial Area, 40 kilometres south of Perth. Support from the Western Australian Government includes the provision of the land for the facility through a long-term lease from its land and development agency, LandCorp. The necessary environmental and development approvals have also been received, allowing construction to commence.

Veolia will perform operations and maintenance services for Kwinana Project for an initial 25-year term, with an estimated contract value of AU$450 million (~€278 million).

“This project is an example of the private and government sectors coming together to resolve community issues, in this instance dealing with ever-growing demands on landfill and generating reliable baseload renewable energy to Australia’s overall energy mix,” comments the project’s newly-appointed CEO, Frank Smith.

The project is also supported by 20-year waste supply agreements with Rivers Regional Council, which represents seven Local Government Authorities, and the City of Kwinana. It also has a five-year waste supply agreement with Veolia.

Additionally, the Western Australia Local Government Association (WALGA) has appointed the Kwinana Waste to Energy facility as a preferred supplier of baseload renewable energy, representing a reliable source of baseload power to WALGA members.

Technology

According to consultants to the project, Ramboll, the facility is the first in Australia to utilise well-proven grate technology – a solution that uses thermally treated waste to turn water into steam in order to produce electricity.

That technology includes Keppel Seghers' grates and boiler, which are designed to achieve efficient energy recovery and operational reliability. When completed in 2021, the facility will effectively reduce the volume of waste that goes to landfills by over 90%.

“The plant will process around 400,000 tonnes of waste per year, with a calorific value of between 7 and 14 with a recovery of 10 MJ/Kg of waste, as it passes through two lines using Keppel Seghers air cooled grate technology, which is suited to the thermal treatment of municipal and industrial waste of low to middle calorific values,” explains Englebert. “It uses a vertical boiler for the production of steam and then flue gas treatment. We also have metal recovery from the bottom ash including ferrous and non-ferrous and we will reuse the ash itself in construction materials.”

Future

In 2017, a report by PricewaterhouseCoopers, ‘Energy from Waste in Australia Delivering projects in an emerging sector,’ said that “it is encouraging that a number of states now have formal Energy from Waste policies and recognise energy recovery within their waste hierarchy… The appetite from the market is evident, but these projects also suggest a willingness within the public sector to use pathfinder projects to help move the industry forward.”

The idea that Kwinana could be just such a pathfinder is not hard to imagine for Nick Houldsworth, Senior Managing Consultant at Ramboll in Australia.

“This project required strong intercompany collaboration between Ramboll’s Energy and Environment & Health teams in Europe and Australia, and we are confident it will pave the way for future Australian waste to energy projects,” he says.

Managing Director of DIF Australia, Marko Kremer, also looks forward to the development of the sector in Australia. “European countries have long embraced the conversion of waste into energy, which has proven to deliver multiple benefits in terms of managing waste and contributing to a sustainable and secure energy supply,” comments Kremer.

Englebert also supports the view that there is strong potential for additional development in the near future, and tells WMW: “We think Australia is promising. You see there is strong support with the landfill tax increasing. While the country is making a big effort to recycle, there is still a large amount of waste ending up in landfill – we’re talking about 10 million tonnes per year. At the end we see that the countries with the most advanced waste management policies have a combination of a high recycling rate and energy from waste from the non-recyclable waste.”

“It’s a good match because of course it’s good to recycle as much as possible, but as it is, it’s not possible to recycle infinitely. For example, you can only recycle paper five or so times, plastics 10 or 12 times, depending on the plastic, so there has to be a solution. Waste to energy is a good solution to remove toxic substances from the cycle,” he concludes.