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ARENA and CEFC to co-fund Australia's second Energy-from-Waste facility

In Western Australia, the Australian Renewable Energy Agency (ARENA) is providing AU$18 million in recoupable grant funding to develop Australia’s second large scale energy-from-waste (EfW) plant while the Clean Energy Finance Corporation (CEFC) is committing up to AU$57.5 million. The AU$511 million facility will be located in the Rockingham Industrial Zone, 40 km south of Perth where it will reduce waste currently going to landfill and generate dispatchable electricity for the grid.

Hitachi Zosen Inova AG (HZI) is delivering its first energy-from-waste (EfW) plant in Australia. In addition to developing and constructing the state-of-the-art EfW facility in East Rockingham near Perth, Western Australia, HZI will also part-own the plant as well as be responsible for the operations and maintenance (O&M) of the facility (illustration courtesy HZI).

Being developed by New Energy Corporation, Hitachi Zosen Inova Australia (HZI) and Tribe Infrastructure Group (Tribe), an independent infrastructure project finance firm based in Abu Dhabi, United Arab Emirates (UAE), the East Rockingham Resource Recovery Facility (ERRRF) will be owned by a consortium of co-investors including John Laing, HZI and ACCIONA.

ERRRF is expected to process approximately 300 000 tonnes per year of residual waste from non-recyclable materials in the Perth metropolitan area to deliver 29 MW of baseload electricity capacity, enough to power more than 36 000 homes.

Long term waste supply agreements have been struck with local councils in the area, including the Eastern Metropolitan Regional Council and the City of Cockburn. French waste management company Suez has also signed a long-term deal to supply up to 65 000 tonnes per annum of commercial and industrial residual waste. The project has entered into a power purchase agreement (PPA) for 25 MW of its capacity.

The project has the ability to generate large scale generation certificates for eligible feedstock in accordance with Clean Energy Regulator requirements. The facility will also recover 70 000 tonnes of bottom ash which can be processed and used in road bases and other construction materials.

ACCIONA and HZI have been appointed to design and construct the facility. Suez and HZI will operate the facility under a 20-year operations and maintenance (O&M) agreement. The facility will use moving grate combustion technology supplied by HZI. HZI’s technology has been installed in more than 600 projects worldwide and meets the most stringent environmental requirements.

The project is expected to employ 300 workers during construction, and up to 50 operations staff on an ongoing basis when complete.

Reduce landfill disposal and GHG emissions

ERRRF will be built in the East Rockingham industrial area, 40 km south of Perth and just a few kilometres away from the Avertas Energy EfW plant in Kwinana, the country’s first large scale waste-to-energy (WtE) facility.

Currently under construction, the Avertas Energy EfW plant is also being supported by both the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC).

ARENA Acting CEO Nicola Morris said that energy-from-waste projects represent a significant opportunity in growing Australia’s bioenergy sector, which is the focus of a roadmap being developed by ARENA.

As the second state-of-the-art energy from waste facility in the country, East Rockingham represents a progression along the pathway towards commercialisation for the sector. The project will be delivered by a consortium with global expertise which will drive competition in the Australian market. We expect this project to demonstrate that large scale metropolitan energy-from-waste plants are now a bankable asset class in Australia. Furthermore, the recycling and waste-reduction efforts of local councils and other residual waste providers are supported by the “waste-arising” contractual structure, which is a key commercial innovation of the project, Nicola Morris said.

According to the latest figures from the Department of the Environment and Energy, Australia produces about 67 million tonnes of waste a year, with more than 21 million tonnes ending up in landfill. Solid waste disposal accounts for about 1.6 percent of Australia’s greenhouse gas (GHG) emissions.

CEFC CEO Ian Learmonth said that reducing Australia’s reliance on landfill for waste disposal was another way to cut GHG emissions and help meet the country’s international emissions targets.

Measures to improve reuse and recycling significantly reduce waste levels and diverting it from landfill is another important waste minimisation strategy. EfW is a great example of technology that addresses more than one challenge, using our rising waste levels to provide much-needed baseload energy. The clean energy produced by the EfW sector improves the reliability and security of the electricity supply to firm and support grid stability – an important priority for the CEFC, said Ian Learmonth.

CEFC waste sector lead Mac Irvine said that where waste could not be avoided or reduced, recycling and recovery of energy from waste offered a much better solution than landfill.

Under the waste hierarchy, disposing of waste in landfill is the lowest order use of waste. EfW facilities create a higher-order use for waste because they divert waste from landfill as well as recover energy from it. They also recover other materials like metals, glass, and aggregates that can be recycled to form part of a wider circular economy. This all leads to significant emissions reduction, said Mac Irvine.

First to use “waste-arising” contracts

The ERRRF is the first of its kind in Australia to use “waste-arising” contracts, giving councils the ability to continue to pursue waste reduction targets with waste supply commitments to the ERRRF. This type of innovative contractual framework will help support Western Australia’s Waste Avoidance and Resource Recovery Strategy 2030.

New Energy Corporation Chairman Enzo Gullotti said the waste-arising model meant that councils would only pay for the capacity they used and would not be penalised if they successfully implemented waste reduction schemes.

This is a win for the environment and represents real value for money for ratepayers who will be protected from the rising cost of landfill, particularly through the State’s landfill levy, Enzo Gullotti said.

The subordinated debt facility provided by the CEFC is the first of its kind for the EfW sector in Australia and provides capital structure innovation for the project.

The CEFC is leading the way by supporting only the second EfW plant of this kind in Australia. With this project, the CEFC has now invested AU$415 million into the waste and bioenergy sector Australia-wide for a total project value of more than AU$1.7 billion. This investment also demonstrates the CEFC’s focus on investment opportunities in WA. Total CEFC investment commitments in WA now stand at more than AU$400 million, across a diverse range of sectors, said Ian Learmonth.

Justin Bailey, John Laing’s Regional Managing Director for Asia-Pacific, said the investment continued its push to partner responsible infrastructure projects around the world.

We are proud to be working alongside our partners to make this state-of-the-art resource facility a reality, not just as a sustainable waste management solution, but also as a critical contributor towards Australia’s wider emissions reduction commitments, Justin Bailey said.

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