On 20 September 2012 DECC opened a consultation on its plans to expand the current non-domestic Renewable Heat Incentive (RHI) scheme. The plans include a proposal to broaden the eligibility criteria for Energy from Waste (EfW) plants.
EfW plants are currently supported under the RHI through the biomass tariff – the tariff is paid for the proportion of heat generated from the biomass in municipal solid waste(MSW). Commercial and industrial waste, however, is excluded and this has proved a significant barrier to the development of EfW plants as it is usually uneconomical to run a plant purely on MSW.
Extension of RHI support
The consultation is therefore welcome news for EfW plants as the Government plans to expand the types of feedstock eligible under the RHI, to be consistent with the Renewables Obligation. This will effectively extend RHI support to commercial and industrial waste which will, if implemented, provide much needed certainty to developers of EfW plants, and, in particular, developers of oversized and/or merchant EfW plants.
The consultation closes on 18 October 2012.
Specialist Waste & Energy Team
At Bevan Brittan LLP, our specialist Waste & Energy Team has advised both the public and private sector on a wide range of waste disposal projects. More recently, we have been involved in a number of project solutions involving the use of oversized and/or merchant EfW plants and we understand the key commercial and legal issues, including:
- Planning: obtaining planning permission is always contentious for EfW plants and sensitivities are often heightened for oversized and/or merchant EfW plants
- Multiple contracts: any commercially operated EfW plant will service a range of contracts; however, an oversized and/or merchant EfW plant may have to balance a number of significant contracts, which means developers then have to consider how waste is prioritised and how to manage risks across such contracts
- Form of contract: a developer of an oversized and/or merchant EfW plant bidding for a local authority disposal contract may have flexibility to offer contract terms which are significantly simplified as compared to, for example, the WIDP PFI standard form.