Select Committee on Environmental Audit Memoranda


Memorandum by Brightstar Environmental


  1.1  Brightstar Environmental (BE) is a subsidiary of Energy Developments Limited (EDL), an Australian listed company, and the third largest dedicated renewable power generation company in the world. EDL has been operational in the UK for the past four years developing projects under the Non Fossil Fuel Obligation (NFFO) regime. Through EDL, Brightstar Environmental holds 155MW of NFFO 5 MIW contracts and is seeking to develop these and other non-NFFO resource recovery projects in the UK. BE's intention is to deliver approximately 200MW of renewable power generation by 2010. As a recent entrant into the UK renewables market, and as owner and operator of an emerging, non-incineration, energy from waste technology, Brightstar is well placed to comment on the government's proposals for the development of renewable energy capacity in the UK.


  2.1  Brightstar wishes to make the Committee aware of its views in respect of the Government's approach to renewable energy generation and the economic framework for the development of emerging technologies which can offer significant contribution to meeting Government targets.

  2.2  It considers that only through a unified and sustained approach to renewable energy generation will the Government be able to foster the creation of a diverse and commercially viable renewable energy sector, and achieve its target of 10 per cent renewable generation contribution by 2010. Further, the ability of the renewables sector to substantially exceed this 10 per cent level in the long term will be very much dependent on how willing the government is to give a strong lead now.

  2.3  The recently announced Renewables Obligation, and the ongoing consultation on the subject, has revealed some inconsistency in the government's approach and commitment to energy generation from renewable sources. The failure to distinguish between types of Energy from Waste (EfW) technology, which has resulted in a blanket exclusion of this source from the Renewables Obligation, will create a significant barrier to advancement and improvement in this sector.

  2.4  The division of responsibility between the DETR and DTI for waste and renewable energy policies is causing confusion in the market place. Whilst strategies for waste management is encouraging the development of new environmental solutions for maximising recycling and resource recovery, policy for the encouragement of renewable technologies is moving against this. The formation of a Sustainable Energy Agency will assist the government in achieving the needed unified approach, and facilitate it to deliver fully its targets for sustainable development and environmental improvement.


  3.1  The Government has stated its intention to derive a minimum of 10 per cent electricity production from certified renewable sources by 2010. Additionally, it has set itself five key aims for its renewable energy policy. We would draw attention to two in particular, "to help provide secure, diverse, sustainable and competitive energy supplies," and, "to stimulate the development of new technologies necessary to provide the basis for continuing growth of the contribution from renewables in the longer term."

  3.2  Given the present level of development in the sector, the government's 10 per cent renewable electricity generation target will only be met with the inclusion of EfW projects in its calculations and it has already been agreed that this will be the case. However, the current proposal to give a blanket exclusion to all energy from waste within the new Renewables Obligation calls seriously into question whether there targets will be achieved.

  3.3  While the Government is undoubtedly focusing greater effort on neglected sources of renewable energy generation—wind power, wave power, energy crops—in doing so it should not lose sight of the EfW sector in its totality especially in the new technologies which are emerging which with the correct support will have a major role to play.


  4.1  The attraction of energy from waste is its ability to contribute to environmental improvement. EfW diverts waste away from landfill, eliminates methane emissions from landfill waste, and generates electricity without the climate change implications of fossil fuels. However incineration has generally been an unpopular method of waste management due to the perceived health risks and size of operation.

  4.2  Energy from waste has been the principal beneficiary of NFFO, a regime that has done much to encourage private sector take-up of first generation EfW technology—mass burn incineration.

  4.3  Under the New Electricity Trading Arrangements (NETA), NFFO will be replaced by an obligation on the energy supply companies to purchase a proportion of their electricity from certified renewable sources. It is through this new Renewables Obligation (RO) that the government seeks to meet its 10 per cent renewable energy generation target by 2010.

  4.4  NFFO provided small renewable generators with a secure outlet for their power through a long term contract at a fixed power price. The RO does not provide this same long term security, but does create market demand for renewable power at a more attractive price to offset some of this financial risk. The RO is also intended to stimulate the development of new technologies, and as such current thinking is to exclude EfW which is seen as developed technology and "sufficiently commercially viable".

  4.5  Discussion on the role of EfW has focussed almost exclusively on incineration. Whilst mass burn incineration has become "commercially viable", it is not the only available solution.

  4.6  Brightstar Environmental is owner and operator of a resource recovery technology known as Solid Waste and Energy Recycling Facility (SWERF), a new non-incineration process which delivers an environmentally advantageous sustainable waste management solution. It achieves this by diverting household waste away from landfill to materials processing, recycling and energy generation.


  5.1  SWERF incorporates an advanced thermal processing technology based on pyrolysis and gasification which offers a clean and efficient process that will be viable at small scale and therefore sized to meet a local community's needs. The process meets the stringent new EU emission standards, and can contribute substantially to targets for landfill reduction nominated in the Government's Waste Strategy 2000.

  5.2  Its front end separation process for the removal of all recyclable components from the waste stream prior to thermal treatment will result in the processing of only the residual organic fraction or biomass. This makes SWERF compliant with the EU's current definition of renewable energy sources in that unlike incineration, it is only the biomass fraction which is primarily converted into energy.

  5.3  SWERF is an example of Advanced Thermal Conversion (ATC), an emerging process, clearly distinguishable from incineration, offering lower environmental impact and greater energy recovery than combustion technology (in the order of 50 per cent). It can be clearly distinguished from mass burn incineration and as such should be considered separately from it in official thinking on renewable energy. This generation of technologies cannot be included in the "commercially viable" category of EfW as stated in the recently published Renewables Obligation document. As emerging technology it is likely to take several years for this to occur, and until such time, it is reasonable to consider that ATC should receive similar support to that received by incineration in its earliest years under NFFO.

  5.4  Whilst SWERF offers the potential to maximise recycling revenues, projects still rely upon the two most significant revenue streams, which are, as for EfW plant, the gate fee paid by the supplier of waste and the income received from the sale of electricity produced. In the case of SWERF, these are of equal importance because the improved efficiency of ATC provides 50 per cent more electricity available for export than traditional EfW schemes currently operational in the UK.

  5.5  In considering the viability of a facility, as well as achieving rates which are competitive for the purposes of raising project finance, it is crucial that both these revenue streams are underpinned by either long term secure contracts or at least some high degree of market certainty.

  5.6  Brightstar currently holds through its parent company 155 MW of NFFO5 contracts, but is having significant difficulty delivering these projects, due to competitiveness of gate fees that will be required to sustain the NFFO5 power price against traditional waste management methods. Since the award of the NFFO5 contracts, the waste industry has not generally seen the price rises that were expected, and in some areas levels of gate fees have fallen.

  5.7  It is this blanket exclusion of energy from waste that will have a serious impact on the delivery of the benefits of ATC into the UK. If the government is to realise its stated aim "to promote a climate of opportunity, and to encourage innovation so that renewables can become increasingly cost effective and competitive with other more traditional energy sources" emerging technologies need to be supported through the RO.

  5.8  EfW is considered as already being " commercially viable" because it does not require a premium above the price for brown power. It is correct that large scale incineration plants (>400,000 tonnes of waste per annum) have been viable at or around the "Pool" price and have been able to operate at competitive gate fees at this level. However, this is not the case for emerging technologies and smaller sized projects where higher power prices are presently needed in order for gate fees to be competitive.

  5.9  Without the proven track record of incineration, financiers of ATC projects will need to see reasonable market demand for power at a power price that offsets their risk. In addition, for smaller community sized facilities which generally carry a higher unit capital cost, a more attractive power price will be needed to make gate fees affordable.

  5.10  If the current proposal for the RO stands, ATC projects will not be bankable until gate fees increase to levels which will sustain these projects. This is unlikely to occur until post 2010 when the legislation for the reduction of landfill forces change on the existing landfill based waste industry.

  5.11  Although providing potential for substantial renewable energy generation capacity, the EfW industry, in whatever form, is currently a waste driven business and must therefore compete on this basis. The price of power is therefore absolutely crucial to enable projects to be competitive in winning waste supply contracts, a situation confirmed by difficulties in delivering the Company's existing NFFO5 contracts.

  5.12  It will therefore be virtually impossible for this technology to succeed let alone survive if it is dependent on selling power into the "open" market where the prices for electricity has dropped substantially in recent years and is expected by the government to fall even further. Hence the delay in delivering the renewable generation and environmental benefits of ATC will be significant and the difficulty in proving ATC as a robust technology in the UK market place will be further compounded.


  6.1  As operator of an emerging technology in an uncertain renewable energy market, Brightstar believe there is an urgent need for sustained and consistent government action to stimulate both the waste and renewable energy industry, and work to overcome the barriers faced by new technologies.

  6.2  We believe that ATC technologies—of which SWERF is just one—offer significant environmental and electricity supply benefits over traditional incineration technology. The use of ATC over incineration is being looked upon favourably by local authorities and environmental advocacy groups as it offers a more efficient technology, delivers higher standards of environmental performance, and can be provided at a community scale to meet local planning and environmental objectives. It is this market need for smaller more environmentally acceptable plants which has created a significant demand for SWERF in the UK on which Brightstar's business objectives have been based.

  6.3  We therefore note with some concern the recent Parliamentary Office for Science and Technology briefing note (POST 149—Incineration of Household Waste, December 2000) and its misleading labelling of pyrolysis and gasification technologies as "incineration". So long as such inaccurate understanding is reinforced in the minds of decision-makers, so too shall the barriers be to new technology.

  6.4  Growing political and public unease with incineration—as highlighted in the recent hearings of the Environment Sub-Committee of the Environment, Transport and Regional Affairs Committee into sustainable waste management—is likely to lead to greater activism and resistance to applications for EfW facilities. With the view, embedded in some official thinking, that all energy generated from municipal solid waste amounts to incineration, alternative technologies like SWERF are being caught up in this debate.

  6.5  The impediments in the planning system to the coherent development of renewable power capacity are well publicised, and will doubtless be addressed in greater detail by memoranda from other respondents in this inquiry. Applications for planning permission are likely to prove increasingly problematic and controversial. The Government has stated its wish to see a greater strategic element in the renewable energy planning framework. However without timely and co-ordinated action a number of renewable energy projects will continue to be at risk.

  6.6  While in its response to the House of Lords Select Committee on European Communities report on Electricity from Renewables (HL 78-I, 29 June 1999), the Government rejected the formation of a Sustainable Energy Agency, the evident difficulties in establishing a viable and vibrant renewables sector highlights the validity of its recommendation.

  6.7  Brightstar therefore supports the House of Lords, and groups of the standing of the Green Alliance, in their view that only with the creation of such an agency will the necessary joined up thinking on sustainable development, and the contribution of renewable energy, be truly realised.


  7.1  Brightstar wishes to see a strong and dynamic renewables sector from the belief that this kind of environment is the best way of delivering on the promise that renewable energy generation offers. If ultimately all forms of renewable energy need to demonstrate their economic viability independently in the mass electricity generation market, the role of government now is to put in place the foundations on which the private sector can deliver.

  7.2  The Renewables Obligation is a key means by which it proposes to do so, but as presently formulated, it does not encourage competition and development within some sectors of renewable generation. Illustrative of this is the current approach to energy from waste, and the grouping of all technologies, resulting in the exclusion of emerging ATC technology as being eligible for support. ATC is not commercially equivalent to developed mass burn incineration. However, it offers benefits in delivering sustainability and in making significant contributions to meeting the Governments' current target for renewable energy. As such a more considered approach from government to encourage its development is needed.

January 2001

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