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De-risking your business plan: how to secure and demonstrate a long-term reliable source of waste

De-risking your business plan: how to secure and demonstrate a long-term reliable source of waste. Simon Gandy Ricardo-AEA Principal Consultant – Resource Efficiency & Waste Management Presentation to Sustainability Live, Feedstock supply and infrastructure capacity session

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De-risking your business plan: how to secure and demonstrate a long-term reliable source of waste

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  1. De-risking your business plan: how to secure and demonstrate a long-term reliable source of waste Simon Gandy Ricardo-AEA Principal Consultant – Resource Efficiency & Waste Management Presentation to Sustainability Live, Feedstock supply and infrastructure capacity session 3rd April 2014, NEC Birmingham

  2. Ricardo-AEA • Internationally-renowned consultancy specialising in environment and energy issues • Over 40 years experience; over 400 consultants globally • Waste market research • Technical due diligence • Technology review • Independent certification • Air quality Introduction: www.ricardo-aea.com • Simon Gandy • MA, MEng in ChemEng • 7 years at Procter & Gamble • MSc in Env Tech • 14 years in Environmental Consultancy • Project Highlights • CIWM President’s Report on C&IW Arisings & Infrastructure • WRAP Review of Market for Waste Derived Fuels and CHP Opportunities

  3. Some of our clients in resource efficiency and waste

  4. Context: UK Waste Infrastructure • Planning permission has traditionally been cited as the main impediment to waste infrastructure development • EP0W: a reliable source of waste for the lifetime of a waste facility is one of the critical factors that financial institutions consider when deciding whether to fund a project • Developers of waste treatment plants must therefore demonstrate that they can secure the necessary waste to operate their plant • Data uncertainties make estimations of national under- or over-capacity problematic, but Ricardo-AEA, Urban Mines, CIWM and SITAall believe the UK needs a mix of more facilities

  5. Waste Market Research – FALCON • FALCON is Ricardo-AEA’s GIS-based map of UK waste facilities and data • It encompasses: • FacilitiesIncluding technology, size and status • ArisingsMunicipal waste arisings and fates by tonnage and percentages • Locations • ContractsMunicipal residual waste contracts (recycling & organics also tracked but not yet plotted) • Underpinned by a series of live databases (~5% churn each month on facilities alone)

  6. Get Local • For developers looking to deliver individual facilities, the national picture is less important • The critical question is the local and regional balance for their waste • They need to understand who are the potential suppliers of their particular waste, and who are their competitors for that waste • This is fundamentally the same analysis as the national picture, but goes into much more detail, and has a less precise system boundary Potential sources of appropriate wastes Potential destinationsfor appropriate wastes

  7. Seeking the Sources: 1. Local Authorities • Large tonnages; long contracts; lower prices • Ideal as “baseload” for a facility, to make sure that there is enough waste to keep it operational • Provide significant comfort to potential funders that business will succeed • What contracts are coming up? Tracking OJEU unlikely to give you the best chance of winning • Need a database of incumbent contractors, when those contracts expire, and any options for extension • If the contract is likely to be for more waste types than you can accept, start early seeking partners for a consortium bid • Consider appropriate catchment area

  8. Seeking the Sources: 2. Commercial & Industrial • Smaller tonnages; shorter contracts; higher prices • Short-term or spot-price contracts are higher value and help boost profitability • Really tough to get contracts before the plant is built – “come to us when you’re ready to accept waste” • How to break the vicious circle? • Win contracts? • Find funding? • Find waste?  ?? 

  9. Finding C&IW • Look for large local businesses likely to produce the right of waste and approach directly • Contact local waste brokers to determine what they can handle and their prices • Perform catchment modelling for local waste sources • Run SIC-based analysis of local businesses and likely arisings • Use probability weighting to account for haulage and competition • Results are presented in GIS maps, together with supporting tables, showing the local waste landscape and its opportunities

  10. Mapping the Competition • How much waste will your competitors take out of the market? • A complex and shifting picture of facilities and contracts • Can guess how long operational plants will remain open • Which proposed and consented plants will reach operation? • How far will waste travel? • How will exports affect availability? • Will plants operate at design capacity? • Run a baseline prediction of futurecompetition • Use sensitivity analysis to test feasiblealternatives, to investigate where critical uncertainties lie • By overlaying a consolidated picture of facilities on the map of arisings, the overall market situation can be viewed

  11. Conclusions • There are differences in opinion about the future national balance of waste supply and plant infrastructure to handle it in the UK • Whatever the truth, decisions about individual facilities are made at the local or regional level • Developers must assess the balance between the available waste for their facilities and the competition for that waste • Uncertainties persist at the regional level, but it is possible to identify and estimate relevant waste arisings and likely competition, using a suite of techniques that together provide a market picture • Such an independent view of the market can help provide confidence to funders that the facility will not run dry

  12. Thank You Simon Gandy is Modelling Knowledge Leader within the Resource Efficiency and Waste Management practice at Ricardo-AEA. He has over 14 years’ experience in the environmental consultancy industry, assisting public and private clients on matters of waste management, producer responsibility and life cycle assessment. This includes supporting waste market research developments, and Simon is the architect of Ricardo-AEA’s waste knowledge databases and GIS mapping tool, FALCON. Simon has completed more than ten separate market research projects for waste management clients on national and regional scales. These have included MSW, C&IW and organic waste arisings studies, landfill void assessments, competitor facility maps and local authority contracts research. Simon has led waste trend analysis, arisings studies and composition analysis for a number of major private companies, and has shared his research and data handling techniques with WRAP and Defra. His most recent study, for the 2013 CIWM President’s Report, analysed the state of C&IW statistics in the UK and Ireland. Its conclusions, that there remains a sizeable capacity gap in treatment capacity, was supported by interviews with a panel of UK industry experts. simon.gandy@ricardo-aea.com

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