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.
2.0 SUMMARY OF
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
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
generationwind power, wave power, energy cropsin
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.
4.0 THE ROLE
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 technologymass
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
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
5.0 SWERF TECHNOLOGY
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
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
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
6.0 THE NEED
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 technologiesof
which SWERF is just oneoffer 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 149Incineration 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 incinerationas highlighted in the recent hearings
of the Environment Sub-Committee of the Environment, Transport
and Regional Affairs Committee into sustainable waste managementis
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
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.