Financial close has been reached on Australia’s first waste-to-energy (WtE) facility in Kwinana, WA, with construction of the facility – co-developed by Macquarie Capital and Phoenix Energy Australia – commencing this month and scheduled to open by the end of 2021.
The facility will divert 400,000 tonnes of household, commercial and industrial waste from landfill each year, which represents a quarter of Perth’s post-recycling rubbish. The facility will use the residual waste to generate energy, recover and recycle metals, and reuse the remaining ash residue as construction materials.
Once operational, the facility will result in an overall reduction of carbon dioxide emissions of more than 400,000 tonnes per year, the equivalent of taking 85,000 cars off the road. The facility will also export 36MW of electricity to the local grid per year, sufficient to power more than 50,000 households.
Macquarie Capital and Dutch Infrastructure Fund (DIF) will provide $275 million of equity finance and Macquarie Capital will also continue to be responsible for delivery of the facility. A group of financial institutions and the Clean Energy Finance Corporation (CEFC) will provide $400 million debt finance for the facility. The CEFC will commit up to $90 million. The Australia government’s Renewable Energy Agency, ARENA, will provide a grant of $23 million.
The facility will be located in the Kwinana Industrial Area, 40km south of Perth. Support from the WA government includes the provision of the land for the facility through a long-term lease from its land and development agency, LandCorp.
Acciona has been appointed to design and construct the facility, and a 25-year operations and maintenance service agreement has been signed with Veolia, who currently already operates more than 60 WtE facilities around the world.
With increasing pressure on landfill capacity, and concerted community efforts to reduce landfill levels, WtE represents a significant opportunity for the generation of affordable green power.
The Kwinanan facility will use Keppel Seghers moving grate technology, which thermally treats the waste and converts the recovered energy into steam to produce electricity. Metallica materials will be recovered and recycled, while other by-products will be reused as construction materials. Moving grate technology is used in approximately 2,00 facilities globally, with Keppel Seghers providing its technology to more than 100 WtE plants in 18 countries.
During the construction phase, more than 800 jobs will be created including apprenticeships and a range of sub-contracting and supply opportunities for local businesses. Approximately 60 full-time positions will be created once the facility is operational.
The project is supported by 20-year waste supply agreements with Rivers Regional Council, which represents seven Local Government Authorities, and the City of Kwinana. The project also has a five-year waste supply agreement with Veolia.
The Western Australia Local Government Association (WALGA) has appointed the Kwinana WtE facility as a preferred supplier of baseload renewable energy, representing a reliable source of baseload power to WALGA members.
“The project supports Perth communities by providing a practical, long-term solution for waste management,” said Chris Voyce, Macquarie Capital executive director.
“We are pleased to have contributed our global infrastructure and renewable energy expertise.
“Our support for the creation of lower carbon-intensive energy sources is underscored by the expansion of our participation in this project over the past three years; we originally came on board as a financial adviser and have since taken on the responsibilities of co-developer and investor.”
According to Phoenix Energy managing director Peter Dyson, this project has been several years in the making and undergone an appropriately rigorous approvals process.
“I am delighted that the project has met all requirement and we can now move to delivering a first for Australia; an energy source that is one of the cleanest in the world,” Dyson added.
“DIF is excited to be involved in the first thermal WtE project in Australia and look forward to continue our contribution to the sector going forward,” said Marko Kremer, managing director of DIF Australia.
“European countries have long embraced the conversion of waste into energy and it has proven to deliver multiple benefits in terms of managing waste and contributing to sustainable and secure energy supply.”
Newly-appointed CEO for the project, Frank Smith, said the project is an example of the private and government sectors coming together to resolve community issues.
“In this instance, dealing with the ever-growing demands on landfill and generating reliable baseload renewable energy to Australia’s overall energy mix,” Smith continued.
“As we progress through construction and into operations, we remain committed to engaging with the local community, building on the dialogue that has already been established through the early stages of the project.”
Contractual terms remain confidential. The facility has received all the necessary environmental and developmental approvals to commence construction.