The perfect storm for waste-to-energy

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There is currently a ‘perfect storm’ brewing around Waste-to-Energy (WtE). With elevated energy futures prices following the recent federal election, electricity price pressure is likely to intensify for large energy users, including water utilities, and many of these energy users have sustainability goals that include target proportion of renewable energy usage. Meanwhile, following waste import policy changes in China and with states moving towards harmonisation of landfill levies, waste disposal will become an increasing challenge for municipal authorities and state governments. This perfect storm has created a significant amount of interest in waste to energy technology – could we solve two problems with the one solution? To explore this further, we take a look at the progress to date for waste-to-energy solutions in Australia and some of the technical and commercial considerations that are important to achieving beneficial business outcomes.

Waste to energy in Australia

WtE, whilst a well-established technology for municipal waste disposal and energy generation in comparable jurisdictions, is relatively immature on a large scale in Australia (Figure 1). In Victoria, there are various small to medium organic waste conversion facilities including Yarra Valley Water’s Aurora facility, which is a medium scale anaerobic digestion facility converting 30,000 tonnes of commercial food waste into energy annually. Also, in Northern Victoria, Waranga Green Energy’s project, currently under construction, to convert biomass (piggery effluent) into renewable energy. However, while there are a number of project proposals, and a large-scale thermal WtE plant that is currently under construction in Kwinana, there is not yet a single operating plant that can recover energy from municipal solid waste. By contrast, WtE is so prevalent across parts of northern Europe that governments are looking to incentivise more advanced conversion technology, such as under the UK’s Contract for Difference (CFD) scheme, by which the UK government provides, by way of public reverse auction, long term subsidy contracts to low carbon generation technology.   

Figure 1: Large scale waste-to-energy projects in Australia

Technology considerations

The waste conversion technologies incentivised under the UK’s CFD scheme involve gasification, as opposed to simple incineration. While an incinerator will burn waste in a boiler using heat and lots of oxygen, a gasification facility (Figure 2) will use heat and very little oxygen to convert solid waste into a fuel gas that can be combusted in a separate chamber to heat water to drive a steam turbine and generate power.

Figure 2: Gasification facility

The production of a synthetic fuel gas (syngas) provides a more efficient and cleaner energy recovery process, as well as the potential for gas storage or gas network feed-in. Gasification facilities can also produce useful industrial outputs, in contrast to incineration that produces large amounts of ash that must be disposed of. However, gasification plants are significantly more expensive to build, with additional cost for gasification processing as well as more extensive infrastructure to process waste before it enters the plant. Some differences between incineration and gasification are shown below.

Commercial considerations

For large energy users, including water utilities, there are other important commercial considerations in relation to implementation of a WtE project:

Business outcome considerations

It is most important to consider what business outcomes are required in relation to a prospective WtE development before accounting for the aforementioned technical and commercial considerations:

  • Offset of energy costs?
  • Achievement of renewable energy targets?
  • Reduction of greenhouse gas emissions?
  • Reduction of waste disposal?
  • All of the above?

For example, WtE plants based on incineration technology may allow the offsetting of energy costs, achievement of renewable energy targets and reduction of waste disposal but could actually increase greenhouse gas emissions. Conversely, plants based on gasification could achieve all of the business outcomes stated above. As a further example, WtE plants constructed with a high degree of commercial risk (e.g. short-term fuel contracts, poor hedging arrangements or sub-optimal funding arrangements) are not likely to adequately offset energy costs and reduce waste disposal over time.

In summary, while the ‘perfect storm’ provides an opportunity for large energy users including water utilities to consider WtE projects, they ought to think carefully about what they are trying to achieve before trying to make a number of complex and inter-related technology and commercial decisions.