EMEA: UK waste plants to return to market despite challenges

04 May 2018 - 12:00 am UTC

Chinook Sciences is bringing a controversial pipeline of UK energy from waste projects back to market, having partnered with Saudi renewables developer Alfanar Energy.

The Anglo-US waste technology supplier and developer is understood to be developing three medium-scale EfW plants with Alfanar – including the Nottingham-based Millennium EfW and Thames Gateway in London.

However, sources said that this pipeline has a long history and so far has not been able to find project finance due to lender concerns around Chinook’s patented RODEC gasification technology.

Alfanar is understood to be in the midst of due diligence on the pipeline, and in the past few weeks Chinook has re-approached financial advisers with a view to again raise debt for the projects.

Alfanar, a major construction business building energy projects in the Middle East, acquired a 49% stake in the Millennium EfW from Chinook Engineering in January.

Chinook Urban Mining’s 20MW Thames Gateway project is understood to be the second – and more advanced – project that it will acquire a similar stake in.

The EfW plant, which would be located in Dagenham, East London, received planning permission in 2014 with capacity to process up to 180,000 tons of waste per year.

The developer previously appointed Catalyst Corporate Finance to advise on project financing the Thames Gateway plant three years ago. At the time it is understood to have attracted interest from the Green Investment Bank.

But the process stalled because of questions around Chinook’s RODEC system, which uses a five-stage process to treat waste. Sources have said this has never been proven to work on a commercial scale for UK waste.

Another factor that had deterred lenders the last time this came to market was that Chinook had not wrapped the construction risk on the project.

However, one source added that Alfanar’s involvement could allow them to overcome this obstacle. “If they have deeper pockets and an EPC contractor willing to wrap it then this will add impetus, as long as the market can get comfortable with the technology.”

Chinook’s technology involves heating waste to extreme temperatures that breaks down the hydrocarbon molecules and coverts it into a gas. Valuables in the waste, such as metals, are extracted from the process. The gas then passes through water, which absorbs the heat and turns it to steam for use in industrial heating. The cold gas is then cleansed, delivered to storage units and finally fed into combined cycle power gas engines.  

The process is already used in European Metal Recycling’s Oldbury plant near Birmingham, where it is used to process automotive shredder residue. However, here too commissioning faced delays and there are still questions around how well the technology is performing.

Innovative Environmental Solutions, EMR and Chinook’s joint venture, recorded a GBP 66.3m loss after tax for the year ended 31 December 2016 compared to GBP 12.7m the year before. EMR took control of 100% of Chinook’s shares in the business in February this year.

Chinook’s latest attempt to get its EfW network off the ground signals the wider transformation of lenders’ attitude to the merchant waste market now that PPP opportunities have dried up. There are believed to be some 40 EfW projects in the UK alone looking for financing.

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