On December 9, crisis-hit UK outsourcing giant Interserve announced its second rescue plan in less than a year. In the next day’s trading (Monday) shares in the company lost more than 50% of their value as creditors considered the possibility a Carillion-style collapse.
What wasn’t mentioned in the majority of press reports was the role a relatively new energy-from-waste (EfW) technology – gasification – might have played in the company’s downfall.
Interserve last year announced its exit from EfW. The company was hit by the insolvency of technology company Energos, which it had sub-contracted to install gasification technology at a Derby plant and at Viridor’s Glasgow Recycling & Renewable Energy Centre.
But, according to people with knowledge of the sector speaking to Inframation, nearly all gasification projects, not just those that relied on Interserve and Energos, are now struggling and it is looking increasingly unlikely that the UK’s gasification pipeline will materialise in its current form.
“There are projects out there and maybe some will succeed but at the moment none of them are in a steady state of commercial operation so it’s difficult to talk about their reliability and availability,” says a lawyer with experience advising on a range of EfW projects including those using gasification technology.
Infrastructure and energy investors with exposure to gasification include Aviva Investors, InfraCapital’s Bioenergy Infrastructure Group, Helios Energy Investments and Aurium Capital Markets as well as Equitix.
EfW projects using gasification technology have been notoriously difficult to bring to completion but people in the sector have repeatedly said the technology is not far off from being proven.
“Most investors are hostile towards gasification and I don’t think many banks will fund it,” says the same lawyer.
“So the reality is that I don’t see much more being done with it. A lot of developers in the country are switching their planning consent from gasification to more conventional EfW technologies.”
There is already evidence of this happening, with the 7.75MW Bridgwater EfW project in Somerset, which on 29 November was acquired by Equitix and renewables investor Iona Capital for GBP 72m.
The project has been converted from gasification to a moving grate technology – effectively a type of incinerator technology and a widely proven EfW technology, often used to process municipal solid waste – through a planning variation.