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Another setback for gasification sector as incineration specialist enters administration

Another setback for gasification sector as incineration specialist enters administration
Energos has been contracted to provide gasification technology to Viridor's GRREC
Energy-from-waste plant specialist Energos has gone into administration following contractual disputes with two of its main contractors.

The firm is contracted to develop technology for Viridor’s £154-million Glasgow Recycling and Renewable Energy Centre (GRREC) at Polmadie.

However, in May, Interserve, the company developing the facility, announced that it had set aside £70 million in provisions for its UK construction division as a result of a delay to the Viridor contract, completion of which was originally scheduled for early this year.

In a trading update to shareholders, Interserve said that a further deterioration in the project, relating to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain, had ‘significantly adversely impacted’ its expectations for the UK construction division as a whole.

Energos also has a £65-million contract to supply thermal conversion technology for another Interserve development in Derby, as well as contracts with AmeyCespa in Milton Keynes and the Isle of Wight. None of these constructions have yet been completed or reached the commissioning stage.

Matthew Wild and Lindsey Cooper of RSM Restructuring Advisory were appointed joint administrators of Energos on 11 July. In a statement, RSM said that the decision to appoint administrators was made by the directors of Energos due to cash flow issues caused by contractual disputes with their two main contractors.

Cooper said: “It’s early days, but we are working with our professional advisors to review the status of the current contracts with a view to maximising the returns to creditors.”

Issues for gasification continue

Energos’s entry into administration is the latest in a series of issues for gasification companies in the UK this year.

In April, American gas producer Air Products announced that it was leaving the energy-from-waste business, writing off around £700 million after the development of two gasification projects in the North East – Tees Valley 1 and 2 – was abandoned following ‘additional design and operational challenges would require significant time and cost to rectify’.

Tees Valley 1 cost an estimated US$500 million (£320 million) to construct and was originally due to begin operations in 2014, but because of delays caused by technical issues has not yet passed the final stages of commissioning. Meanwhile, construction of Tees Valley 2 had begun, but Air Products temporarily stopped construction work on the incinerator development in November, which reportedly resulted in 700 construction workers being laid off.

Concerns over the technology led to planning permission for the Bilsthorpe Energy Centre in Nottinghamshire being delayed, though Secretary of State for the Department of Communities and Local Government subsequently approved the plans in June.

According to Shlomo Dowen, National Coordinator of the United Kingdom Without Incineration Network (UKWIN): “The fact that yet another big name gasification company has gone into administration should act as a wake-up call for those thinking about investing in and relying upon unreliable technology such as gasification.

“Anyone who has been paying attention will know that gasification projects are infamous for over-promising and under-delivering. Given the vast quantities of residual waste treatment capacity that already exists, investment and procurement should now be focused on upstream opportunities such as better collection, sorting and recycling infrastructure.”

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