Business

Troubled gasification plant to stay closed until 2018

An Avonmouth advanced thermal treatment (ATT) plant is to stay closed until 2018 as it plans a ‘major redevelopment’ to solve issues regarding feedstock supply.

Activity at the Avonmouth Bio Power Energy (ABPE) plant, which, in theory, is capable of producing electricity from up to 120,000 tonnes of refuse-derived fuel (RDF) a year using pyrolysis and gasification technology, has been suspended since June 2016 as its owners seek a long-term solution to under-performance.

Troubled gasification plant to stay closed until 2018
The ACT plant (right) was designed to treat RDF created at New Earth's MBT facility (left)
The plant was established by New Earth Solutions in 2013 to process RDF from its neighbouring mechanical and biological treatment (MBT) facility, with the site benefitting from ‘grandfathered’ double Renewable Obligation Certificates for processing organic waste until 2033.

However, a summary in the ABPE annual report, filed in December and written by Director Nayjot Singh Dhillon, states: ‘Since the initial plant implementation, the inability of New Earth Solutions MBT to constrain the supplied RDF within specification has driven development of the plant’s capability to accept a wider than intended and continually variable RDF specification.’ Consequently, the report says that ‘whilst a number of improvements’ were achieved, ‘the plant has… always operated at below its targeted design point’.

These issues have led to a reduced thermal output of the plant, and therefore the plant has not met the company’s expectations for the export of electricity. Attempts to increase the facility’s capability, meanwhile, have resulted in increased equipment, operation and maintenance costs.

Acquisition

In an attempt to resolve the problems, the waste and energy recovery arms of New Earth were broken up, with the ownership and financing of the plant being transferred in July 2015 to Aurium Capital Markets and Macquarie Bank, alongside Syngas Products Group Ltd, which provided the technology for the plant.

This move was designed to allow the energy-from-waste facility to develop its own business strategy by keeping the supply agreement with the adjacent New Earth Solutions plant, but also source in-specification RDF from other suppliers. It also provided an injection of financing to revise the business’s debt structure.

The change in ownership saw the three acquired companies (New Earth Energy West (Operations) ltd, New Earth Energy West Ltd and NEAT Contracting Ltd) and a newly incorporated entity, Avonmouth Bio Power (Operations) Ltd, change their names to Avonmouth Bio Power to reflect the new corporate branding.

‘Sporadic and short-lived’ improvements

While the report, which notes a total loss for the company of £13.6 million in the financial year ending March 2016, following an even greater loss of £37.8 million reported in 2015, states that following initial improvements in reducing reliance on New Earth Solutions by taking waste from other sources, a fire at the neighbouring MBT facility disrupted feedstock supply and the ‘plant’s ability to operate even close to full capacity’.

Improvements in operational performance after January 2016 were ‘sporadic and short-lived’ and so in June 2016 the board decided to suspend activity at the plant to enable a ‘major redevelopment programme’ to be undertaken. This programme, the company says, is designed to address operational problems including the potential switch of fuel supply from RDF, with the consistent supply of feedstock a key requirement.

It is anticipated that these works, plans for which are currently being implemented, will commence early this year, with operations not resuming until 2018.

New Earth’s turbulent 2016

Following the split between the waste and energy arms of the company, New Earth Solutions continued to experience troubles, and entered administration last June after a long takeover negotiation with a combined heat and power plant developer broke down.

After entering administration, New Earth Solutions went through several sales last year, first to DM Opco and then onto Irish waste management firm PandaGreen Ltd in October.

While over 100 jobs at the company’s five UK MBT and in-vessel composting sites were saved by the initial acquisition out of administration, New Earth’s administrators, Duff & Phelps, later told investors that they were ‘unlikely’ to recover any funds and then published a report revealing that creditors were likely to miss out on over £9 million after the sale, with ‘no hope of repayment’.

Under its new Irish ownership the company will continue to trade under the New Earth name, and Managing Director Peter Mills told Resource that it will be honouring all of its contracts signed before the company entered administration. New Earth manages around 450,000 tonnes of waste from both local authority and commercial customers at its sites every year.

The Avonmouth Bio Power Energy annual report is available to view on the Companies House website.

An in-depth look on the state of advanced thermal technologies can be found in Resource’s recent feature article

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