GIB invests in RRS’s Derby incinerator
The UK Green Investment Bank (GIB) and two international banks have committed to raise up to £195 million for Resource Recovery Solutions’ (RRS) incinerator in Sinfin, Derbyshire.
RRS, a joint venture between waste management firm Shanks Group plc and construction company Interserve Group plc, plans to begin construction on the mechanical biological treatment (MBT) and gasification facility imminently, following a £64 million investment from GIB and two other banks; BayernLB from Germany and Sumitomo Mitsui Banking Corporation from Japan.
Is is thought that this is the first project of its type in the UK to be funded by long-term project finance, which will take the form of non-recourse debt through a Special Purpose Vehicle (SPV).
Artist's impression of the Sinfin facility.
Derbyshire County Council and Derby City Council approved plans for the incinerator, which forms part of its 27-year waste contract with RRS, in February 2014.
The plant will utilise mechanical biological treatment (MBT) to extract recyclable materials from Derbyshire’s household residual waste (approximately 190,000 tonnes of it) before the remaining content goes through an incineration process to produce solid recovered fuel (SRF) to power an on-site gasification facility. This facility was expected to generate enough electricity to power 14,000 homes.
The facility is expected to be complete by April 2017, at which point Shanks will add £18 million of subordinated debt into the SPV.
The project will see 250 people recruited to work on construction of the new facility and 34 new permanent roles to operate it.
“Certainty about the cost of managing waste”
Speaking after the funding announcement, Peter Dilnot, Group Chief Executive of Shanks Group plc said: “We are delighted to have concluded funding for this 27-year contract with Derby City and Derbyshire County Councils. The Derby contract is an important part of our growth strategy for the UK Municipal Division and the introduction of gasification technology also adds an important dimension to the Group’s portfolio of clean waste-to-product technologies.
“We look forward to working closely with the authorities and local residents to continue to provide them with an excellent service and to make more from the waste they produce.”
Councillor Joan Dixon, Derbyshire County Council’s Cabinet Member for Jobs, Economy and Trasnport, added: “The county council is facing massive budget cuts and our current landfill bill is one we cannot afford in the future.
“We do not know how much landfill will cost in coming years but it certainly won’t cost less than it does now. This waste treatment facility will give us certainty about the cost of managing waste in the future, help us to manage our budgets and protect us from future rises in the cost of landfill – including Landfill Tax which is currently set at £80 a tonne.”
Read more about the incinerator plans.