1. Economic Viability of an Energy from Waste Industry in Queensland
CSIRO Workshop | June 2014

2. Content
Introduction and key issues
Energy from Waste (EfW) in an integrated waste management system
EfW Technologies
Waste Clusters
Energy Market and CSO
Financial Model
Conclusion

3. Limitations
This presentation is intended to provide an excerpt to the Department of Environment and Heritage Protection (EHP) on the economic viability analysis of an Energy from Waste Industry in Queensland. It does not purport to be comprehensive advice
LGIS disclaims all responsibility and liability for any expense, damage, loss or costs EHP (or third parties) may incur as a result of use of or reliance on the content of this presentation
LGIS acknowledges drawing on publicly available peer-reviewed resources. LGIS has not independently verified the information gathered

4. EfW is common practice in the US, Japan and Europe
Introduction
EfW is common practice in the US, Japan and Europe
Objectives of EfW are to:
Avoid long-term environmental risks associated with landfills
Utilise the energy content of waste
Reduce the waste facility footprint – scarcity of land
Extract metals
Create localised closed loops

5. Introduction – Waste Hierarchy

6. Introduction - Situation in Europe

7. Introduction - Benchmarking
Germany Denmark UK Ireland Slovenia Spain

8. Objectives of LGIS Work
Assist understanding of economic drivers for a EfW industry in Queensland
Identification of regions or areas which are more likely to invest in sophisticated EfW technologies
Consideration as to when investment conditions are likely to become favourable for sophisticated EfW technologies
Identification of EfW technologies that may offer the best return on investment in Queensland
Assist understanding of policy instruments that could influence EfW investment conditions in Queensland

9. EfW in an integrated waste management system
Small scale
RDF/RDFPP GF AD GF
MBI
Pyr
RDF/RDFPP
RDF/RDFPP
LFG

10. Organic Waste to energy options
Agricultural,
Manure,
Forestry,
Food industry,
Sewage sludge,
Separately collected organics from residents
Solid Biomass
High in Oil
High in Sugar
Wet / Slurry Biomass

11. Landfill Gas – Bioreactor (LFG)

12. Anaerobic Digestion (AD) Example Kompogas

13. Refuse Derived Fuel (RDF) and RDF Power Plant (RDFPP)

14. Gasification (GF)

15. Waste Cluster Categories
5 major categories
Waste composition
Waste quantities
Population forecasts
NEM accessibility
CSO implications
Geographic locations
Used a combination of criteria and assumptions to define the main cluster categories of waste, which included:
Mixed waste composition
Quantities of at least 10,000 tonnes/annum of waste
Population forecasts by LGA to 2031 and extrapolated until 2055 for the 2030 scenario
Accessibility to NEM distribution
Access to CSO or contestability
Geographic locations (not a primary)
The five major categories are:
Rural (defined by CSO and no access to the NEM)
Isolated (
SEQ (Major population centre in SEQ, fully contestable market, NEM access)
Urban/tourism (secondary population centres,
Mining

16. Waste Cluster Categories
Waste quantities
Population forecasts
In defining the key waste cluster categories and the associated volumes of waste that could be used as input for the economic model, it was essential that we looked at the key variables.
The first consideration was for the composition of waste in order to determine the quantity of organic waste and high calorific waste available for WtE. In the report, the NGER defaults to describe the waste composition for the waste that is for. The NGER default values for Queensland outline the accessible organic wastes and other recyclables in the different waste streams that are currently buried in landfills.
Weighting for the different waste streams Municipal Solid Waste (MSW), Commercial and Industrial waste (C&I) and Construction and Demolition waste (C&D) was calculated from the Department landfill records From the same records, weighted average quantities of waste per person per year have been derived to calculate the anticipated waste volumes by LGA.
The weighted total waste composition will serve to determine the potential waste type available in each waste cluster category.

17. Electricity Market
The report looks at the energy market conditions as a driver
Using this platform, we considered the impacts of the two main factors in defining the key waste cluster categories which then input into the model to assess the viability of WtE solutions
accessibility to the National Electricity Market (NEM)
the Community Service Obligation (CSO)
NEM - accessibility of the NEM will be crucial to the distribution of energy generated from waste. The ability to supply energy back to the grid The NEM mainly covers the Eastern seaboard.
CSO - the provision of electricity in regional and isolated areas is subsidised by the government through the CSO payments to Ergon Energy Corporation Limited to ensure equitable access for all Queenslanders. The potential for WtE Potential reallocation of the CSO payments depending on the geographic location of waste clusters could potentially support the viability of WtE solutions. The fully contestable SEQ market is not subsidised and therefore clustered differently.
With limited availability of publicly available information, LGIS has used an input cost for the CSO of $280 per MWh
This was derived through the following calculation
- In 2011/12, Ergon Energy was paid a total CSO of $415 million.
- Ergon Energy owns and operates 33 isolated power stations which provide electricity to isolated and remote communities, and these power stations generate approximately 101,000 MWh of energy per annum . The component of CSO attributable for this isolated load in 2011/12 was $117 million.
- From this information, LGIS has estimated a CSO subsidy of around $1,158 per MWh in isolated areas.
- Given that the provision of electricity to isolated and remote areas is the most cost prohibitive, LGIS has made an assumption that the overall cost per MWh for the CSO network, on average, could reasonably be around half of the isolated CSO, therefore $579 per MWh.
- Of this $579 per MWh, LGIS has assumed that network costs account for around 48 per cent of the total cost of retail prices (based on breakdown sourced from the QCA). Therefore, applying this to the estimated average CSO price, a figure of $278 per MWh was derived (rounded up to $280 per MWh for the final figure).

18. Electricity Price
Queensland electricity base load spot price forecast by ACIL Tasman 2012

19. Model – Waste Flows

20. Model – Base Case Output

21. Model capex/opex sensitivity

22. Without direct policy intervention
Landfill Gas is the lowest cost option to 2015
By 2020 Anaerobic Digestion should become lowest cost option except for SEQ, where RDF should become the lowest cost option by 2030.
More sophisticated technologies Gasification and RDF - power plant remain highest cost options

23. Policy intervention possibilities
Policies can have significant influence on the timing and viability of sophisticated EfW technologies
Increased landfill standards or landfill surcharges will bring forward the point in time when AD and RDF will become more favourable
Existing CSO could be an important revenue source if made available for embedded electricity generation
EfW Standards and EfW in the context of a Queensland waste strategy in conjunction with the energy strategy would provide further investment confidence

24. Conclusions
All variables together are important when considering attractiveness of EfW investments
Economic variables suggest good EfW investment conditions by 2020 for AD and RDF,
EfW projects have lead times of several years
Non-economic environment needs to be set (such as EfW standards, community engagement)

25. Thank You
Clinton Parker Manager, Business Solutions
Umur Natus-Yildiz Senior Advisor