These factors determine the future EfW market
Trying to forecast the direction of travel of the UK EfW market is complex, with many influencing factors. Relatively small changes can have significant effects upon the volume, quality and price level of waste fuels, argues Country Manager at Geminor UK, James Maiden.
Keeping a keen eye on developments across the entirety of the European market, is more important than ever. As we enter the 2020’s, market conditions are constantly changing, which affect the manner in which the market develops. Factors such as public behaviour patterns, government policy, economic activity levels and new facilities are some of the most decisive.
In order to have good quality, it is essential that you have updated information regarding the particular market you are involved in. Otherwise, market data is empirical or normally out of date by the time it is understood. For example, we have seen the dramatic moves in the European biomass markets over the past 18 months: UK development of capacity coupled with changes in the sourcing strategy of the building board and furniture makers has drastically turned around the price expectations and supply-and-demand position of wood waste collectors and processors.
Geminor has direct operations, employing local market specialists in Norway, Sweden, Finland, Denmark, France, Germany (Benelux), Poland and the UK, (Ireland). This structure provides a source of shared information and market data on how the respective sourcing and offtaking markets are changing.
UK project development will continue, but it will become increasingly difficult to get new projects to financial close over time, because of the Project Development structure, the need to underwrite fuel supply and the dearth of EPC/Construction capacity. The advent of the Dutch tax means that this non-seasonal market is now less attractive for UK producers. Consequently, we are seeing material staying in or returning to landfill, as landfill equivalent prices, lack of forward price certainty and seasonal demand mean that the Nordic markets are not the option for some.
Some markets have landfill restrictions and consequently the gate fee has – in theory – no upper limit. The UK market works differently, since landfill sets the market price. Consequently, the price of waste can outcompete that offered by the UK producers.
Offtakers, however, may experience higher O&M costs, plant availability levels and throughput rates because of the “spec” of these import streams. Offtakers operating on a highest gate fee model are driven in this direction. The net result of such developments is that we now see available material in the UK market of c. 10 million tonnes, but the level of export from England is decreasing. For reasons given above and everyone’s’ favourite Brexit uncertainty. Add into this mix the deliverability horizons of new conversion technologies, i.e. waste to Jet Fuel and Chemicals, you have a very dynamic market.
Keeping alert to changes – and responding to them – is a good rule in the years to come. Being present in many European waste markets is what we believe is necessary to stay ahead and to see changes early. We expect significant changes in the markets in the future, due to increasing focus on achieving higher recycling rates for waste in Europe, including the UK.
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