Veolia has had plenty of experience building energy-from-waste plants, but this one required a completely different way of thinking. It required transforming practices within the company. It required changing the status quo within Veolia and successfully delivering something that the company was not previously able to deliver. It required changing mindsets and teamwork to achieve financial growth in a market that Veolia had not previously been involved in.
New partners The key difference with Rookery South is that Veolia is a partner company working with American energy-from-waste specialists Covanta and British financing firm Green Investment Group (GIG).
All but one of Veolia’s ten energy recovery facilities (ERFs) were built as part of local authority contracts. Typically, these facilities would process municipal solid waste from households that had been collected as part of council integrated services. This meant that Veolia would also be responsible for services such as materials recovery, recycling and waste reduction. The other facility, SELCHP in South London, treats local authority waste but under various commercial partnerships between the public and private sectors.
With Rookery South, the ERF will be a merchant plant, primarily treating commercial and industrial waste, but potentially some household waste, too.
“Most of our plants so far have been built under a local authority contract,” says Veolia in the United Kingdom & Ireland Corporate Development Director, Christophe Bellynck. “On the back of these contracts, the plants have been financed and operated by Veolia. Then, at the end of the contract, these plants revert to the local authority. The difference with Rookery South is that it will be fed by residual commercial and industrial waste collected by Veolia, plus any local authority contracts that we might win that come to tender.”
Unlike a local authority contract, Veolia, Covanta and GIG will co-own the plant with 30% funding from equity and 70% coming from bank finance.
“Veolia will provide the vast majority of the waste,” says Bellynck. “Covanta will operate the plant, while GIG has been the investment partner.”
This business model of developing a merchant facility with external partners required completely innovative thinking at Veolia. Teams that were used to delivering local authority contracts had to entirely rethink their ways of working.
“The merchant plant model was completely new to Veolia people here,” says Chief Technology & Innovation Officer at Veolia in the United Kingdom & Ireland, Richard Kirkman. “Even in the wider market, most merchant plants had failed. Rookery South is a particularly large and complex project. To see it through successfully, we had to reorientate all the internal ‘people machinery’ of the company and external collaborators in order to deliver something different to how things were done before. This is the most important type of innovation for Veolia, since it delivers growth in a way that we had not previously been involved in.” “There were around 50 people involved in this project, and for each of them it was completely different than their normal day job. It required constantly thinking in a different way, whether it was the commercial team needing to find multiple commercial or municipal contracts when they might only be used to one local authority contract, or needing to share financial information with banks that we might not have previously. It was a great example of a large team working together to make a new project work successfully,” explains Richard Kirkman.
As well as feeding the plant with residual waste from its commercial contracts, Veolia will also be responsible for handling the disposal of air pollution control residue (APCr) and managing the power purchase agreement arrangement for the sale of electricity generated by the facility. Once completed and operational in late 2021/early 2022, the ERF at Rookery South will generate electricity that will be sold into the grid. Over time, the land around the facility will allow for construction of data centers, for example where a private wire can be used to give consistency of energy supply. Alternatively, if any factories are built in the area, heat and electricity could be provided to them.
“Covanta has recognized Veolia’s competences and reputation in the United Kingdom when it comes to recycling IBA (incinerator bottom ash) and selling electricity to the grid, showing that the commercial interests of Covanta and ourselves are aligned,” says Christophe Bellynck.
Situated in a central location close to major towns such as Luton, Northampton, and Milton Keynes, Rookery South will handle over 545,000 metric tons of waste per year, generating 60 MW of electricity – enough to meet the needs of 112,500 homes. Long-term projects It is also a model that Veolia is looking to replicate with other ERFs in the United Kingdom.
“Rookery South will be the first, but others are being developed,” says Christophe Bellynck. “This model of Veolia as co-owner of the facility, providing the waste and operating the plant, with funding coming from third parties, is a good and innovative one for us.”
“Eventually, we plan to build three more plants. One has had planning permission submitted, and we have identified a further two projects. In one of these, we are preparing the planning application. This is a model that we are sure is going to be very successful.”
Rookery south in figures
545,000 metric tons per annum of waste processed
60 MW of electricity generated
112,500 homes could be powered by the facility
24/7 operations to begin in 2022
50 new permanent operational roles will be created from 2022
300 jobs created in construction of the ERF