Waste to energy
October 3, 2018
Greenhouse gas emissions avoided
Waste diverted from landfill
Successful investment in green infrastructure first requires investment into high quality development pipelines. By partnering with and investing alongside leaders in renewable energy, GIG can combine its financing expertise and access to capital with some of the sector’s foremost development platforms.
With Covanta, a New Jersey-based sustainable waste and energy solutions provider, GIG has established a partnership with plans to develop projects capable of processing some 2 million tonnes of waste a year into green energy.
As part of the joint venture arrangements, GIG and Covanta expect to co-develop and invest in a pipeline of WTE projects in the UK and Ireland, with Covanta operating and maintaining the projects after construction.
For Covanta, the joint venture brings equity investment from GIG that allows it to recycle its capital into additional projects. For GIG, there is real value in building an enduring relationship with a trusted partner and world-leading owner and operator of WTE facilities. The two partners bring complementary skills: GIG will focus on the financing, and Covanta on the technical and engineering elements, while the two partners will jointly manage commercial and contracting arrangements and stakeholder management.
Together, the partners bring a wealth of sector expertise. Covanta owns a portfolio of 43 facilities around the world, capable of processing more than 18 million tonnes of waste a year, and with an electricity generating capacity of 1.5 GW. GIG, meanwhile, brings experience garnered financing more than £1 billion of projects in the UK waste and bioenergy markets.
As a first step in the partnership, GIG has invested €136 million in a 50% stake in Covanta’s newly operational Dublin Waste-to-Energy facility, in a deal that closed in the first quarter of 2018.That project is capable of processing more than 580 kilotonnes of residual waste annually, generating enough electricity to power 80,000 homes and the potential to heat 50,000 homes through district heating. Macquarie Capital advised on its financing over 2012-14 and its refinancing in 2017.
A number of projects are under development by the joint venture. These WTE projects are interesting in the world of green energy in that they will not receive any subsidy for the sale of the power generated, requiring a focus on maximising revenue opportunities from the waste processed as well as ancillary revenue streams such as heat offtakes and capacity market revenue.
The expectation is that these projects are the start, with the joint venture exploring additional opportunities in the UK and Ireland and other attractive WTE markets around the world, demonstrating the power of a partnership to deliver high quality assets as national and local governments increasingly seek to capture the benefits of their waste resource.
President and CEO, Covanta