Policies and Issues of Waste to Energy

[box type=”shadow” ]This is in continuation of the technical conference by WTERT held in Hyderabad in June. This article outlines the regulatory and financial aspects of WTE plants. These were the focal points in one of the sessions. [/box]

Dr Dilip Boralkar, Former Member Secretary, Maharashtra Pollution Control Board, highlighted the hazards of unscientific management of Municipal Solid Waste all over India and particularly with reference to about 2000 TPD to 10,000 TPD at Pune and Mumbai Municipal Corporations respectively. He observed that the planning of the cities and the infrastructures is improper having unplanted growth of cities and inadequate facilities for municipal waste management. He remarked that there is no political will and passive approach of authorities to the problem. There are many flaws at all level in observing “MSW Rules 2016”. There needs to be compliance of Environmental Regulation, protection of public health and hygiene, use minimum land for disposal, minimum cost burden to the citizens, project subsidy and reduce tariff, 20 years suitable payback facility, guarantee from vendors, recycling and training for reclamation of land. All these can support Swachha Maharashtra Abhiyan as a way forward to smart city.

Er. Nimish Vora, Associate Director, Energy & Utility, Price Water House Coopers (PWC) spoke on preferential tariff procedures and regulatory perceptive. He mentioned that the new tariff policy has provision of 100% of power generation and advised not to have competitive bidding for WtE plants. Waste itself has many problems and their operations, collections, segregations etc. involving many conflicts. Even with the executive authorities there are difficulties of arriving at important issues like tipping fees and electricity tariff. Existing generation of power and tariff framework in India must be looked into with respect to generic tariff issues and suggested to have a project specific tariff with reference to the unique factors which differ from plant to plant. These be considered specifically for arriving at regulatory process. He gave the break-up of components of capital cost composition and cost & tariff profile on WtE plants highlighting the issues of high CAPEX, high auxiliary, bio-mass syndrome, affecting the royalty and showed the corelation between generic versus Project specific and MSW versus RDF.

Prashant Maniar, Founder, Encito Advisers, spoke on “Factors Influencing Financial Viability of WtE Projects”. He talked about his extensive researches and surveys of failures of WtE plants by closely studying numerous failed projects for variety of reasons like structures of built up plants, concessions received and contents of agreements of PPA, closing of M&A transactions and issues of equity and debts. Nevertheless, large number of energy plants altogether combust about 33000 TPD Municipal Solid Waste in several plants across the globe producing energy as small as 100 KW.

The fair amount of waste is also processed for biomethanation and composting as well. On the Feed Stock, he said, its characteristics and procurement process has to be important for good revenue model and must be composed of taking into account actors like tipping fees, PPA, percentage of composition of composting and recyclable material, potential of liquid fuels and others. It is good to have proper tendering processes, contracting and sub-contracting and selection of appropriate technology with reference to Indian conditions and not to neglect emission controls. The plant should have stand alone withstanding the liabilities. He emphasized the CAPEX and OPEX to have inbuilt factors like ability of technology provider, the viability for a contract period, and to enter into cost competitiveness approach which could involve local fabrications of components. Nevertheless, the operations and maintenance success only shall achieve the good financial returns. He emphasized for Escrow type of agreements and bank guarantees or payment backup by Government. Another suggestion is the consortium ways of owning of the plants with confirmations of the rest of the qualifications like technical, financial, operations synergies drawing the references from Global experiences. It is advocated to follow fulfilment of obligatory responsibilities of all stakeholders for sharing liabilities and honouring exit options. He mentioned about factors within banks, and cares to be taken about in case of defaulters, terminations of contracts and take over. The most premium factor for a definitely viable WtE plants is to have confirmed and cemented association between Municipalities, the Developers and PPA agencies.

Ajay Saxena, PPP Expert, Asian Development Bank, spoke about analysis of present PPP tender in waste management projects. He discussed about the problems associated with tender processing, lack of precautions from the bidders, compliances to be given as per tenders and mismatch between the tendering authorities and bidders, all leading to dealing of the process.

Whatever technologies you want to bring in, there has to be some reasonable factors which can convince the bank authorities to make them bankable, different operators go with the diverse approaches in terms of infrastructure and revenue model which adds to the complications. All have to arrive at some common platform to be able to bid successfully for WtE or any similar project to deal with MSW with Corporations and Government.