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WASTE TO ENERGY

A Guide for Local Authorities


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WASTE TO ENERGY:

A GUIDE FOR LOCAL

AUTHORITIES


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iii

FOREWORD

Local Authorities often have access to or are responsible for waste streams that can beused to produce renewable energy. Australian and State Government policy and program

support for renewable energy as part of its greenhouse reduction commitment, together

with energy market reform, have created opportunities for Local Authorities to convert an

environmental problem and financial burden into a resource base for the production of

renewable energy.

This Guide has been developed to provide senior management in Local Authorities with

an overview of the opportunities and risks associated with waste-to-energy conversion.The Australian energy market and the relevant policies and regulations are complex. The

Guide outlines the issues that should be understood before the organisation makes

progress in developing waste-to-energy solutions. A number of international case studies

are also provided.

The Guide has been developed by the Australian Business Council for Sustainable Energy

(BCSE). Australian Government funding through the Australian Greenhouse Office in the

Department of Environment and Heritage supports this project. The BCSE acknowledgesthe assistance of a number of its members and other stakeholders in providing input for

this Guide. It also acknowledges the assistance and support of staff at the Australian

Greenhouse Office and consultants Energy Futures Australia and Stephen Schuck &

Associates.

About the Australian Business Council for Sustainable Energy


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WASTE TO ENERGY:A GUIDE FOR LOCALAUTHORITIES

iv

Disclaimer

The Australian Business Council for Sustainable Energy (the Providers) provides thisWaste-to-Energy: A Guide for Local Authorities on the following basis:

The Guide is not intended to be final or definitive but rather a fairly vigorous preliminary

assessment of a structured way in which to assess and evaluate waste-to-energy

opportunities and to facilitate the implementation of cost effective projects either now or

planning for the future.

The Guide is not intended to be used as the tool for basing final investment decisionsupon, and in all cases the user must conduct sufficient additional analyses and obtain

appropriate professional advice before proceeding with any investment decisions.

The Providers do not and cannot in any way supervise, edit or control the content of any

information or data accessed through the contact details provided in the Guide and shall

not be held responsible in any way for any content or information accessed.

The Providers, along with their servants and agents, are released from and indemnifiedagainst all actions, claims and demands which may be instituted against the Providers

arising out of use of this Guide or of any other person for whose acts or omissions the

user of the Guide is vicariously liable.

The views expressed in this publication are those of the authors at the time of writing and

are not attributable to the Australian Government.


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v

TABLE OF CONTENTS

Foreword iii

1 Introduction 1

1.1 The Guide 1

2 Setting the scene 2

2.1 The waste resource 2

2.2 The social environment 32.3 Waste-to-energy applications 7

3 New and emerging opportunities and support for waste-to-energy 8

3.1 Greenhouse initiatives providing indirect support 9

3.2 Policy measures providing financial support 12

4 Waste-to-energy technologies 18

5 Economics of waste-to-energy 22

6 Business risk considerations 25

6.1 Waste treatment the environmental sustainability issue 25

6.2 Issues surrounding waste-to-energy projects 26

6.3 Financing routes 27

7 Making it happen 31


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1

1. INTRODUCTION

1.1 The Guide

INTENDED AUDIENCE

This Guide is principally aimed at the senior management of Local Authorities, including

waste management companies acting as agents for the Local Authorities and waste waterauthorities. Local Authorities are constantly under pressure to increase efficiency and

reduce the environmental impacts of their activities. Waste-to-energy represents an

opportunity for Local Authorities to potentially manage risks and/or costs whilst improving

environmental outcomes at the same time.

AIMS AND SCOPE

The main aim of this Guide is to facilitate the development of waste-to-energy projects inthe short term if economically and technically feasible, and to allow Local Authorities to

plan for future development of potential which may require medium- to longer-term

strategic focus. The Guide is intended to give a variety of readers (for example, executive,

strategic and operational management) an understanding of the opportunities, issues and

risks involved in implementing cost-effective waste-to-energy projects. The Guide assists

in providing some of the necessary tools to allow readers to assess and evaluate

opportunities, facilitate the implementation of cost effective projects or to develop

t t i l th t ill bl th t b d l d l t i ti f iliti


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2

2. SETTING THE SCENE

In Australia, and also worldwide, Local Authorities are under increasing pressure from the

community and from governments to incorporate ecological, social and economic

considerations into their day-to-day operations. Sustainability is rapidly becoming a

guiding principle underpinning all decision-making.

Local Authorities with responsibility for waste streams are seeing costs escalate,

traditional options diminish and social and budgetary pressures mount. Decision-makersand planners can no longer assume that past practices will reliably guide them into the

future. Senior Management now face complex strategic issues regarding the

implementation of new or proven waste management technologies, whilst minimising

economic and environmental risks to the organisation and coping with increasing social

accountability.

Local Authorities can view the waste-to-energy opportunity in a number of ways ranging

from indifference to proactive enthusiasm. Three possible approaches have beenidentified.

1 Is energy production simply a by-product of a solution to a critical waste problem? In

this case the organisation may give energy matters a lower weighting in its decision-

making, focussing instead on the waste handling and disposal features of proposed

applications.

2 Does energy from waste provide the organisation with opportunities to satisfy social

and environmental expectations and obligations regarding sustainability, with waste

t id ti b i l t f th ll i ? I thi th


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2. SETTING THE SCENE 3

Waste resources can offer a number of benefits when used to produce energy, other than

mitigation of greenhouse gas emissions.

The cost of the fuel to a power generation facility is usually low due to the pre-existing need to collect and manage waste. Costs may even be negative.

The current cost of disposing of waste is increasing (for example, full cost landfill

pricing is now being considered more widely by governments as a policy measure)

and can be associated with environmental problems.

Local energy production results in reduced electricity network losses, and can improve

energy security and reliability for the local area.

Such projects create regional employment opportunities.

However, it must be emphasised that in the Australian context, appreciation of many of

these benefits has yet to become mainstream.

FIGURE 2.1

Composition of municipal solid waste by tonnage

FIGURE 2.2

Composition of municipal solid waste by volume

Paper/Cardboard 10%

Food/KitchenWaste39%

Wood/Timber 6%

Other Organic3%

Glass7%

Plastic3%

Other Plastic4%

Metals 7%Other 3% Paper/Cardboard 15%

Food/KitchenWaste22%

Other Organic6%

Glass3%

Plastic7%

Other Plastic10%

Metals 4%Other 3%


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For waste management, the waste management hierarchy (see Figure 2.3) is widely

accepted. This promotes avoiding the generation of waste in the first place, followed by

maximising the use of existing materials by their reuse, reprocessing and recycling into

alternative products, including recovery of their inherent energy content, in preference to

committing the material to disposal.

FIGURE 2.3

W t t hi h


4

A seminar held by theAustralian CooperativeResearch Centre forRenewable Energy (ACRE)Energy Policy Group andBioenergy Australia (2001)identified many of thefeatures of sustainability thatare pertinent to waste-to-energy developments: Sustainability involves

multiple humandimensions which are notfully independent and mayinvolve concepts ofcommunity at household,local community, state,national or global levels.

Economic sustainabilityinvolves the concepts ofproductive, allocative anddynamic efficiency.

Environmentalsustainability includesspecific issues rangingfrom local to regional toglobal and alsoencompasses themaintenance of entireecosystems.

Social sustainabilityinvolves the ideas ofhuman knowledge andingenuity, quality of life,equity and the social skillswhich serve to create ormaintain a society.

Technical sustainabilityinvolves using bestpractice products,services, work practicesand institutionalarrangements, as well asfostering appropriateinnovation in hardware,software and theinstitutional framework.

Achieving perfectsustainability is unlikely asis consensus between allstakeholders and thereforetrade-offs must be madethat allow communities toimprove all aspects ofsustainability over time.

SUSTAINABILITY CONTEXT


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However, tighter environmental laws and regulations are continuing to be applied for air

and water emissions. Burning and landfill of wastes for disposal are being discouraged by

such regulations. Even the best-designed landfills still have significant fugitive emissionsof methane, a potent greenhouse gas, to the atmosphere. Figure 2.4 shows the fugitive

emissions from waste streams in the year 2002. Leachate from landfill and inappropriate

disposal of organic waste streams, such as animal litter to agricultural land, can also

cause significant environmental pollution in the ground water, and give rise to odours.

Nonetheless, significant quantities of urban wastes continue to be disposed of in landfill,

largely due to its current low cost and ready availability.

From an energy perspective there are also other issues of interest in addition toconsiderations of sustainable development and climate change mitigation. There is

increasing interest in the concept of having smaller, more modular generating plant

geographically distributed around the power system rather than large, centralised

facilities. With such distributed or embedded generation, the system is by its nature more

secure, that is, more robust against blackouts as demand on the system is rapidly

increasing and less vulnerable in terms of national security. To varying extents distributed

generation is supported by opening power systems up to competition from companies

offering smaller, distributed power solutions, including energy from waste power plants.

This provides a good synergy between the distributed nature of waste generation and the

geographic location of electrical loads.

FIGURE 2.4

Fugitive emissions from waste for 2002

CO2 e emissions (Gg)

W t St M th Nit id C b di id T t l


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WASTEWATER BIOGAS

Sewage wastewater caneither be processed

aerobically (in the presenceof oxygen) or anaerobically(oxygen excluded). Theanaerobic process producesmethane, which in thisproject is collected and usedto generate renewablepower. If not collected andused for power productionthe methane would either beflared or vented toatmosphere with adverseenvironmental impacts.

WERRIBEE SEWAGEPLANT

The Werribee Sewage Planthas been transformed froman open lagoon treatment

l t t bi l t

Host: Melbourne Water

Owner: AGLCapacity: 3.8 MWLocation: Werribee

Sewage Treatment Plantabout 30 kms south-west of Melbourne

Operational: June 2001Operator: AGL Energy

ServicesPower purchase

arrangements: 100%to Melbourne Water

Manufacturer: DuetzPackager: SE Power

EquipmentConstruction contractors:

AGL Energy ServicesPrimary fuel: Biogas from

anaerobic digestion of

l d

CASE STUDY

Melbourne WaterWerribee Biogas facilityWerribee, Victoria


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2.3 Waste-to-energy applications

Wastes have a diversity of physical and chemical properties and therefore a wastebioenergy resource needs to be matched with the appropriate energy conversion

technology. For example, landfill gas projects will utilise reciprocating gas engines that are

capable of being installed in a modular form and can accommodate some fluctuation in

fuel quality. The waste materials covered in this Guide range from dry agricultural

residues through to wet wastes, and the various urban wastes. The settings, scale of

plants, energy conversion technologies and key participants will differ for each of these

and consequently so will the viability parameters of different projects and the economic

considerations and implications.

When talking about waste-to-energy applications, it is common to refer to a primary

energy conversion process, an energy carrier and secondary energy conversion.

Primary energy conversion of wastes of high calorific value generally occurs via one of

combustion, gasification or pyrolysis. These are all thermal conversion processes, with the

essential difference being the amount of atmospheric oxygen used in the process. The

biochemical processes of fermentation and anaerobic digestion are generally chosen forprimary energy conversion of wetter waste or mixed waste streams. These two processes

utilise naturally occurring microbes and biochemical pathways to convert waste into

energy carriers such as methane-rich biogas and ethanol. Refer to Section 4: Waste-to-

energy technologies for more detailed information.

The energy carrier (steam, gasified waste, biogas, pyrolysis bio-oil) produced during the

primary waste conversion process of combustion, gasification, pyrolysis, anaerobic

di ti f t ti i i d t b t d i t bl f f h

The Australian BusinessCouncil for SustainableEnergy has identified one

hundred and two waste-to-energy projects that wereoperating in Australia atthe end of 2004, with atotal capacity of 917 MW.Of these, 115 MW can beclassified as renewablewaste-to-energy, 473 MWas renewable waste-to-energy cogeneration, 172

MW f il f l t t


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3. NEW AND EMERGING OPPORTUNITIES AND SUPPORTFOR WASTE-TO-ENERGY

Climate change is now recognised as being real and immediate and requiring urgent

action. Analysis undertaken by the Australian Government concludes that Australia is

vulnerable to changes in temperature and precipitation. Australias vulnerability to climate

change is intensified by already being a generally dry continent and experiencing high

natural climate variability from year to year. [Saddler, H., Diesendorf, M. & Dennis R.

(2004)A Clean Energy Future for Australia, WWF Australia.]

Scientists now agree that climate change is due to the enormous amounts of fossil fuels

that we burn: the coal we burn to generate electricity and the oil that we use in our cars.

Reducing the greenhouse emissions from the fossil fuels that we use to meet our energy

needs is thus an important priority for governments at both the state and national level.

FIGURE 3.1

Greenhouse gas emissions by sector in 2002

8


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3. NEW AND EMERGINGOPPORTUNITIES AND SUPPORTFOR WASTE-TO-ENERGY

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Importantly, producing power from waste sources not only displaces the production of

electricity from fossil fuels but also reduces emissions of the more greenhouse-intensive

methane gas, increasing the environmental gain. The other important issue for LocalAuthorities is that the employment leverage from renewable energy is greater than from

conventional energy. As a result, expanding renewable energy production from waste will

lead to increased employment, particularly in regional and rural communities.

In Australia, major new commercial opportunities for waste-to-energy projects are

emerging out of greenhouse gas emission reduction measures. These measures may

provide general support or financial benefits to waste-to-energy projects.

3.1 Greenhouse initiatives providing indirect support

There are a number of initiatives that may provide indirect support to Local Authorities for

reducing greenhouse gas emission. These include:

the Australian Government Greenhouse Challenge program

the Cities for Climate Protection program.

AUSTRALIAN GOVERNMENT GREENHOUSE CHALLENGE PLUS PROGRAMME

Greenhouse Challenge Plus, launched in March 2005, is a joint industry and Australian

Government initiative to:

Reduce greenhouse gas emissions;

Accelerate the uptake of energy efficiency;

Integrate greenhouse issues into business decision-making; and

Provide more consistent reporting of greenhouse gas emissions levels.


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The Department of the Environment and Heritage, Australian Greenhouse Office

administers Greenhouse Challenge Plus. The support provided by the AGO to programme

participants can be useful to organisations implementing a waste-to-energy project aspart of a broader greenhouse gas emissions abatement programme.

For further information on the Greenhouse Challenge Plus, visit

www.greenhouse.gov.au/challenge, call: 02 6274 1229 or e-mail:

[email protected]

THE SITE

The project is located at the

Swanbank Landfill,Queensland, approximately40 kilometres south-west ofBrisbane. Thiess Servicesoperates the landfill which isa former coal mine.

FUEL SOURCE

AND SUPPLYFuel is supplied from a

Owner: Joint Venture(Thiess Services, LMS,New Hope Energy)

Nominal capacity:710 MW

Location: Ipswich,Queensland

Commissioned:18 February 2002

Capital cost:$4 5 illi

CASE STUDY

ReOrganic EnergyIpswich, Queensland


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CITIES FOR CLIMATE PROTECTION PROGRAM

Cities for Climate Protection (CCP) is an innovative program that helps local governmentand their communities to reduce greenhouse gas emissions and their impact on the

environment. It is an International Council for Local Government Initiatives (ICLEI)

campaign, delivered in Australia in collaboration with the Australian government through

the Australian Greenhouse Office. CCP Australia is the largest local government

greenhouse program in the world, with over 200 local councils now participating.

CCP empowers local governments to reduce greenhouse gas emissions. It provides local

governments with a strategic milestone framework that helps them to identify theemissions from their councils and communities, set reduction goals and develop and

implement an action plan to reach the targets .

A range of support is available for member organisations of CCP, including:

CCP software and other appropriate tools for calculating emissions

direct support in assessing emissions and understanding what they mean

training workshops

workbooks, relevant case study material and fact sheets access to expertise and networks of local council peers to exchange ideas and

solutions

advice on funding opportunities and some funding support from the Australian

Greenhouse Office.

The support offered by CCP could also be useful to an organisation which is

implementing a waste-to-energy project as part of a broader greenhouse gas emission

b t t i iti ti


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3.2 Policy measures providing financial support

Greenhouse gas emission reduction measures which may provide specific financialsupport to waste-to-energy projects include:

the Australian Government Renewable Energy Development Initiative (REDI)

funding from various State Government programs

the Australian Government Mandatory Renewable Energy Target (MRET)

the NSW Greenhouse Gas Abatement Scheme

the national Green Power initiative.

RENEWABLE ENERGY DEVELOPMENT INITIATIVE (REDI)

REDI was announced by the Australian Government in June 2004 with the release of the

Energy White Paper Securing Australias Energy Future. The initiative comprises $100

million over seven years and will be allocated to promote strategic development of

renewable energy technologies, systems and processes that have strong commercial

potential.

The program will be administered by AusIndustry, which is part of the Department ofTourism, Industry and Resources. AusIndustry are currently in the process of developing

guidelines for the initiative. Refer to www.Ausindustry.gov.au

According to Ausindustry, REDI will be a competitive grants program designed to give

smaller scale renewable projects a leg up to commercialisation. REDI will provide

support through the innovation spectrum, helping projects move from proof-of-concept to

commercialisation and then on to business collaborations. The program will support

i i d l i d d l f bl h l i hil l


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CASE STUDY

Kristianstad Biogas PlantKristianstad, Sweden

Built in 1996, theKristianstad biogas plant inSweden processes

household, industrial andagricultural waste andproduces biogas for thelocal district heating plant,with plans to fuel the fleetof waste transport vehicles.Of the 73,000 tonnes oforganic waste delivered tothe plant each year,household waste andmiscellaneous waste makeup about 5 per cent eachwith the remaindercomprising both animalmanures and agriculturalprocessing wastes. Theequivalent of 20,000 MWhof biogas is recoveredannually, 17,900 MWh is

h di i h i


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AUSTRALIAN GOVERNMENT MANDATORY RENEWABLE ENERGY TARGET (MRET)

With effect from 1 April 2001, the Australian Government introduced a trading schemefor electricity generated from renewable energy sources, the Mandatory Renewable Energy

Target (MRET). MRET places a legal liability on wholesale purchasers of electricity to

proportionately contribute towards the generation of an additional 9500 GWh per year of

electricity generated from renewable sources by 2010. The target applies nationally until

2020, with all electricity retailers and other wholesale electricity purchasers on liable

grids in all states and territories contributing proportionately to the achievement of the

target. To ensure that there will be consistent progress toward achieving the 9,500 GWh

target by 2010, the measure will be phased-in by specifying a number of interim targetsover the period 20012020.

Wholesale electricity purchasers are proportionately liable for meeting their share of the

target. For example, if a liable party purchases 10 per cent of the liable electricity in

Australia, they will need to meet 10 per cent of the interim target level for that year.

Wholesale electricity purchasers meet their share of the target each year by surrendering

renewable energy certificates (RECs).

RECs are created by accredited renewable energy generators which deliver renewable

electricity to a grid, end-user or directly to a retailer or wholesale buyer. Waste-to-energy

projects may be classified as renewable energy generators for the purpose of MRET if

they use one or more of the following fuels:

bagasse

black liquor

wood waste


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The MRET scheme enables waste-to-energy projects to generate a revenue stream from

the trading of RECs which is additional to the revenue from the sale of electricity. This

provides a strong incentive for the implementation of waste-to-energy projects.

FIGURE 3.2

RECs created during 2003 by waste-to-energy generators.

Source: Australian Business Council for Sustainable Energy, Sustainable Energy Report 2004

NSW GREENHOUSE GAS ABATEMENT SCHEME

The New South Wales Government has set a state-wide benchmark of reducing

greenhouse gas emissions to 7.27 tonnes of carbon dioxide equivalent per capita by

2007. This is 5 per cent below the per capita emissions in the Kyoto Protocol baseline

year of 1989/90. To ensure continual progress towards this end target, progressively

tighter targets have been set year-on-year, commencing with a target of 8.65 tonnes per

capita in 2003 and leading to the final benchmark level of 7.27 tonnes per capita in

Fuel Type RECs created

Bagasse cogeneration 174,344

Black liquor 108,243

Crop waste 0

Food & agricultural wet waste 0

Fuel Type RECs created

Landfill gas 246,463

Municipal solid waste combustion 641

Sewage gas 27,520

Wood waste 120,031


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FIGURE 3.3

NGACs registered during 2003 by waste-to-energy generators

Source: Passey, MacGill, Nolles & Outhred (2005)

To achieve the required reduction in greenhouse gas emissions, benchmark participants

purchase and surrender certificates called NSW Greenhouse Abatement Certificates

(NGACs). One NGAC represents one tonne of carbon dioxide equivalent that would

otherwise have been released into the atmosphere in generating electricity. NGACs are

transferable certificates that may be freely traded between any parties. It is expected that

NGACs will generally be traded at a moderate discount to the $10.50 penalty.

NGACs may be created by eligible electricity generators that reduce the average

greenhouse intensity of electricity generation. To be eligible, generators must be

connected to the main transmission networks of the National Electricity Market, or to

distribution systems currently connected to those networks in NSW, the ACT, Queensland,

Victoria and South Australia. It is expected that when the Basslink connection between

Tasmania and the mainland is operational, generators in Tasmania will also become

Fuel Type NGACs registered

Landfill gas 1,979,899

Sewage gas 59,381

Bagasse 10,895

TOTAL 2,050,175


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NATIONAL GREEN POWER INITIATIVE

The purpose of a Green Power program is to increase the quantity of electricity generatedfrom renewable energy sources and therefore to drive investment in new renewable

energy generators.

Under a Green Power program, electricity retailers provide a green tariff option to

customers that is at a premium to regular tariffs. The retailer commits to ensuring that an

equivalent amount of electricity to the amount of Green Power energy purchased by a

customer is produced from renewable energy sources by approved electricity generators.

The additional cost to the retailer of purchases from these generators is covered by thehigher tariff charged to customers who purchase Green Power.

In Australia, electricity retailers offer Green Power products throughout the country.

Depending on the details of the individual retailers program, customers are offered an

opportunity to purchase a proportion or the whole of the electricity they use as Green

Power at prices which are usually between 20 per cent and 40 per cent above the

normal price. Around 125,000 customers across Australia have chosen Green Power

products, including close to 6000 businesses.

Retailers purchase sufficient electricity to meet their Green Power commitments from

approved Green Power generators. Broadly defined, these are generators whose

generation of electricity is based primarily on renewable energy sources and results in

greenhouse gas emission reductions and net environmental benefits. Generators are given

the final Green Power tick of approval if they comply with specific eligibility guidelines.

All generation projects are assessed individually against strict criteria and require support


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4. WASTE-TO-ENERGY TECHNOLOGIES

As noted in Section 2.3, wastes have a diversity of physical and chemical properties

requiring matching energy conversion technologies. Moisture content and contamination

levels are particularly important. Drier forms of waste are usually converted through the

thermal energy conversion paths, while wet wastes may be processed through

biochemical pathways. Other wastes may be converted through esterification. The

diagram below illustrates the variety of pathways through which waste sources can be

converted to energy and energy related products. Also illustrated is the range ofsecondary energy technologies to produce the end-use energy. The technologies are then

outlined briefly. For further detail refer to Attachment 1.

Members of the AustralianBusiness Council forSustainable Energy canprovide guidance about

appropriate technologiesfor different waste-to-energy applications. Seewww.bcse.org.au.

Waste materials

Thermal processing Biochemical Chemical

Combustion Gasification Fermentation EsterificationPyrolisis Anaerobic

digestion


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4. WASTE-TO-ENERGYTECHNOLOGIES

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The MAV anaerobictreatment plant in Ghent,Belgium, is equipped to

handle and treat sewagesludge, organic wastes, pre-sorted food waste, fatsludge and abattoir residuesto produce biogas and highquality fertiliser. The planthas a capacity of 200,000tonnes per year, which issupplied under contract byindustry and farms in thesurrounding area. Totalfermentation capacity is12,000 litres, dividedbetween four digesters.

Carbon Partners areestablishing a similarfacility, with StateGovernment support in the

CASE STUDY

MAV Anaerobic Treatment PlantGhent, Belgium

GBU Ghent biogas plant Belgium


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Thermal energy conversion

The three principal means of thermal energy conversion are combustion, gasification andpyrolysis, with the essential difference between these paths being the amount of

atmospheric oxygen involved in the process.

Biochemical energy conversion

These technologies use naturally occurring microbes to convert waste organic material

into energy carriers such as methane-rich biogas and ethanol. A variety of technologiesbased on this biological treatment are available and include anaerobic digestion,

fermentation and esterification.

Secondary energy conversion technologies

The energy carrier (steam, gasified waste, biogas, pyrolysis bio-oil) produced during the

primary waste conversion process of combustion, gasification, pyrolysis, anaerobicdigestion and fermentation is required to be converted into a usable form of energy, such

as electricity and process heat, in a secondary energy conversion step. There are several

mature technologies. Those technologies generally used are limited to the following well-

proven and commercially sensible generators.

STEAM TURBINES


20


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214. WASTE-TO-ENERGYTECHNOLOGIES

INTERNAL COMBUSTION ENGINES

Internal combustion engines are widely used for powering small to medium scaleelectricity generators. Spark ignition engines use combustible fuels such as methane-rich

biogas, or producer gas, while compression ignition engines use fuels such as biodiesel.

Large, modern compression ignition engines can have efficiencies up to 30 per cent. Dual

fuel operation of diesel engines with biogas or producer gas involves supplying the waste-

derived gas into the engines combustion air intake.

GAS TURBINES

Gas turbines are well proven commercially for operation with natural gas. The operation

with hot gases from the combustion of wastes, or biogas and producer gas derived from

waste- and biomass-derived fuels, using modified gas turbines, has been demonstrated in

several countries for outputs up to 8 MW electrical output. Gas turbines may be either

indirectly fired or directly fired. With indirectly fired gas turbines, the combustion chamber

is replaced by a heat exchanger heated by an external heat source from the combustion

of the waste fuel. With directly fired gas turbines, cleaned, hot combustible gases from a

pressurised gasifier are fed directly into the gas turbine. Methane-rich biogas, such aslandfill gas, is a commercially mature technology.

Emerging technologies

MICRO-TURBINES


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5. ECONOMICS OF WASTE-TO-ENERGY

In considering the economics of waste-to-energy projects, thought must be given to the

revenue streams that are available to the project and the costs that will be incurred in

securing the waste and in building, operating and maintaining the plant. The settings,

scale of plants, energy conversion technologies and other factors will influence the project

economics as will the consistency and volume of wastes available. Supply as well as the

physical and calorific nature of the waste can add operational costs that are unable to be

sustained, or are unacceptable to operating licence conditions.

Revenue streams

Revenue in a waste-to-energy project will generally come from the sale of electricity

generated or through the gate fees for processing waste. Possible revenue streams can

include:

avoided waste disposal and/or processing costs, such as avoided tip fees sales of electricity. This is typically through a power purchase agreement with an

electricity retailer. The electricity generated may also offset the power that would

otherwise be consumed in the case where cogeneration is adopted

avoided network costs where local generation reduces or delays the need for network

expenditure

sale of NGACs, Green Power or Renewable Energy Certificates (RECs) under the

MRET scheme


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5. ECONOMICS OF WASTE-TO-ENERGY

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CAPITAL COST OF THE PLANT

Plant items could include: waste/feedstock acquisition, processing, storage plant

the energy conversion plant, digester or reactor

gas clean-up systems

generator system

effluent or ash disposal works

cooling systems (if required)

electrical plant and equipment

storage (for biodiesel/biogas) emissions treatment (for example, scrubbing systems).

OPERATING AND MAINTENANCE COSTS

Ongoing costs could include:

transport costs for the feedstock, if not delivered to or on-site already

insurance

annual fees for licences and emission compliance labour and contractor costs

operating material and plant maintenance costs

audits.

FEEDSTOCK COSTS

Those disposing of a waste may pay for its processing. Alternatively the waste feedstock


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THE SITE

Woongoolba continues to bea thriving sugar-growing

area, with 6500 hectares ofland under sugar cane andgrowers looking to expandinto adjoining Shires, inparticular Beaudesert. Themill is the largest grower,producing 55,000 tonnesper annum. The Rocky PointSugar Mill is the only mill inAustralia to produce organic

certifi ed sugar and has itsown distillery (alcoholfactory) on site to convertmolasses into alcohol, inparticular fuel alcohol. Thisprovides another use formolasses, which was onceonly used as a stockfeed forcattle.

Owner: Stanwell

Capacity: 30 MWLocation: Woongoolba,55 km southeast ofBrisbane

Commissioned: August2002

Capital cost: $50 millionDeveloper: Stanwell and

The Heck GroupConstruction contractor:

Alstom PowerOperator: StanwellFuel source: Biomass

consisting of bagasse,municipal greenwasteand woodwaste

Boiler: ABB VU40 GrateBoiler

Boiler Capacity: 130

CASE STUDY

Rocky Point Cogeneration PlantWoongoolba, Queensland


24

View from top of boiler house looking down on dearator

(right) and stack, with spray-water cooling pond and

biomass stockpile in backgroundCREDIT:DOUG STELEY STANWELL CORPORATION


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6. BUSINESS RISK CONSIDERATIONS

Like any organisation, Local Authorities face a number of business and operating risks

that they need to manage in providing services to their constituents. Progressing waste-

to-energy projects will entail some risk to the organisation, particularly where this is a

new activity. It is, however, important to note that the do nothing approach also often

involves considerable risk, as the authority will be exposed to future greenhouse emission

constraints, as well as tightening environmental controls on waste disposal, odour and

visual amenity.

Many waste-to-energy technologies and applications are well established and well proven,

and in many countries (with similar conditions to Australia) have been providing effective

service to local constituents. This fact is not well known, and there remains a perception

that the technologies and applications are not technically proven. As at 31 December

2004, there were ninety-seven waste-to-energy projects either operating or under

construction with a combined electricity generation capacity of 772.51 MW (refer to

Attachment 3).

There are also emerging waste-to-energy technologies being developed that have the

potential to expand the range of opportunities available to productively utilise waste

streams.

6.1 Waste treatment the environmental sustainability issue


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26

A common misconception with waste-to-energy technology is that within the accepted

hierarchy of waste handling options (refer to Section 2.2), energy recovery is actually no

higher than disposal as currently practised. This perception arises as a consequence of

the following potential concerns in the Australian community:

The community tends to equate combustion, even in modern facilities, with burning.

This may mean that the community is more receptive to biological processes for waste

treatment than combustion because of poor past experience with municipal solid

waste incinerators and their emissions.

Energy supply has historically been relatively inexpensive and not been constrained as

Australia has abundant supplies of coal.

Some view investment in a plant as providing a hungry mouth for the waste stream,

encouraging unsustainable waste producing practices rather than promoting

innovation. It can compete for resources and contribute to unsustainable practices

rather than promote innovation.

Waste-to-energy technology may reduce participation in and hence cost-effectiveness

of kerbside recycling, which has an accepted social value and is already significantly

subsidised.

What is also not well understood by the community is that the consumption and

generation of electricity leads to significant production of harmful greenhouse gas

emissions. Waste-to-energy conversion not only reduces greenhouse gas emissions from

power generation, but also reduces the more potent waste methane emissions. The global

warming potential of methane is twenty-one times that of carbon dioxide. Waste-to-

energy projects can also lead to other local environmental benefits such as reduced odour

and more effective land use. Again, these benefits are not well understood or recognised.

The Waste ManagementAssociation of Australia hasdeveloped a frameworktool to help guide energy-from-wastedecision-making byproviding an agreed basisfor evaluation of options fordealing with urban wastestreams, a starting point

for community involvementand a template for projectdesign, development andimplementation. For furtherinformation, the reader isdirected to the tworesource documents,ASustainability Guide forEnergy from Waste

Projects and An Energyfrom Waste Industry Codeof Practice. Seewww.wmaa.asn.au

FRAMEWORK TOOL


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6. BUSINESS RISKCONSIDERATIONS

27

It should not be automatically assumed that policy support will be forthcoming for

projects that may seem sensible and viable. For example, the environmentally sustainable

or green credentials of municipal waste mass burn technologies, co-firing with fossil

fuels, and the use of manure from battery chickens can be politically sensitive and may

be questioned irrespective of any net environmental benefits. The planning and approval

process for these types of projects may also be difficult and the benefits may not be well

understood by the local community. For these types of projects, the importance of

effective consultation and community engagement cannot be overestimated.

Even at the design and early discussion phase, considerable effort should be made to

demonstrate that the highest value uses will be achieved from the waste stream. A

seemingly simple proposal may evolve into a proposal for a total system perspective that

considers multiple outputs and co-location of business activities in eco-industrial parks in

order to obtain support for the project.

It is important to:

clearly understand the waste resources available now and in the future

nurture relationships with both stakeholders and future service providers from an early

stage

develop strategies that minimise the organisations exposure to risks make corporate decisions about the scale of involvement that might be appropriate for

the organisation

prepare the community for energy-from-waste concepts

ensure EPA requirements are clear and the process and criteria for acceptance of the

proposal is objective.


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A Victorian example ofanaerobic digestiontechnology is the 160 kW

cogeneration plant at the1500 sow (15,000 animal)Berrybank piggery nearBallarat, Victoria. This facilityuses a two-stage digestionprocess to ensure completedigestion of the solids. Adaily average of 210,000litres of slurry is produced,having an organic content of

1.7 per cent. The plant hasan output of 3500 kWhelectricity and 27,000 MJ ofthermal energy.

The electricity is producedusing spark ignition engines.The farm uses 65 per cent of

the electricity produced, theplant 25 per cent and about10 per cent is sold into thegrid. A benefit of the plant isthat it now produces anodourless organic fertiliser asan end product. The initialinvestment of this plant was$2 million. An overall benefitof $300,000 p.a. is claimed.

Source: IEA CADDET

CASE STUDY

Berrybank cogeneration plantBallarat, Victoria

OWNER FINANCING EPC OR TURNKEY


28


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6. BUSINESS RISKCONSIDERATIONS

29

Project finance refers to lending funds to a project strictly on the merits of the projects

own commercial performance, without recourse to the projects owners for a guarantee of

debt repayment. To underpin such a non-recourse loan, the projects services must be

able to be dedicated on contract to a few credit worthy customers. The credit is built

upon the basis of a series of commercial contracts which envelop the project and strictly

define its life. These would generally include;

a long-term revenue contract for the services of the project (waste processing)

a long-term Operations and Maintenance contract with an entity who will operate the

facility for a predictable fee

a turnkey Engineering, Procurement and Construction (EPC) contract with a major

engineering company that will build and guarantee the performance of the plant

an Offtake agreement for the sales of electricity and other products (such as fertiliser).

The duration of the various contracts should match and align with the financing.

EQUITY FINANCE. This expands the capital base of the developer through a share issue

or selling an equity stake in the project itself to a financier who may wish to take an

active part in running the business.

DEBT OR LOAN FINANCE. There are two types of loans: those secured against thedevelopers existing assets (on-balance sheet financing) and limited recourse financing

(secured against future cash flows from the project). It is unlikely that a lending

institution will finance 100 per cent of the projects requirement. A lender will wish to see

some contribution from the developer, usually between 20 and 40 per cent, to establish

commitment from the developer.

Traditional investors may not recognise the environmental benefits and sustainability of


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connected to the local(Energex)11 kV grid via a 2MVA transformer.

ENERGY PURCHASEAND SUPPLY

The plant is registered as anon-scheduled generator inthe National ElectricityMarket (NEM).The plantworks in season from Aprilto end November - five to sixdays a week to production

requirements.The steamturbine generates about 9.5GWh per annum ofelectricity, of which 1.4GWh is consumed onsite.The remaining 80 per centis exported to the grid.Underthe third party powerarrangement,the host gains

Owner: Ergon Energy

Capacity: 1.5 MWLocation: Gympie,160 km north ofBrisbane

Commissioned:September 2003

Capital Cost: $3 millionDeveloper: Ergon EnergyConstruction contractor:

SE Power Equipment,

Queensland BoilersOperator: Ergon EnergyFuel Source: Food process

waste, macadamia nutshells

Boiler: Water tube steamboiler.

Boiler capacity: 6 MW,9 t/hour

CASE STUDY

Macadamia Nut Power PlantGympie, Queensland


30


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FIGURE 7.1

Summary of some existing waste-to-energy projects

Project Fuel Commissioned Size Capital cost Generator Power Sale Developertype Arrangements

Rocky Point Bagasse 2002 30 MW $50 million Market, Long-term StanwellCogeneration Plant, Qld non-scheduled agreement Corporation

Tableland Mill Bagasse 1998 7 MW Non-market, N/A BundabergCogeneration Plant, Qld non-scheduled Sugar

Visy Pulp & Paper Mill, NSW Black 2001 20 MW N/A N/A Visyliquor

Belconnen Project, ACT LFG 1999 1 MW Non-market, Long-term EDLnon-scheduled agreement

Brooklyn Project, VIC LFG 2002 1 MW Market, Long-term EDLnon-scheduled agreement

Eastern Creek, NSW LFG 2002 2.5 MW Market, Long-term EDLnon-scheduled agreement

Ipswich Renewable LFG 2004 1 MW Market, Long-term LMSEnergy Facility, Qld non-scheduled agreement

Jacks Gully, NSW LFG 2001 1 MW Market, Long-term EDLnon-scheduled agreement

Kelvin Road Facility, WA LFG 2003 2.1 MW N/A Long-term LMSagreement

Millar Road Power LFG 2003 1.7 MW N/A Long-term LMSGeneration Facility, WA agreement

Lucas Heights II Plant, NSW LFG 1998 13 MW Non-market, Long-term EDLnon-scheduled agreement


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7. MAKING IT HAPPEN 33

7.1 Project fundamentals

There are effectively two key models and then some derivatives of each of these. The firstis for the Local Authority to undertake the project on its own books. It will develop the

project and fund the investment through internally derived funding sources or through

specified financing but the key thing is that the Local Authority owns the energy

conversion project. The other option (or extreme) is for the Local Authority to merely

supply the fuel, or host the facility on its land. In this case the development and

investment capital is provided by a project developer.

Biogas projects in sewage treatment plants undertaken to date in Australia tend to havebeen undertaken directly by the local water authority. This model has tended to be

followed where the project is reasonably integrated with other activities at the site.

Interestingly, however, recent projects such as at Werribee and in Townsville have tended

to be undertaken by third party developers who own and operate the facility.

In the case of landfill gas projects, the model has been for the complete outsourcing of

the project by the waste authority, with third party developers effectively providing the site

(and fuel). The project proponent in this case would typically pay the authority a monthlylease or rental for use of the landfill.

The role that the Local Authority in these cases typically plays is that of fuel provider. In

the case of the Werribee and Townsville projects, the Local Authority provided a waste

water or methane stream. In the case of a landfill project, the project proponent is

typically provided with the exclusive use of the site for a defined period of time for a

specified monthly rental.

Hobart City Council soughtout a third party developerfor cogeneration at one ofits waste water treatmentplants. Despite the rate ofreturn being relativelyattractive, the scale of theproject was considered too

small (0.14 MW) to beworth the effort, followingan assessment by the thirdparty at the councilsexpense. The council hasproceeded with andfinanced the project itself.


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7.2 Stakeholder considerations

The success of any waste-to-energy strategy or project will depend on identifying keystakeholders early in the process, and addressing their concerns and interests. While the

principle is similar to many other developments, waste-to-energy does create strong views

in the community misguided and otherwise. Although many jurisdictions do require

public consultation as part of the permitting process,2 engaging with the community and

meeting their expectations through an approach described associal impact assessment

should be encouraged for potentially controversial developments. Social impact

assessment has been defined as the process of analysing and managing the intended

and unintended consequences of planned interventions on people so as to bring about amore sustainable biophysical and human environment (Dr Frank Vanclay, Charles Sturt

University).

Ideally the process should be employed at all key stages of a waste-to-energy

development planning, design and evaluation of options; construction and

implementation; and operation and would encompass the following actions. Stakeholder

groups need to be identified, and could include neighbours, nearby landholders, local

groups (including indigenous interests), environmental groups (local and umbrellaorganisations), other non-government organisations, suppliers and consumers,

shareholders, unions and media. A public involvement program for all key stakeholders

would be developed, as would a social/economic profile of the area.

The range of issues and concerns of each stakeholder group would be identified, and

important social impact categories would be developed (such as employment, property

values, conservation and so on). The probability, magnitude and extent of effects of the


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USE/HOST

Heat is recovered from a hotwater heat exchanger. The

waste heat is used for heatingraw sewage sludge feed todigesters. Digested sludge isde-watered and used foragricultural biosolids.

ENERGY PURCHASEAND SUPPLY

Digester gas is combusted inthe engines and heat

recovered from thecogeneration facility is used toheat raw sewage sludge beforegoing to the digester. Theelectricity produced is treatedas green power under ascheme accredited by theSustainable EnergyDevelopment Authority of New

Owner: Sydney WaterCapacity:

3 MWLocation: The plant islocated at MalabarSewage Treatment Plantat Malabar, New SouthWales.

Commissioned: April1999

Capital cost:

$AUS 5 million

Developer: AGLConstruction: SE PowerOperator: Sydney Water

CASE STUDY

Malabar Sewage Treatment PlantMalabar, New South Wales

7. MAKING IT HAPPEN 35


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7.3 Risk management

Any new venture brings with it elements of risk. Waste-to-energy projects are not yetregarded as a standard part of the Australian waste management environment and the

project risks are commensurate with this. However, the waste management environment

everywhere is changing fast and the do-nothing approach carries its own risks.

The organisations plan may aim to reduce the magnitude of the project risks outlined

below and elsewhere, through small-scale demonstration, experience and capacity-

building, with further developments promoted as the benefit-to-risk ratio continues to

increase.

The common elements of project risk that are discussed in relation to a plant such as a

waste-to-energy development are outlined below. Other risks, such as technology risk and

market risk, have been outlined in other sections of the document. Each can be allocated

and managed in different ways.

OPERATIONS RISK

Planned and unplanned outages of the plant will require contingency plans particularly

important if the plant is being relied upon for waste disposal. Contracted supply of power

from the plant will need to be covered in the event of outages. Waste fuel supply to the

plant will need to be carefully managed. Some technologies must be run continuously

and cannot easily be shut down.

ENERGY PRICE RISK


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8. THE REGULATORY ENVIRONMENT

In becoming a renewable generator, the power generation facility must:

register as a generator in the National Electricity Market if it has a capacity above

5 MW and exports more than 20 MW per year, or wants to sell power through the

wholesale market;

connect to the local distribution network; and

meet particular state-specific planning and environment regulations

The BCSE has published two documents that comprehensively set out the issues and

processes that generation project proponents need to be aware of in connecting to the

local distribution networks and to the National Electricity Market (NEM). These are the

Guide for the Connection of Embedded Generation in the National Electricity Market

and the Technical Guide for Connection of Renewable Generators to the Local Electricity

Network. These Guides are aimed to provide the reader with a general understanding of

the NEM and the issues that affect the design, cost of connections and network access

for renewable embedded generators. This section will give a brief overview and readersare directed to these reports for further information. Both of these Guides are available

under Publications on the BCSEs website at www.bcse.org.au .

8.1 National Electricity Market

Since 1998, there has been a competitive market in electricity generation and retailing in


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38

Alternatively, embedded generators may choose not to participate in the NEM and

instead:

sell all their power to the local retailer under a power purchase agreement.

sell all their power to a customer sharing the same connection point under a powerpurchase agreement.

In practice, proponents of embedded generation projects generally choose to enter into

longer term power purchase agreements which have a defined price with retailers.

Contracting in this way is easier for the generator, who is also able to achieve a more

certain revenue stream that will in turn assist the effective financing of the project.

As part of the registration process (assuming the proponent is required, or chooses, toregister) the proponent must classify its generator as:

either a scheduled generating unit or a non-scheduled generating unit

either a market generating unit or a non-market generating unit.

Generators that produce above 30 MW are generally required to register as a scheduled

generator. Others may apply to be classified under this status. Scheduled generators must

participate in NEMMCOs centralised dispatch process. These generators will be

dispatched in accordance with their submitted price bids. Non-scheduled generators arenot required to participate in the dispatch process. These generators will produce

electricity as they see fit or as their resources warrant, and receive the prevailing

wholesale market price.

A generator will be deemed a market generator unless the entire generators output is

purchased by the local retailer or by a customer located at that same connection point

through a power purchase agreement. A market generator must also sell all sent-out


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8. THE REGULATORYENVIRONMENT

39

8.3 Connection to the distribution network

To connect to the local distribution network, the project proponent must make aconnection application to the Distribution Network Service Provider (DNSP), who are

responsible for the planning and development of the network and for engineering new

connections. This application includes the provision of certain technical information.

The developer must also enter into a connection agreement with the DNSP. This sets out

the terms and conditions under which the DNSP will provide a connection to their system

and the rights and obligations of each party. Additional agreements may also be required,

for example to cover the safety, technical requirements and operational arrangements foroperating and maintaining the connection. An embedded generator cannot begin

operation until all agreements have been negotiated and signed and any required

connection infrastructure has been installed, tested, inspected, signed off and

commissioned.

Connection costs can have a major impact on the financial viability of embedded

generation projects. These costs are project specific, depending on various characteristics

of the generation scheme and the local distribution network, and are a matter fornegotiation between the proponent and the network service provider.

Building a connection can be time consuming, with time scales dependent on project-

specific factors. Major issues involved with the construction of the connection

infrastructure are the times required to obtain planning and environmental approvals as

well as the associated lead times for materials and items of plant that need to be ordered

and timescales for installation and commissioning. Generally speaking, low-voltage


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40

Much of the information relating to approvals, such as legislation, guidance notes,

procedures and forms, is available on the Internet sites of the relevant Australian and

State Government departments.

Approval requirements will depend on factors such as size (which determines

environmental impact) and location (which determines development approval

requirements). Location issues that will impact on approval requirements include current

zoning of the area (which determines the permitted purposes) and any special areas that

will be impacted (crown land, areas of environmental significance). For more information

on development and environmental approvals on a state-by-state basis, refer to the Guide

for the Connection of Embedded Generation in the NEM.

Australian Government approvals may also need to be sought under the Environment

Protection and Biodiversity Conservation Act 1999 if the project has, will have or is

likely to have a significant impact on a matter protected that may include:

the values of a World Heritage property

the values of a National Heritage place

the ecological character of internationally important (Ramsar) Wetlands

nationally listed threatened species and ecological communities

listed migratory species.

An action that may be located on, or otherwise may have a significant impact on, the

environment of Commonwealth land may also need to be referred.

For further information see www.deh.gov.au/epbc or call the Referrals Section in the

Department of Environment and Heritage on (02) 6274 1111.


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41

APPENDIX 1 GLOSSARY, ABBREVIATIONS AND ACRONYMS

ACCC Australian Competition and Consumer Commission.Aerobic process A process requiring the presence of oxygen.

ACRE Australian Cooperative Research Centre for Renewable Energy. Some of the activities

previously carried out by ACRE are now undertaken by the Research Institute for

Sustainable Energy (RISE) based at Murdoch University.

Anaerobic digestion Digestion of organic matter by bacteria in the absence of air.

BCSE Australian Business Council for Sustainable Energy

BOO/BOOT Buildownoperate/Buildownoperatetransfer arrangements.

Biodegradable component Component that has the ability to breakdown safely by biological means into its rawmaterials of nature and disappear.

Biofuels Fuels made from biomass resources. These include wood, waste and alcohol.

Biogas A combustible gas derived from the anaerobic decomposition of organic matter.

Composed primarily of methane, carbon dioxide and hydrogen sulfide.

Biomass Can refer to the total mass of living organisms in a given area, but when talking about

energy it refers to plant materials and animal wastes used as fuel.

CADDET An information centre sponsored by twelve member countries committed to the sharing of

information regarding renewable energy and energy efficiency activities and developmentsworldwide. The program concluded in March 2005.

Calorific Value The heat liberated by the combustion of a unit quantity of a fuel under specific

conditions; measured in calories.

CCPTM Cities for Climate Protection.

CO2-e Carbon dioxide equivalent. This is the concentration of carbon dioxide that would cause

the same amount of radiative forcing as a given mixture of carbon dioxide and other

greenhouse gases.


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Global warming potential Essentially the warming potential of a gas. The instantaneous radiative forcing that results

from the addition of 1 kg of a gas to the atmosphere, relative to that of 1 kg of carbon

dioxide. The measure allows for equal comparison of the various greenhouse gases

contributions to global warming.Green Power Electricity generated from approved generators under accredited Green Power products.

Green waste Urban wood waste such as tree loppings and garden waste.

IEA International Energy Agency.

IRR Internal Rate of Return.

Integrated waste The use of a variety of techniques to handle municipal solid waste safely and effectively,

management including source reduction, recycling, composting, combustion and land filling.

Kyoto Protocol An international agreement reached in 1997 at the Third Conference of the Parties to the

UN Framework Convention on Climate Change. The Protocol established specific targetsand timetables for reductions in greenhouse gas emissions to be achieved by the

frameworks signatories. The protocol became legally binding for those countries who

have ratified on 16 February, 2005. The Australian Government has chosen not to ratify

the protocol.

kW or MW Kilowatt or Megawatt.

kWh or MWh or GWh Kilowatt hour; megawatt hour; gigawatt hour.

Landfill gas Gas generated by the natural degrading and decomposition of municipal solid waste by

anaerobic micro-organisms in sanitary landfills. Comprised of 50 to 60 per cent methane,40 to 50 per cent carbon dioxide, and less than 1 per cent hydrogen, oxygen, nitrogen

and other trace gases.

Leachate A liquid generated in landfills. It is the result of water seeping into and through the

wastes. As the water contacts the waste materials, it dissolves part of the organic and

inorganic matter contained in the landfill. If this leachate is allowed to exit the bottom of

the landfill, it will carry contaminants to the groundwater and/or adjoining surface water.

Limited recourse financing Security for the project debt is underpinned by the cash flows of the project itself, with


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APPENDIX 1. GLOSSARY,ABBREVIATIONS ANDACRONYMS

43

Recyclables Products or materials that can be collected, separated and processed to be used as raw

materials (inputs) in the manufacture of new products.

Renewable energy Energy from sources that cannot be exhausted.

Reuse Practices which find alternate uses or alternate avenues for use of an item rather thanexpending energy to dispose of it or alter its form by recycling.

Social impact assessment The process of analysing and managing the intended and unintended consequences of

planned interventions on people so as to bring about a more sustainable biophysical and

human environment (Dr Frank Vanclay, Charles Sturt University).

SEAV Sustainable Energy Authority Victoria.

SEDA Sustainable Energy Development Authority (NSW).

SEDO Sustainable Energy Development Office (WA).

SRI Socially Responsible Investment.TNSP Transmission Network Service Provider

WMAA Waste Management Association of Australia.


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44

APPENDIX 2 LIST OF USEFUL ORGANISATIONS, SUPPORT PROGRAMSAND REFERENCES

Useful organisations

Australian Greenhouse Office (AGO)

Department of Environment & Heritage Tel. (02) 6274 1888

GPO BOX 787 www.greenhouse.gov.au

Canberra, ACT 2601

Australian Business Council for Sustainable Energy (BCSE)Suite 304, Level 3 Tel. (03) 9349 3077

60 Leicester Street Fax. (03) 9349 3049

Carlton, VIC 3053 www.bcse.org.au

Bioenergy Australia

7 Grassmere Road Tel./Fax. (02) 9416 9246

Killara, NSW 2071 www.bioenergyaustralia.org

Department of Energy, Utilities & Sustainability (DEUS)

Level 17 Tel. (02) 8281 7777227 Elizabeth Street Fax. (02) 8281 7799

Sydney, NSW 2000 www.deus.nsw.gov.au

Sustainable Energy Authority Victoria (SEAV)

Ground Floor Tel. (03) 9655 3232

215 Spring Street Fax. (03) 9655 3255

Melbourne, VIC 3000 www.seav.vic.gov.au

Waste Management Association of Australia (WMAA)


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46

ATTACHMENT 1 WASTE-TO-ENERGY PRIMARY CONVERSION TECHNOLOGIES

Thermal energy conversion technologies

COMBUSTION

Direct combustion is a mature and well-established technology with numerous operating

plants around the world. In combustion, the waste fuel is burnt in excess air in a

controlled manner to produce heat. Flue gases from efficient combustion are mainlycarbon dioxide and water vapour, with small amounts of other air emissions, depending

on the nature of the waste fuel. The flue gases are cleaned using flue gas scrubbers, bag

filters and electrostatic precipitators, and if required further chemical processing to reduce

emission of oxides of nitrogen (NOx) and other pollutants. Up to 60 per cent of the cost

of a municipal solid waste-to-energy plant can be in the air emission control plant. The

combustion heat is used to raise steam in a boiler. The steam is expanded through a

turbine connected to a generator, thereby producing electricity.

FIGURE A.1

Flow chart of a conventional direct combustion waste-to-energy plant

CLEANED FLUE GASES


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ATTACHMENT 1.WASTE-TO-ENERGY PRIMARYCONVERSION TECHNOLOGIES

47

GASIFICATION

Gasification is the conversion of a carbon-rich waste feedstock into a combustible gas, atelevated temperatures, up to 1300C, in a restricted atmosphere of air or oxygen. For

organic-based feedstocks, such as most wastes, the resultant gas is typically a mixture of

carbon monoxide, carbon dioxide, hydrogen, methane, water and small amounts of higher

hydrocarbons. If air is used, the gas is sometimes called producer gas and is diluted by

atmospheric nitrogen. Producer gas has a relatively low calorific value of 46 MJ/Nm3,

compared with the calorific value of natural gas which is about 39 MJ/Nm3. Producer

gas can be used as a fuel in boilers, internal combustion engines or gas turbines. Its low

calorific value requires using greater volumes of gas to achieve the same energy outputcompared with using natural gas.

In some sophisticated applications oxygen-enriched air or oxygen or even steam may be

used as the gasification medium. The resulting gas, usually called syngas, will have a

higher calorific value in the range 1015 MJ/Nm3 due to the absence of diluting

nitrogen.

The combustible gas produced from most waste sources will contain varying amounts oftars and particulate matter, which may need to be removed prior to its use in a boiler,

engine or turbine. The degree of the contamination and purification required will depend

on the gasification technology and application of the fuel gas.

Gasification of coal is a proven technology, having been used to produce town gas since

the early 1800s. In more recent times gasification has been adopted and applied to

various waste streams. A variety of gasification technologies have been developed, or are


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PYROLYSIS

Pyrolysis is thermal transformation of a material in the complete absence of air or oxygen,typically at temperatures in the range 400800C, to form a mix of gases, vapours,

liquids, oils, solid char and ash. The composition and proportions of these products

depends on input composition, pre-treatment, temperatures and reaction rates. At

temperatures around 500C and short reaction times (under two seconds), pyrolysis oils

are produced, with up to 80 per cent of the feedstock being transformed into pyrolysis

bio-oil. At higher temperatures of 700-800C, pyrolysis reactions produce a much higher

proportion of gas, with correspondingly fewer liquid and solid products. The gas has a

calorific value of 1520 MJ/Nm3, about half that of natural gas, and may be used to fuelengines and gas turbines without modification. Pyrolysis bio-oil has a heating value of

about 17 MJ/kg, or about 60 per cent that of diesel on a volume basis. A significant

feature of producing pyrolysis bio-oil is that it can be produced at a separate location to

where it is eventually used, using transportation and storage infrastructure similar to

conventional liquid fuels.

Pyrolysis bio-oil has been successfully trialled as a boiler fuel, and several pilot and near-

commercial projects have been conducted in Europe and North America. Bio-oil has beensuccessfully fired in several diesel test engines, where it behaves similarly to diesel in

terms of engine parameters, performance and emissions. A number of pyrolysis plants are

in operation, mainly concentrating on processing uniform waste streams such as plastics

and biosolids.

FIGURE A.3

Flow chart of the pyrolysis process


48


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ATTACHMENT 1.WASTE-TO-ENERGY PRIMARYCONVERSION TECHNOLOGIES

49

Biochemical energy conversion technologies

ANAEROBIC DIGESTION

Anaerobic digestion is a biochemical process in which a consortium of bacteria

participates in the decomposition of organic matter in the absence of oxygen to produce a

biogas consisting of approximately 5575 per cent methane and 4525 per cent carbon

dioxide plus some trace gases, depending on the waste stream and system design.

Anaerobic digestion is a versatile process and can be applied to a wide variety of waste

biomass feedstocks including municipal solid waste, industrial waste, livestock and foodprocessing wastes, and human sewage.

The liquid fraction of the remaining digested feedstock from several wastes, such as farm

and food processing wastes, can be returned to the land as a fertiliser and the solid fibre

can be used as a soil conditioner.

The familiar form of anaerobic digestion occurs in landfills, where anaerobic digestion

occurs over decades. A variant on landfills are bioreactor cells, where the biologicalprocess of breaking down the waste, and thus producing biogas, is sped up by optimising

the process. There is a whole spectrum of anaerobic digesters customised to the various

wet waste streams. These include covered lagoons, contact digesters, plug flow reactors,

completely mixed digesters, fixed-film/packed-bed sludge blanket, hybrid fixed-film/sludge

blanket, landfills. The flow chart for a generic anaerobic digester is shown below.

FIGURE A.4


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FERMENTATION

Organic wastes can be converted to ethanol through fermentation. This is where bacteriaconvert carbohydrates in the feedstock to ethanol, the alcohol found in beverages. Where

the feedstock is in the form of starch, it must be converted to sugars prior to

fermentation. Feedstocks to date have included agricultural wastes such as molasses or

waste starch, with recent developments focusing on municipal organics including food

and sewage sludge. The production of ethanol from cellulose components such as corn

cobs and rice straw is under development.

ESTERIFICATION

Biodiesel can be produced from waste vegetable oils and tallow through a trans-

esterification process. This process involves combining the oil with an alcohol (usually

methanol) in the presence of a catalyst (usually caustic soda). A by-product is glycerine,

which is itself a chemical feedstock. Biodiesel is a less toxic and more biodegradable fuel

than petroleum diesel and is often blended with petroleum diesel to provide a renewable

energy component in the fuel.

New South Wales now hastwo operating 40 ML peryear biodiesel plants basedon waste vegetable oil andtallow.


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ATTACHMENT 2 CONTRACTUAL ARRANGEMENTS FOR STAND-ALONE WASTE-TO-ENERGY DEVELOPMENT

Stand alone project financing

A typical project structure for a stand-alone waste-to-energy development using a residual

waste stream illustrates the nature of the contractual arrangements that will need to be

considered. The terms are discussed in the text following the diagram, and financing

matters are considered in more detail in Section 6.3.

Equity

Wasteprovider

Offtake

DebtO&M

Project In excess of 40% of capital requirement

Term (typically over 10 years) Put-or-pay Min price/volumes


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The roles of the various contracts and contracting parties are:

Waste processing revenue contract

Assuming the waste provider would otherwise incur expenditure, including capital

expenditure for new works, to treat the waste stream, the waste-to-energy path provides

an alternative mechanism. The revenue contract for treating the waste mitigates the

market risk by ensuring that the project has revenues for waste management. From a

project integrity point of view, the waste provider needs to be creditworthy and capable of

paying the fees that the project would charge for waste processing. This should not be

difficult, since the entity would currently be paying for disposal or some otherconventional solution, or is looking at a major capital expenditure to perform this function.

From the projects perspective, the service contract needs to be for a long term (say ten

years) so as to allow the project to amortise its debt. It needs to guarantee delivery to the

project of a fixed or minimum volume of material at a fixed or minimum fee per tonne,

even on a put-or-pay basis, such that the gross revenues produced from this service and

the offtake contract (see below) cover the projects operating costs and debt servicing.

Lenders will typically look for cash flow to cover debt service (principal plus interest) by

two times, and most environmental projects should exceed this, due to their perceived

risks. The excess over actual debt service is the return to the company and any other

partners it may have brought in to provide equity to the project. In turn, the project

undertakes to treat the waste according to agreed specifications and promises to be

available to accept the volumes anticipated (except for scheduled downtimes). These

guarantees are backed contractually by the EPC and O&M contractors.


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Operations and maintenance contract

An appropriately qualified organisation is contracted to operate and maintain the waste-to-energy plant for the duration of the revenue and offtake contracts, following take-over

after the acceptance test. This mitigates the operational risk. If something goes wrong

and the plant suffers unplanned downtime, the O&M contractor pays the penalties. By

the same token, the O&M contractor is usually entitled to performance bonuses for

exceeding planned performance.

Project-specific companies would generally expect to see all risks mitigated prior to

committing the project to construction. Larger corporate investors might be prepared toaccept that certain material risks will be resolved after project construction and operation

have started. Involvement in a project by an electricity company may mean that a power

purchase agreement is not needed, simplifying the contractual arrangements.

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ATTACHMENT 3 EXISTING RENEWABLE WASTE-TO-ENERGY PROJECTS IN AUSTRALIA

WASTE-TO-ENERGY PROJECTS

POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04

Listed by primary fuel

Equipment Types: RCP: Reciprocating engine

ST: Steam turbine

Owner Location Status Equip. Configuration Size Year Where Industry

type No. x MW MW thermal host

BAGASSE COGENERATION

NSW

NSW Sugar Milling Co-op Broadwater Operating ST 1 x 8.0 8.00 1996 NSW Sugar Milling Co-op Sugar

NSW Sugar Milling Co-op Condong Operating ST 1 x 3.0 3.00 1981 NSW Sugar Milling Co-op Sugar

NSW Sugar Milling Co-op Harwood Operating ST 2 x 0.75, 1 x 3.0 4.50 19641982 NSW Sugar Milling Co-op Sugar

NSW Subtotal 15.50 3 Projects/sites

QLD

Bundaberg Sugar Nambour (Moreton Mill) Operating ST 1 x 2.0, 1 x 0.75 2.75 1970 Moreton Sugar Mill Sugar

Bundaberg Sugar Bingera Operating ST 1 x 1.5, 1 x 3.5 5.00 1969 Bingera Sugar Mill Sugar

Bundaberg Sugar Fairymead Operating ST 1 x 5.5, 1 x 2.67, 1 x 1.25 9.42 1970 Fairymead Sugar Mill Sugar

Bundaberg Sugar Mourilyan Operating ST 1 x 1.75, 2 x 1.5, 1 x 1, 1 x 0.5 6.25 1970 Mourilyan Sugar Mill Sugar

Bundaberg Sugar Arriga (Tableland Mill) Operating ST 1 x 7.0 7.00 1998 Tableland Mill Sugar

Bundaberg Sugar Babinda Operating ST 1 x 6.0 6.00 1971 Babinda Sugar Mill Sugar

Bundaberg Sugar South Johnstone Operating ST 1 x 2.0, 1 x 9.5, 1 x 7.8 19.30 19701997 South Johnstone Mill Sugar

Bundaberg Sugar Millaquin Operating ST 1 x 2, 1 x 1.75, 1 x 1.25 5.00 1970 Millaquin Sugar Mill & Refinery Sugar

CSR Sugar Kalamia Operating ST 1 x 9.0 9.00 1976 CSR Kalamia Sugar Mill Sugar

CSR Sugar Pioneer Operating ST 1 x 2.5, 1 x 1.2, 1 x 3.5 7.20 19581976 CSR Pioneer Mill Sugar

CSR Sugar Plane Creek Operating ST 2 x 2, 1 x 4, 1 x 10 23.00 19701997 CSR Plane Creek Mill Sugar

CSR Sugar Victoria Operating ST 1 x 3.2, 1 x 3.6, 1 x 5.0 11.80 19651976 CSR Victoria Mill Sugar

CSR Sugar Inkerman Operating ST 1 x 2.0, 1 x 10.0 12.00 19631976 CSR Inkerman Mill SugarCSR Sugar Invicta Operating ST 1 x 9, 1 x 2.5, 1 x 38.5 50.00 19761996 CSR Invicta Sugar Mill Sugar

CSR Sugar Macknade Operating ST 1 x 3.0, 1 x 5 8.00 1965 CSR Macknade Mill Sugar

CSR Sugar Pioneer II Construction ST 2 x 30 63.00 2005 Nth Qld Mill Sugar

Ergon Isis II Construction ST 25.00 2006 Isis Central Sugar Mill Sugar

Ergon Tully II Construction ST 25.00 2006 Tully Sugar Mill Sugar

Independent (Sugar North) Mulgrave Operating ST 1 x 5.0, 1 x 3.0, 1 x 1.0, 1 x 1.5 10.50 1970 Mulgrave Sugar Mill Sugar

WASTE TO ENERGYA GUIDE FOR LOCAL

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A GUIDE FOR LOCALAUTHORITIES





ST: Steam turbine



BAGASSE COGENERATION (continued)

QLD (continued)

Independent Maryborough Maryborough Operating ST 1 x 0.75, 2 x 2.0 4.75 1970 Maryborough Sugar Factory Sugar

Isis Central Sugar Mill Isis Operating ST 1 x 1.5, 1 x 2.7, 1 x 6.5, 1 x 0.8 RCP 11.50 19651975 Isis Central Sugar Mill Sugar

Mackay Sugar Cooperative Farleigh Operating ST 1 x 1.5, 1 x 3.0, 1 x 3.5, 1 x 5.0 13.00 19561983 Mackay Sugar Farleigh Mill Sugar

Association

Mackay Sugar Cooperative Marian Operating ST 1 x 3, 1 x 10, 1 x 5 18.00 19671978 Mackay Sugar Marian Mill Sugar

Association

Mackay Sugar Cooperative Pleystowe Operating ST 1 x 3.1, 1 x 7.0 10.10 19661975 Mackay Sugar Pleystowe Mill Sugar

Association

Mackay Sugar Cooperative Racecourse Operating ST 1 x 3.5, 1 x 7.0 13.80 19681982 Mackay Sugar Racecourse Mill Sugar

Association

Mossman Sugar Mill Mossman Operating ST 2 x 1, 1 x 3, 1 x 0.85, 1 x 6 11.85 19541995 Mossman Sugar Mill Sugar

Proserpine Sugar Mill Proserpine Operating ST 1 x 10, 1 x 6, 2 x 2 20.00 19741999 Proserpine Sugar Mill Sugar

Stanwell Corporation Rocky Point Operating ST 1 x 30 30.00 2001 Rocky Point Sugar

Tully Sugar Tully Operating ST 2 x 2.25, 1 x 5.3, 1 x 10.0, 1 x 1.6 21.40 19651997 Tully Sugar Mill Sugar

RCP

QLD Subtotal 459.62 29 Projects/sites

WA

CJ Ord River Sugar Kununurra Operating ST 1 x 6.0 6.00 1995 Ord Sugar Mill Sugar

WA Subtotal 6.00 1 Project/site

BAGASSE COGENERATION S ubtotal 481.12 33 Projects/sites

BLACK LIQUOR

NSW

Visy Paper Tumut Operating ST 1 x 20 20.00 2001 Visy Paper Paper

NSW Subtotal 20.00 1 Project/site

QLD

Visy Paper Gisbon Island, Brisbane Operating ST 1 x 2.0 2.00 1997 Visy Paper Paper

QLD Subtotal 2.00 1 Project/site

ATTACHMENT 3. EXISTINGRENEWABLE WASTE-TO-

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RENEWABLE WASTE-TO-ENERGY PROJECTSIN AUSTRALIA





ST: Steam turbine

GT: Gas turbine



BLACK LIQUOR (continued)

VIC

Paperlinx Maryvale Operating ST 3 x 12, 1 x 18.5 54.50 19761989 Australian PaperMaryvale Mill Paper

VIC Subtotal 54.50 1 Project/site

BLACK LIQUOR Subtotal 76.50 3 Projects/sites

CROP WASTE

QLD

Ergon Energy Gympie Operating ST 1 x 1.5 1.50 2003 Sungold Macadamias Food processing

QLD Subtotal

wtoe australia

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