Opportunities and Challenges Waste to Energy Industry
IMIA Conference, Istanbul September 2009
Mike Robertson
Liberty International Underwriters Waste to Energy Case Studies Case Industry Dynamics and Profile Process Features Key Assessment Risk Considerations Underwriting Conclusion Practical Opportunities and Challenges • • • • • •
Liberty International Underwriters Waste to Energy processing and disposalresidential, of nonwastes, commercial, hazardous construction andand and demolition land waste mandated clearing recovery industrial ofand debris the recyclable safe for disposal materials materials.’ or destruction the of those proper Waste Management – Definition Industry ‘The waste industry involves the collection, Source: Waste Business Journal -Source: Waste 2009
Liberty International Underwriters In billions of $ Management Industry Industry Dynamics 27.0 26.2 29.4 31.0 32.5 33.9 35.1 36.6 38.0 39.4 40.8 41.9 42.9 46.3 49.8 52.1 54.0 55.7 57.4 59.2 60.9 62.6 64.2 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $0 $70 $60 $50 $40 $30 $20 $10 Historical and Projected Growth of the Waste Revenues Source: Waste Business Journal Source: Waste
Liberty International Underwriters Obama Commitments (2009) emissions by emissions by 2020 $150bn $150bn over next 10 years Create 5 million jobs by Create 5 million jobs by investing • 20% in Green House Gas cut 20% • Renewables: 10% Renewables: 10% by 2012, 25% by 2025 • EU Package on Climate Change (2008) Reduce Green House Gas emissions by 2050 by Green House Gas emissions Reduce • ng framework to tackle climate change Stern Report 2006 emissions by 80% by 80% of current levels emissions UK Climate Change Act (2008) UK Climate Change 2 Decarbonise the Power sector by 60% • k Directive (2008) k Directive Government Directives Reduce CO Industry Dynamics • Reduce Green House Emissions by at least 50% 50% by 2050 Reduce Green House Emissions by at least • US Stimulus Bill (2009) US World’s first long term legally bindi long term legally first World’s • construction waste by waste by construction 2020 of household waste and 70% of household waste and 70% of EU Waste Framewor EU Waste All EU countries must recycle 50% 50% must recycle All EU countries • $18bn for environmental infrastructure • $63bn for renewables and energy $63bn for renewables and energy efficiency • Source: IFSL Impax Environmental Leaders Fund: March Fund: 2009 Leaders IFSL Source: Impax Environmental
Liberty International Underwriters Industry Profile Waste to Energy …..the process of creating energy in the form Primarily to reduce the volume of landfill required. reduce the volume of Primarily to waste heat in derived from Secondary product is conjunction with a steam turbine generator: of electricity or district heating from the incineration of waste sources. Purpose: • •
Liberty International Underwriters Waste to Energy Industry Supply and Demand Considerations Source: Confederation of European Waste-to-Energy Source: Confederation of Plants European Waste-to-Energy
Liberty International Underwriters Process Features Waste to Energy Mass Burn-Municipal Mass Solid Waste Derived Fuel Refused Common Processes: • •
Liberty International Underwriters Waste to Energy Process Features – Mass Burn
Liberty International Underwriters Waste to Energy Process Features – Derived Fuel Refuse
Liberty International Underwriters RDF includes process Municipal shredding of Solid prior to delivery to Waste the incinerator multiple RDF requires shredders, handling conveyors and large tipping area extensive RDF incorporates odour control ductwork on tipping, shredding and conveyors Refused Derived Fuel • • • Waste to Energy Mass Burn Industry Profile – Key Process Peculiarities Mass Burn allows Mass Municipal introduction of directly to the Solid Waste incinerator Burn has Mass limited shredders and smaller tipping floor Burn feeding Mass the air requires combustion system little odour control ductwork • • •
Liberty International Underwriters Disadvantages High capital cost requiring continuous utilisation and availability relative power Significant consumption and operational and maintenance expense Mature installations experience process inefficiencies-reliability, corrosion risk Increasing factors associated with ‘integration’ processes Negative public perception towards stack omissions • • • • • Industry Profile Waste to Energy Advantages Fully integrated process-Fully ‘front end’ recycling with Energy (Power) recovery Waste processed at half the calorific value of leading fossil fuel-coal. co-fired with Flexibility: other fuels in a variety of different boiler designs ‘Proven’, available technology at an ‘object’ level pollution control Sophisticated systems continuing to evolve • • • • •
Liberty International Underwriters Waste to Energy Specific Inherent Hazard Wide diversity in terms of mix ‘fuel’ (waste) Metal and flammable explosion risk materials in waste occurring within waste Spontaneous combustion of the refuse holding pit Deep seated fires in waste bunker Loss of fan suction within combustion process can lead to fire spreading back up the refuse chute. machinery, equipment and pipe Deterioration of and corrosive environment from dust work • • • • • •
Liberty International Underwriters Waste to Energy Technical Risk Assessment Financial evaluation of contract parties and Financial evaluation of business plan review •
Liberty International Underwriters Waste Waste Costs Interest Maintenance Transportation Operations and Plant Construction Facilities ing Service Center, California ing Service Center, Waste to Energy Incentives from Waste Tipping Fee Tipping Savings/Revenue Energy Generated Recycling Revenue ‘Renewable’ Energy ‘Renewable’ Financial Factors – Feasibility of Waste-to-Energy The Source: Naval Facilities Engineer
Liberty International Underwriters Waste to Energy Technical Risk Assessment Elevate review of project management and Elevate review of power generation disciplines Integrity of main suppliers and vendors - QA/QC reference plants and establish details of – – Financial evaluation of contract parties and Financial evaluation of business plan review Owner/Operator and Managing Contractor- structure, reporting, expertise Plant design and workmanship considerations: Plant Fire detection/protection Fire at ‘exposed’ process stages • • • •
Liberty International Underwriters Waste to Energy Fire Detection and Prevention –Specific localised fire protection on Shredders –Conveyors carrying combustible material hoppers and feed chutes –Bins, –Boiler fuel systems –Hydraulic systems Fire detection/protection Fire is well designed, in good sustainable maintenance and condition and a support inspection programme in place to Automatic sprinklers to protect: Water cannon over MSW/RDF pits • • •
Liberty International Underwriters Waste to Energy Underwriting Considerations Develop consistent approach to basis of Insurance basis of Develop consistent approach to Valuation Selective and prudent approach to the granting of ‘Defects’ cover Bespoke policy wording considerations to encourage sustaining ‘best practice’ Tailor survey and inspection disciplines ‘service plans’ to address critical recommendations Pro-active involvement in claims handling and post loss investigation • • • • •
Liberty International Underwriters Refuse Derived Fuel to Power Refuse facility since Operational 1989 850,000 tons municipal solid waste per annum Reduces solid waste by 60% for landfill 62MW Generates of power to state grid Fire in conveyor system Cause: • • • • • • Case Study 1 Waste to Energy
Liberty International Underwriters Waste to Energy Fire in Conveyor System
Liberty International Underwriters Refuse Derived Fuel to Power Refuse facility since Operational 1989 365,000 tons municipal solid waste per annum 55MW Generates of power to state grid Ingestion and fire in Cause: Shredder • • • • • Case Study 2 Waste to Energy
Liberty International Underwriters Fire in Shredder Waste to Energy
Liberty International Underwriters Refuse Derived Fuel to Power Refuse facility end of 2008 Operational 500,000 tons municipal solid waste per annum 44MW Generates of power to state grid Cause: Explosion in Shredder section • • • • • Case Study 3 Waste to Energy
Liberty International Underwriters Waste to Energy Explosion in Shredder
Liberty International Underwriters Practical Conclusion Waste to Energy Government incentives guarantee significant and sustainable global investment Greater financial analysis as part of ‘risk selection’ processes is actively encouraged active risk assessment and involvement at Pro design stages can reduce dominant ‘process’ risks on-going risk Encourage ‘partnership’ approach to management and improvement recommendations risk assessment approaches Enhance evolving given changing ‘industry dynamics’ • • • • •
Liberty International Underwriters