End of Life: Rebuilding, renewing, replacing – what is financially viable?

Chris Winward, commercial director at Privilege Finance, recently shared his thoughts on the emerging and significant opportunity to invest in extending the life of ageing AD plants at the ADBA National Conference 2019.

Back in the early 2010s, there was a wave of new AD development projects, as investors and developers became aware of the opportunity to use agricultural wastes to generate green gas or electricity. The launch of Renewable Heat Incentive (RHI) funding, Feed in Tariff (FiTs) and Renewable Obligation Certificates (ROCs) supported the initiation of new projects. These tariffs ensured a guaranteed income for AD plants, helping create a viable business model for investors and developers.

Looking forwards, many of the AD plants built during the development boom at the start of the decade will be reaching the end of their operating lifecycle in the next 14-15 years. Privilege estimate that at least 279 AD plants will reach end of life by 2034.

However, as part of developing a circular economy it is imperative that the industry takes a longer-term view with regards to revitalising the existing infrastructure, rather than being limited to building from scratch. Significant resources have already been used to develop these plants that are now approaching end of life, but there is still huge potential for investment in these plants, as replacing and renewing equipment could extend total lifespan to 30-40 years.

As with many industries, there has been significant progress in the technology available over recent years. Replacing outdated equipment with new, more efficient technologies can simultaneously improve performance and extend the overall lifespan, meaning plants will generate more renewable energy, profitably, for longer.

Recapitalising in this way could enable sustained production of financially viable renewable energy, much of which is generated using waste as feedstock, to contribute towards reaching UK net zero targets.

Chris Winward