Allens advises on Australia's first waste-to-energy facility

Allens has advised on the financing of Australia's first commercial-scale waste-to-energy facility in Kwinana, Western Australia, which has reached financial close.

A separate Allens team advised Macquarie on the acquisition of Phoenix Energy's interest in the project in conjunction with Dutch investment fund, DIF, which has existing interests in the Western Australian renewables sector.

The facility will process a mix of 'red bin' municipal waste and commercial and industrial waste. It is to be delivered under a turnkey engineering, procurement and construction contract with Acciona S.A. and operated by Veolia Environmental S.A.

When completed, the facility will provide capacity to process 400,000 tonnes of waste a year and generate up to 45 megawatts of energy, enough to power 65,000 households.

The project is underpinned by 20-year waste supply agreements with the Regional Rivers Council (on behalf of a group of member local councils), the City of Kwinana and a five-year retail waste supply agreement with Veolia. Electricity and power and green credits generated by the facility will be sold on a merchant basis.

The $700 million project is being developed by Macquarie Renewable Energy Holdings and DIF and is scheduled to reach practical completion by 30 September 2021.

Macquarie has a proven track record developing and funding waste-to-energy projects in Europe.

Financing for the project was complex given the contractual matrix for the various inputs and outputs of the facility, the innovative technology and ground-breaking nature of the deal in Australia. The debt is provided by a syndicate of domestic and international specialist banks and funds, many of whom have experience funding waste-to-energy projects in Europe. The project is also supported by a $23 million grant from the Australian Renewable Energy Agency.

'We are delighted to have advised on this Australian-first waste management and renewable energy project,' said Partner Rob Watt, who led the Banking & Finance team.

'Waste management and productive alternatives to landfill are a key focus for governments and industry in Australia, given rising costs as available land becomes increasingly scarce. Recent technological advancements have led to recognition of the benefits of waste-to-energy.

'This project represents a significant step towards increased diversification of Australia's energy mix and a viable longer-term solution for the treatment of waste,' he said.

'We are excited to have been able to assist Macquarie with such an important development for the waste treatment and renewables landscape in Western Australia,' said Partner Jodi Reinmuth, who led the Equity/Projects team.

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