Alter Nrg believes that the WTE market provides a near-term opportunity to build gasification projects which can create positive cash flow for the company by eliminating waste and creating energy (electrical power or syngas).
Waste to Energy -
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 Hitachi Waste to Energy Facility Located in Utashinai, Japan, opened in 2003. Uses WPC plasma gasifiers. Photo courtesy of Hitachi |
The WTE market has the following attributes:
Strong Returns
Based on internal projections, preliminary pre-tax returns on equity are greater than 30% with long-lived (30 year) cash flow, and a capital investment of $105 million for a moderately sized 500 tonne per day facility.
Strong Market Fundamentals
The supply and demand situation in Ontario, our first Canadian target
market, is changing rapidly. Currently, approximately four million tonnes per year (approximately one third of Ontario’s waste) comprising 1.3 million tonnes per year of municipal solid waste (“MSW”) and 2.7 million tonnes per year of industrial, commercial and institutional waste (“IC&I”) is being sent to the U.S. for disposal.
The three key Ontario municipalities responsible for the MSW being sent to the U.S. have agreed to stop transporting their waste to the U.S. by 2010. The U.S. is actively considering closing the border to all Ontario waste. As a result, there is limited existing landfill capacity in Ontario and a growing public reluctance to approve new landfill sites.
Diversified Risk
Tipping fees and energy sales provide roughly equivalent revenue streams for a WTE facility. The viability of a WTE project is therefore partially insulated from decreases in energy prices. Alter Nrg expects Ontario tipping fees to increase over the next four years because disposal of MSW in Michigan will be eliminated. If the U.S. stops accepting other forms of waste from Ontario, we think tipping fees will increase further.
Environmentally Responsible
We believe that plasma gasification is an environmentally superior method of treating waste since it has fewer emissions, generates non-hazardous by-products and generates more energy per tonne of waste processed than other technologies such as incineration. CO2 emissions from a gasifier have less impact from a greenhouse gas perspective than methane emissions from landfills. In addition, landfills have an associated long term environmental liability, usually measured in terms of many decades, that are not associated with WTE facilities.
Regulatory Support
The Ontario Ministry of the Environment enacted legislation (Regulation 101/07) in March 2007 to significantly reduce regulatory hurdles for the implementation of WTE facilities which are anticipated to reduce project approval timelines once project sites are identified.
Commercially Proven
The WPC Technology has been commercially proven by Hitachi Metals Ltd. in its
Japanese WTE facilities. These facilities have been in operation for approximately five years.
Potential Opportunities
The Corporation has advanced discussions with waste management companies and municipalities that are interested in our solution to the waste problems in Ontario.
Strong Growth Potential
Japan thermally treats over 75% of its waste while the 25 members of the European Union treat over 20% with some member countries treating over 40%. We believe that there is the potential for rapid market growth in Canada where less than 3% of waste is thermally treated.
