20/20 vision
02-MAY-2006
The German waste-to-energy market up to 2020
Germany is facing a capacity shortage of waste-to-energy
plants to deal with high-calorific RDF. PHOTO:
AMANDUS KAHL GMBH & CO. KG
Germany is facing considerably more challenges
than first expected with its new approach in waste management. Since the implementation
of the ban on landfilling in June last year, the country has been seeing an
over-supply of substitute fuels, yet there is not enough waste-to-energy capacity
to handle them.
On 1 June 2005 Germany’s implementation of the EU Landfill Directive came into
effect, prohibiting the landfilling of biodegradable waste and supporting energy
recovery and recycling options. The legislation was expected to lead to landfill
closures as material is diverted for treatment elsewhere. Furthermore, an over-supply
of substitute fuels was predicted. In practice, implementation of the Directive
has been more difficult than expected. Diversion rates have increased, but the
extent of over-supply of substitute fuels in Germany has been underestimated
and the capacity for handling the highcalorific waste is currently insufficient.
As other Member States move forward to divert more waste from landfill, it is
appropriate to examine the German situation in greater detail and consider the
likely path ahead. This article will focus on market issues, while the next
feature will cover other implementation impacts and solutions.
|
‘The extent of over-supply of substitute fuels has been
underestimated’
|
THE EVE OF A NEW ERA
Just before midnight on the eve of the changeover, German waste transport vehicles
were still queuing at landfill sites to dispose of their waste at the best possible
price. For some companies, the rigidity with which the law was implemented came
as a surprise. Put simply, they were not ready. For others, the changeover was
used as a market opportunity. They invested in waste treatment systems and since
then have been relying on a rigid and unyielding implementation of the regulations.
Before implementation, the capacities of MSW plants were not fully exploited
due to cheap competition from landfill. Post-implementation, plant capacities
have been overstretched and treatment costs have risen from €30–50 to €180–200
per tonne due to high demand. Furthermore, MSW plants are only partly qualified
or not qualified at all for combusting refuse-derived fuels (RDF) with a calorific
value of more than about 15 MJ/kg (4.2 kWh/kg). Therefore, the main capacity
problem lies basically in the energy recovery of high-calorific fractions above
15 MJ/kg, which are mainly done in coal-fired power plants and cement kilns.
THE MARKET
Supply and demand
A crucial issue in the successful diversion of material previously destined
for landfill is the time span allocated to market consolidation between supply
and demand for substitute fuels.
On the supply side, the results of the material flow analysis conducted by
trend:research show that 6.1 million tonnes per year of municipal and industrial
wastes with a calorific value higher than 11 MJ/kg (3 kWh/kg) require thermal
treatment, but are temporarily stored or are exported due to insufficient capacity.
From those, 2.2 million tonnes annually come from high-calorific fractions from
household or similar trade waste from mechanical–biological treatment (MBT)
plants, and 2.6 million tonnes per year are recyclable commercial waste. The
remaining amounts come from plastic waste and light fractions that are not recycled.
The expected amounts of these waste streams up until 2020 are shown in Figure
1.
Demand for high-calorific wastes is limited. Currently, there are about 2 million
tonnes per year that go into energy recovery. The majority of waste fractions,
about 2.8 million tonnes up to a calorific value of about 15 MJ/kg (4.2 kWh/kg),
are being directed to MSW plants. These are reaching their capacity limits.
Trend:research study
The 858-page study completed by trend:research ‘Waste-to-energy 2020:
Markets, capacities and development potentials’ examines the material
flow within the entire value chain and price development for the substitute
fuels RDF, bone meal, sewage and paper sludge up until the year 2020.
The study uses extensive data from 154 qualitative interviews with experts
in resource recovery and disposal, as well as with transport companies,
consultants and associations. The analysis of this data, in addition to
theoretical groundwork and practical considerations, provides market data
for possible scenarios based on a set of given premises. The study offers
a comprehensive description of these scenarios, along with the necessary
prerequisites for market players and experience-based know-how from other
market sub-branches.
|
Actual capacities for co-incineration (such as in conventional power plants
and cement kilns) have been much smaller than previously thought, especially
in the high-calorific range of 20–30 MJ/kg (5.6–8.3 kWh/kg), adding to the shortfall
in treatment capacity. This is a result of several critical factors, such as
an insufficient amount of high-quality treated waste fuels available on the
market, the resulting technological difficulties, and the limited co-incineration
of substitute fuels by certified fly-ash (EN 450) for the production of concrete.
Current trends indicate that the overall volume of highcalorific waste available
for energy recovery in Germany is decreasing due to the decline in the country’s
population. In addition, the overall volume of industrial waste is steadily
decreasing due to the relocation of production sites abroad and the increase
of material recycling. The main capacity increase from the start-up of RDF plants
will occur in 2008 and this will ease the over-supply of substitute fuels, particularly
on the midcalorific level.
CHP in Stavenhagen, Nehlsen
Food production is energy-intensive. From August 2007, the waste management
firm Nehlsen will supply the potato products giant Pfanni with steam and
electricity from waste-derived substitute fuels. It is the first combined
heat and power station of this kind in Mecklenburg-West Pomerania in north-east
Germany.
|
 |
Price development
The prices for thermal treatment of substitute fuels from high-calorific fractions,
sewage sludge and paper sludge initially increased after the implementation
of the EU policy. The prices are expected to reach their highest level in 2008
and will then decrease again until 2020. The market participants interviewed
by the market research institute trend:research doubt that the base level of
2005 will be reached again.
The Pirmasens WTE plant in western Germany combusts
waste to produce heat and electricity.PHOTO: SOTEC GMBH
From 2008 on, a growing number of RDF plants are expected to go into operation
(such as Stavenhagen, see box). Initially this will achieve high revenues from
thermal treatment fees, especially for high-calorific fractions from MBT plants;
however, it will also increase the demand for substitute fuels and thereby decrease
treatment fees in the long term. The thermal treatment fees for meal and bone
meal will in parts decrease to zero or even reach sale price range. The prices
for mature timber continue to be moving within sale price range.
|
Actual capacities for co-incineration have been much
smaller than previously thought
|
Figure 2 shows the development of the average revenues for substitute fuels
in Germany.
Market development
Inside a WTE plant at Neunkirchen, western Germany.
The plant also produces heat and electricity.PHOTO: SOTEC GMBH
The considerable changes in Germany's waste-to-energy market since June 2005
have led to uncertainties particularly for waste management contractors. Initially,
there will be a significant increase of the market volume for waste-to-energy.
This increase will reach its highest level of half a billion euros per year
in 2010. Subsequently, the market volume will be reduced once more due to decreasing
prices for substitute fuels and decreasing production of sewage sludge and RDF.
Development of the market volume for waste-to-energy is shown in Figure 3.
The market for waste-to-energy in Germany will be dominated by the thermal
treatment of sewage sludge. The reasons for this lie in the relatively high
thermal treatment fees that can be charged and the high amount of water in mainly
mechanically dehydrated sewage sludge.
WASTE EMERGENCY?
The oversupply of substitute fuels is of much greater significance than previously
expected. A number of people are questioning how successful implementation has
been. Opinions are already being voiced on a political level that landfill sites
should be re-opened; however, this would be a punishment to those who have prepared
themselves for the changeover. The Federal Government continues to demand rigid
compliance with the regulations and, according to official statements, is not
acknowledging 'an existing waste emergency in Germany' apart from in the short-term
transition phase. This requires close and immediate attention.
Dipl.-Ing. Tilmann Greiner is Head of Environment
and Waste Management, trend:research GmbH, Bremen, Germany.
e-mail: greiner@trendresearch.de
|
Germany's waste-to-energy market will be dominated by
thermal treatment of sewage sludge
|
Add RSS Feed