Brexit factor at Baldovie

Candidate bidding for energy-fromwaste contract monitoring impact of EU exit vote

The pound’s plunge has put a question mark against the proposed £100 million energy-from-waste (EfW) project at Baldovie to serve Dundee and Angus.

The UK’s vote to leave the European Union and the resultant weakening of sterling has made the German-owned firm bidding to build and operate the plant pause for thought.

The MVV Energie Group is “closely monitoring” whether Brexit will impact on its business.

MVV Environment has two UK plants – at Devonport Docks in Plymouth and Ridham Docks biomass plant in Kent.

It is the only firm being considered to handle the 20-to 25-year residual waste treatment deal with Dundee and Angus due to begin in January.

Three other bids – from Amey, Suez and Veolia – were also evaluated but they have dropped out of the process.

MVV Environment has taken its interest as far as submitting a proposal of application notice to Dundee City Council to redevelop the site in the north-east of the city.

In its latest trading update, the parent group said: “We are closely monitoring whether and how the decision taken by the British population to leave the European Union will affect our UK business.

“Any medium-term weakening in the British pound would reduce the earnings of the MVV Energie Group in euros.

“Implications are also conceivable in terms of interest rates, commodities, demand levels and the regulatory framework.

“Developments will depend on the specific structure of the exit agreement reached with the EU.

“We currently do not expect the Brexit decision to have any significant influence on the development in key waste and waste timber prices.”

Paul Carey, managing director of MVV Environment, declined to elaborate on his German parent group’s statement.

MVV Environment has presented its plans at two rounds of public consultation in the area surrounding Baldovie, and hopes to submit a formal planning application to the city council next month.

The UK company is a subsidiary of MVV Umwelt (German for environment), and in turn part of MVV Energie based in Mannheim.

MVV Umwelt operates six EfW and biomass plants, managing 1.6 million tonnes of waste a year.

With consolidated sales of 3.6 billion euros and around 5,900 employees, MVV Energie AG is Germany’s largest publicly listed municipality network.

The proposed £100m Baldovie contract would see the construction of a new EfW plant for residual waste – debris left over after recycling – to meet the disposal needs of Dundee and Angus.

The plant would have the capacity to treat the 100,000 tonnes of residual waste the two council areas produce each year.

The present incinerator site, which has processed the city’s waste since 1994, is operated by Dundee Energy Recycling Ltd (DERL).

It was closed for 18 months after a serious fire in 2012 which plunged DERL £5m into the red.

A major rebuilding and £8m upgrade restored DERL’s fortunes, and in 2014 the firm made a pre-tax profit of £1.1m from a turnover of £9.6m.

Productivity soared and the amount of waste diverted to landfill reduced from the process that incinerates rubbish and converts it to energy for the National Grid.

DERL did not seek to renew its contract at Baldovie, clearing the way for a new player to enter the field.

Producing energy from waste involves burning the rubbish at high temperatures.

MVV is proposing to use the latest technology to incinerate the residual waste by a system that makes less noise than the existing plant, releases cleaner air and allows less odour to escape.

The firm says it will produce costeffective and environmentally friendly and sustainable heat and electricity for the adjoining Michelin factory, one of Dundee’s biggest employers.

The tyre factory’s need for fossil fuel would be reduced and its viability would be enhanced.

The German-backed operation would create 20 permanent jobs.

It would also support 70 posts indirectly and another 300 during the construction phase.

MVV believes the development will help Dundee and Angus councils meet their commitment under the Scottish Government’s Zero Waste Plan – a vision for a society that produces no waste.

We are closely monitoring whether and how the decision taken by the British population to leave the European Union will affect our UK business. GROUP STATEMENT