DIF and Macquarie Capital commit $196m to Australia’s first ‘large-scale’ EfW project

The two investors are sharing the equity on a 60-40 split for the 36MW facility south of Perth.

Macquarie Capital and the Dutch Infrastructure Fund have reached financial close on a A$700 million ($497.7 million; €432.8 million) energy-from-waste project in Western Australia, billed as Australia’s first “large-scale” EfW scheme.

The 36MW plant at Kwinana in WA will be funded with A$275 million of equity finance from DIF and Macquarie Capital. The split on the equity is 60-40 in DIF’s favour, a source familiar with the deal told Infrastructure Investor, although Macquarie Capital will still be responsible for the delivery of the project.

To date, the project has been co-developed by Macquarie Capital and Phoenix Energy Australia.

In addition, A$400 million of debt financing is being provided by a syndicate of investors and financial institutions, including a A$90 million commitment from the Clean Energy Finance Corporation in its biggest investment to date in WA. Other members of the debt syndicate include IFM Investors, Investec, Metrics Credit Partners, Siemens and Japanese bank SMBC.

The Australian Renewable Energy Agency, an independent agency of the Australian federal government, is providing a further A$23 million in grant funding.

No other financial terms of the deal were disclosed.

The project has 20-year waste supply agreements in place with Rivers Regional Council, which represents seven local government authorities, and the City of Kwinana, which is south of Perth. It also has a five-year waste supply agreement with Veolia.

Construction will commence this month and the plant is scheduled to open by the end of 2021. It will use Keppel Seghers grate technology to process waste, used in more than 100 projects in 18 countries but a first for Australia.

The facility will divert 400,000 tonnes of household, commercial and industrial waste from landfill each year, representing around a quarter of Perth’s post-recycling waste.

This waste will be used to provide 36MW of baseload capacity to the grid, equivalent to the electricity needs of around 50,000 households and reducing CO2 emissions by 400,000 tonnes per year.

The WA Government has provided land for the facility through a long-term lease from its land and development agency, LandCorp. Acciona has been appointed design-and-build contractor, with Veolia to take over on a 25-year operations and maintenance services agreement following construction.

DIF Australia managing director Marko Kremer said in a statement: “DIF is excited to be involved in the first thermal waste-to-energy project in Australia and [we] look forward to continuing our contribution to the sector going forward.

“European countries have long embraced the conversion of waste to energy and it has proved to deliver multiple benefits in terms of managing waste and contributing to a sustainable and secure energy supply.”

CEFC energy from waste lead Henry Anning added that the organisation hoped to play a role in demonstrating the business case for similar large-scale EfW investments in Australia in future.