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Two men overlooking the recyclable packaging on a moving conveyor belt at the Kemsley Paper Mill

Not just hot air

DS Smith, one of Europe’s leading producers of recyclable packaging, wants to meet its energy requirements more efficiently while also decarbonising its operations.

ClientMultiple lenders
ExpertiseWaste management, lenders' technical advisor, technical and commercial due diligence

Opportunity

To help achieve this, the firm has joined forces with Wheelabrator Technologies to develop a combined heat and power (CHP) EfW plant on a site next to DS Smith’s Kemsley Paper Mill in Kent, which produces 800,000t of packaging annually. The 43MW EfW plant will generate renewable electricity for export to the National Grid and steam for processes within the mill, reducing gas demand.

The plant was one of the first group of projects earmarked to receive funding through the contracts for difference (CFD) – a new UK government support mechanism for renewable energy schemes. It’s also the first fully merchant EfW facility with CHP to be delivered using project finance. The lenders needed expert technical advisory support capable of considering these innovations within acceptable risk-profile parameters for the provision of senior debt.

Solution

We provided technical and commercial due diligence, which involved analysing a comprehensive range of risks and provisions, evaluating testing, commissioning, operations and maintenance procedures, technical design, plant solution and EPC delivery, and providing bespoke fuel supply and heat off-take arrangements – all while considering the CFD requirements.

Outcome

The project was awarded its CFD by the former Department of Energy and Climate Change in February 2016, becoming the first UK EfW plant supported by this scheme to reach financial close. When the plant becomes operational in 2019, it will process up to 550,000t of local residential and business waste fuel each year, cutting greenhouse gas emissions by 163,000tCO2e by preventing this waste from going to landfill.

Alongside aiding DS Smith’s decarbonisation plans, this supports UK government efforts to reduce carbon emissions from the manufacturing sector. More than 500 jobs are expected to be created during construction, with the completed plant expected to provide around 40 full-time operational roles. We are providing ongoing construction and operations monitoring services for the lenders.

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