More evidence that Europe is advancing more rapidly than other regions on the environmental front: It is the largest waste-to-energy plants market in the world, with well-developed infrastructure and more than 429 such incinerator facilities, according the London research and consulting firm Frost & Sullivan.
A new analysis from Frost, trenchantly titled European Waste to Energy Plants Market, also finds that this market earned revenue of 3.1 billion euros ($4.4 billion) last year.
The European Union’s push to shift away from landfills through its Landfill Directive “has indirectly helped the waste-to-energy business,” the report says. It has resulted in the planning and commissioning of many waste-to-energy plants over the last five years.
“The most important driver for the waste-to-energy plants market in Europe has been the Landfill Directive and its waste diversion targets,” says Frost & Sullivan Research Associate Karthikeyan Ravikumar, who wrote the analysis. “This has resulted in the diversion of waste from landfills to waste-to-energy plants.”
But in spite of the growth potential that this market offers, the number of players involved “is quite restricted,” Ravikumar says.
For one thing, delays in obtaining environmental and other permits have restrained the growth of the market, she explains. This is due in part at least to the high level of technical expertise required, especially in the design phase of the plant.
Also pricing, references, finance, local knowledge and the ability to offer complete turnkey solutions “have been other key features that separate the key players from the rest.”
“The process of obtaining an environmental permit for the construction of a waste to energy plant is quite tedious and a substantial amount of time is spent on it,” says Ravikumar. “The delay affects the price of raw materials and, thereby, the overall revenues.”
The recession and the resulting decline in investment in this business will influence the prospects for market expansion, and is also affecting plants currently in the planning stage and looking for financing.
France and Germany have the largest number of waste-to-energy plants. Those plants have facilitated the effective treatment of waste diverted from landfills, enabling these countries to reach landfill diversion targets.
In addition to the Landfill Directive, the growing demand for power, paralleled by volatile oil prices, has made waste to energy plants a viable alternative for the disposal of waste, the F&L report says.
It’s also a highly competitive business that has seen players come and go and extensive consolidation since 2002.
A major development on that front is the emergence of the Austrian Energy & Environment Group as the dominant waste-to-energy participant through acquisitions in 2003, 2005 and 2007, including the Swiss-based Vo Roll Inova, Alstrom’s industrial boilers and plants division in Germany and the Czech Republic, and the German plant engineering company Lenties.
Mergers and acquisitions have decreased the number of players involved in the waste-to-energy plants market and have led to market consolidation. F&L found that the top three operators control about 71 percent of the market.
That high level of consolidation indicates a mature market and the likelihood of even further market concentration among the major players.
There’s big money in this and there are some lessons for North America there somewhere.