Today's news of a drop in the gate fees UK Ad Plant operators are being paid by those seeking to dispose of their organic waste is not good news. However, the price given for 2011 seems to be (at £50/tonne) remarkably high. With gaste fees for composting in the region of £20/tone to £30/tonne I am not sure why the waste disposers were choosing to pay what would appear to me to have been a substantial premium to send their waste to an AD plant. That makes me suspect that those producers most likely had another reason for paying AD plant rates, and that the point of saturation for such AD plant clients has now been exceeded.
So, my personal view for what its worth, is that the market rate is probably going to stabilise around this lower level, which is a much better reflection on what the market will stand now that there are so many more UK AD plants in operation.
We have included an extract from the original blog below, but please do also visit the Let's recycle blog article for the full story, using the link provided at the bottom of this article:
"Gate fees for food waste sent to anaerobic digestion facilities have fallen ‘significantly’ since early 2011, with some areas seeing price drops of between £15-£25 a tonne, according to operators.
A market report produced by re3, the waste partnership of Bracknell Forest borough, Reading borough and Wokingham district councils and waste contractor Waste Recycling Group, found in March 2012 that gate fees per tonne of food waste for AD and in-vessel composting facilities (IVC) had fallen by as much as £15 over the preceding 12 months, from around £50 in 2011 to £35.The partnership is investigating gate fees with a view to possibly introducing food waste collections.In its report re3 said: “The price of food waste processing has fallen quite significantly over the last year. It seems unlikely that it could fall too much further as demand and capacity will increasingly relate to one another.”
CapacityOperators of AD facilities across the UK confirmed that prices have been falling and told letsrecycle.com that a number of factors have contributed to this, most notably a growth in the number of AD facilities and an excess of AD capacity.Harry Waters, commercial director at Oxfordshire- based organic waste processing firm Agrivert, which processes around 35,000 tonnes of waste at its Cassington AD facility, said that growth in processing capacity has lead to greater competition in the market, with operators keen to keep prices low to win contracts.He said: “If you go back two years there was very little capacity in the market, operators could charge what they liked and this reflected the risk they had taken as early movers in the market. The market has now seen downward pressure on prices as a further 20 or so plants have become operational in the last 18 months. Although it is growing swiftly there is now a balance of supply and demand which has kept gate fees at a more palatable level for the consumer.”And, Mr Waters noted that two years ago a gate fee of around £60 could be expected for a tonne of food waste, but increased competition had driven this down to between £35-£45.This suggests that predictions made in WRAP’s annual Gate Fees Report in July 2011 that gate fees would continue to fall, having dropped by around £13 per tonne on average, have proved to be correct (see lestrecycle.com story).
EfficiencyMr Waters also commented that a number of larger scale AD facilities coming on-stream have allowed some operators to run plants more efficiently, leading to further falls in pricing still. He said: “Economies of scale are critical to AD. Some of the downward movement in gate fees can be attributed to larger plants delivering operational efficiencies.”Other operators have echoed this view, commenting that the pressure for some operators to fill large capacity facilities are pulling gate fees down. One said: “There is downward pressure on prices due to supermarket demands. Two large operators have built big plants and have not got the waste.”Helen Franklin, managing director of Lower Reule Bioenergy in Staffordshire, said that an influx of new facilities had seen the market become more competitive, but she did not expect it to be a long term trend. Speaking to letsrecycle.com, she said: “What we are seeing is a blip, caused by lots of facilities coming online and people competing for the clients and clients looking for the cheapest offer. We have almost certainly seen gate fees come down, our facility has been affected by another plant opening nearby.”
ScotlandMeanwhile in Scotland, operators have noted that prices have fallen due to local competition in the country’s central belt, although this is expected to stabilise when laws introduced by the Scottish government banning biodegradable municipal waste from being sent to landfill come into effect.Nick Browne, who oversees organics recycling for waste management firm Biffa, which has the 120,000 AD facility at Cannock Chase, Staffordshire, the largest in the country, agreed that the market is competitive but said that there is still opportunity for growth within the sector.He said: “The market is competitive but there is still plenty of food waste and as more councils go down the road of separating out food waste we will start to see an impact on demand. The AD industry is growing, but with fewer parties than originally expected, a lot of facilities received planning permission but did not progress any further due to the recession, for those that do build there is an opportunity as there is a lot of food waste out there.”...letsrecycle.com"
We would be delighted for our readers to chip and tell us what their view is on the all important discussion of gate fee prices for AD feedstock organic waste materials.