The core dogma of manufacturing is something most will be familiar with. Inputs are bought, materials are processed, and the outputs are then sold, hopefully at a profit. Not so in the world of waste and SRF, where inputs attract an income and outputs are associated with costs. A muddled place where assets have become liabilities and vice-versa. Let us talk you through it.
BackgroundSolid Recovered Fuel (SRF) is produced from municipal solid waste (MSW), aka black bin waste or Commercial and Industrial waste (C&I). MSW is stripped of all recyclables, eg. plastics and glass, to produce a lower quality fuel: Refuse Derived Fuel (RDF). This RDF is typically used in Energy from Waste (EfW) plants.
Alternatively, the calorific value (CV) of RDF can be increased by drying. The result is a fuel of an SRF standard which is used as a co-fuel. This can be in the power or steel industry but also in the sensitive kilns used to produce cement.
Higher quality SRF is obtained, without drying, by omitting less homogeneous MSW or precisely funneling feedstocks.
The table below shows some of the key characteristics of SRF, such as chlorine content and particle size.
Current Financial Situation
As a financial model, SRF production is “back to front”. The “raw material” or feedstock is supplied with a gate fee and hence represents an income stream for the receiver. Despite its value as a fuel, the output, RDF/SRF is then disposed of at a cost, as the market views landfill and its associated costs as the only alternative destination for this feedstock. As a result off-takers, such as the cement industry collect money to use it. The financial model here is optimised by charging the highest gate fees possible whilst seeking the lowest disposal costs obtainable. Despite its counter-intuitive nature, maintaining the spread between input revenues and output costs ensures overall economic viability.
Future Financial Situation
Many expert speakers came together a the 2017 Energy from Waste conference in London to discuss the current actualities and future developments in the field. A perceived change in attitude from the cement industry was of particular interest. SRF is coming to be accepted as a valuable fuel source rather than as waste “to be disposed of”. Warmly welcomed by the SRF industry, it signals a new reality for the cement producers. Whilst we do not expect the cement industry to pay for all its inputs anywhere soon, they may veer towards a no cost strategy. The AFE team can assist with all your investment appraisal requirements.
(left) Alpha-Financials Team visits an SRF plant in Swindon
(right) Removal of recyclates from the feedstock.
Email us now or call on +44 (0) 118 934 94 87 to discuss any of the issues mentioned or omitted.
Read here the Nov 2017 Eunomia launch Code of Practice on RDF