The North London Waste Authority (NLWA) has announced that it will it not be proceeding with the procurement process for waste services and fuel use contracts for north London, and as such, will not be appointing either of the remaining bidders as selected bidder.

Thought to be worth between £3.5 to £3.7 billion over 25 to 30 years, the contracts were to cover waste collection and fuel from residual waste for the seven NLWA boroughs: Barnet, Camden, Enfield, Hackney, Haringey, Islington and Waltham Forest. Originally intended to run from 2015, the final bidder would have been expected to dispose of approximately 846,000 tonnes of municipal waste per year (rising to over one million tonnes due to housing growth). The fuel contract would see any residual waste then turned into solid recovered fuel (SRF).

Following the withdrawal of Veolia from the procurement process, the only remaining bidders were FCC/Skanska for the waste collection contract and E.ON/Wheelabrator Technologies for the fuel contract.

However, at a meeting yesterday (26 September), the NLWA decided against continuing the procurement process as it believed ‘an alternative strategy’ could provide a ‘significantly cheaper solution for managing north London’s waste’. The decision was reached, it said, due to the ‘extreme pressures on local authority finances’.

Alternative strategy details

According to the authority, the body could save up to £900 million over 27 years by pursuing an energy recovery outlet in the Upper Lee Valley, instead of following through with the procurement process (however, this figure will depend on the authority’s final approach to any alternative strategy, including its approach to funding). It is thought that this option would also allow the authority ‘greater flexibility in developing plans to manage north London’s waste in the long term’.

Chair of the NLWA, Councillor Clyde Loakes, said that the change in tack came after seeing that local planning authorities were looking ‘more favourably’ towards energy recovery plants. He explained: “Over the last year, a number of changes have taken place that have necessitated this decision. The adoption of two key planning policies this summer – Enfield’s Edmonton EcoPark [pictured above] planning brief in May and the Mayor’s opportunity area planning framework for the Upper Lee Valley in July – have confirmed that the planning environment is now much more favourably disposed towards an energy recovery solution for residual (non-recyclable) waste than at the outset of the procurement process in 2010.

“As a result of some additional work, including a review of the existing energy from waste (EfW) facility, it has become apparent that a significant reduction in the cost of residual waste treatment could be achieved if the authority pursues an alternative strategy based on energy recovery.”

Edmonton EcoPark is managed by London Waste Ltd, a wholly owned subsidiary of the NLWA.

U-turn was 'unexpected'

The NLWA said that the decision was not made on the ‘performance or contents of the bids’ it had so far received, but was based on ‘changing circumstances’.

“The authority is grateful to bidders for their hard work and commitment to its procurement process”, said Loakes. “We must emphasise that this decision in no way reflects on the quality of the bids received or the commitment of bidders themselves but rather represents the authority having stepped back and reassessed its options to find a less expensive solution to its waste management.”

FCC Skanska has expressed its disappointment at the decision by NLWA to collapse the procurement process for its waste services contract.

Commenting on the decision, a company spokesperson said: “Despite the delays in the procurement process the NLWA had consistently led us to believe that this was an affordable and deliverable project. As a result, this late U-turn was unexpected.”

A spokesperson for E.ON also voiced disappointment, saying: “We're obviously extremely disappointed that the North London Waste Authority has decided to cancel this procurement at this late stage.

“However, the North London procurement formed one part of a fuel solution for a Combined Heat and Power plant at the Kemsley mill site in Kent. We will continue to seek appropriate alternative fuel to source for this fully consented facility.”

Recycling targets remain

Despite the change, NLWA will still have to plan for providing capacity for managing the 850,000 tonnes of waste collected by the seven constituent boroughs every year as it will still has to meet its targets of increasing recycling to 50 per cent and reducing landfill to 35 per cent of 1995 amounts by 2020.

This will be considerably harder without a specific recycling strategy, as figures released earlier this year showed that the recycling rate for the north London boroughs stood at 32.9 per cent between April and June 2012. This figure prompted the NLWA to release a statement saying that the area will need to ‘almost double’ the figures if targets are to be met.

Further, north London authorities are bound by the Mayor of London’s target for local authorities to manage the equivalent of 100 per cent of London’s waste by 2031 (instead of sending it out of the area for processing).

NLWA has said it will continue to use the existing EfW facility at the Edmonton EcoPark, which, ‘with some capital investment’, could remain operational until ‘at least 2025’. It will then revisit its energy recovery strategy.

A new strategy will be developed with constituent boroughs based on an energy recovery solution for residual waste, with ‘the opportunity’ to continue to make electricity available to the national grid and ‘potentially make heat available to local residents and businesses in the Edmonton area in the Upper Lee Valley’.

NLWA has urged that although a greater proportion of the area’s residual waste will go to Edmonton in the long term, it is ‘not expected’ that the Edmonton site will receive any more waste than is currently permitted.

Read more about the NLWA procurement.