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Eqtec ready to tackle UK waste problem

General waste is piling up in the UK, but Eqtec chairman Ian Pearson believes it has an answer
rubbish
A source of electricity

Rubbish and how to deal with it has moved rapidly up the list of government priorities since Michael Gove became Environment Minister.

Plastic has received most of the headlines, but it’s not only here that action is being urged.  General waste, too, is piling up.

WATCH: EQTEC Plc in advanced discussions with major European EPC contractor

From one source - refuse derived fuel (RDF) alone, three million tonnes a year is (expensively) exported to Europe, says Ian Pearson, chairman of waste to energy group EQTEC Plc (LON:EQT).

UK missing targets

The UK has a re-cycling target of 50% by 2020 and 65% by 2035, but a recent report suggested that in spite of all of the tub-thumping from Mr Gove, the UK will miss its targets.

At the moment the country is re-cycling 44% of its waste but even to get up to the minimum levels some radical action will be needed.

This is where Pearson believes EQTEC Plc (LON:EQT) can clean up, both literally and financially.

Pearson is a former environment minister and believes that the time has finally come for power from waste to be viewed as a resource as well as a problem.

Eqtec the middle-man

Eqtec sits in the middle of the waste conversion process.

Its technology enables waste to be converted to syngas – a mixture of carbon dioxide, carbon monoxide and hydrogen - which can then be used to produce electricity for the national grid and usable heat as an energy source.

Municipal solid waste (MSW) and RDF are the main feedstock sources, with the owner of the plant receiving a negotiable ‘gate fee’ for taking the material.

READ: EQTEC set for major expansion through new EBIOSS deal

After gasification, Eqtec hooks up to a General Electric gas engine, they are the most efficient but need a clean source of syngas, or a steam turbine generator that can burn anything, to produce electricity.

It is with the GE engines that Eqtec’s know-how has a real advantage adds Pearson, and this allows the operator a more competitive gate fee.

Pearson joined the group in December following a merger with a Spanish group, Eqtec Iberia that also saw Luis Sanchez become chief executive and Gerry Madden move to finance director.

The merger also brought state-of the–art waste gasification technology, while Spanish firm Ebioss, Eqtec Iberia’s owner, became majority shareholder.

Partnerships the strategy

The strategy going forward is to leverage the technology through a pipeline of potential projects and big partners such as Chinese contractor and engineer Energy China.

Sales revenues are expected to come later this year at projects in Newcastle and Hull and another at Usk in Wales, scheduled for a little further ahead.

Melton Hull will be a 16MW plant capable of treating 120,000 tonnes a year.

Seal Sands near Newcastle, meanwhile, will generate 12MW of electrical capacity and have capacity to treat 72,000 tonnes of waste.

Energy China is funding both projects.

Partnerships like this will be the blueprint going forward says Pearson.

Talks are ongoing with a major European engineer/contractor he says, though no names are being mentioned yet.

By going down the partnership route, Eqtec can minimise its risks, he says.

“We just supply the bit in the middle, the gasification equipment and the ongoing operations and maintenance services.

“We are not taking on the construction risk, the feedstock risk or the Power Purchase Agreement (PAA) risk of the plant operator.”

Risk-aversion

Investors with long memories will welcome this more risk-averse approach as in previous guises Eqtec has had a troubled history.

Indeed, it is still yet to hook-up a biomass plant in Newry to the grid in Northern Ireland, despite planning permission for a wood-fired plant being granted more than eight years ago.

The most recent decision was to switch the feedstock to RDF using the technology brought by Eqtec Iberia.

But a deadline of March set by regulator OFGEM to get the plant operational is fast approaching and Eqtec has already indicated it can use the equipment on other projects if it has to.

Projects such as Pluckanes, a wind turbine in Ireland, have been earmarked for sale.

Waste's time has come

A funding in December raised £1.6mln at a heavily discounted 0.65p per share.

Convertible loan note holder Altair has also agreed to extend the repayment date on £2mln worth of bonds until 2020 in return for warrants, a higher coupon and lower conversion price.

At the time, Sanchez said they marked the company’s re-focus on the energy-from-waste market in the UK and Europe.

Pearson, too, is keen to look forward rather than back.

“We [the UK] need to recycle more and produce more energy. Why send it to Europe when we can deal with waste here in UK.

“Eqtec can be one of the leaders really developing the sector.”

At 1.98p, Eqtec is valued at about £26.7mln.

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EQTEC Plc Timeline

Newswire
January 08 2016

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