Three years on

It has been three years since we conducted our inaugural survey into the waste PFI sector in the UK. Back in 2006 the market was on the cusp of the mainstream. The EU Landfill Directive had brought in tough new requirements to reduce the amount of biodegradable municipal waste being landfilled and local councils turned to PFI for the solution.

With the first EU deadline just a few months away in 2010, the issue is back at the top of the agenda. If the UK does not meet the requirements, the country will face an initial fine thought to be around £180 million. If the second and third targets are not met – in 2013 and 2020 – then the estimated fine could rise to £500 million.

PFI push

With this threat looming, the impact of the sustained push in waste PFI since the last survey is clearly visible. In 2006 only a few waste PFI deals had reached financial close. Since then, the sector has flourished. From Cumbria to Sussex, Merseyside, the Midlands, Derbyshire, and London, local authorities throughout the UK are implementing waste projects. Indeed, 2009 even saw the largest such scheme in Europe reach financial close: the Manchester Waste PFI project, which had capital costs of £640 million.

We have taken the opportunity to revisit the topic and assess how commercial interests and opinions about the waste sector have changed with the EU deadline in sight. We interviewed 60 senior figures involved in the waste industry, including officials from banks, sponsors, local authorities and consultancies, to gauge how much feeling – and the market – has changed since 2006.

We have updated some of the questions from the previous survey, such as the drivers and barriers to waste PFI projects, the investment potential in the market and the general appetite for the schemes. The feedback from the industry on the state of the market could not come at a more important time as we approach the EU deadline on waste.

The future of waste PFI - 2009 survey