Shanks Signs Deal Worth 750 Million Pounds for U.K. Waste Plant

Shanks Group Plc (SKS), a U.K. waste management company, signed a deal with a local council worth about 750 million pounds ($1.2 billion) to build a treatment plant in the country’s north that will include a facility to turn trash into electricity.

The 25-year contract with Wakefield Council has been funded by the U.K. Green Investment Bank and a group of institutions including Barclays Bank Plc, BayernLB Holdings AG, and Sumitomo Mitsui Banking Corp., according to a statement on the website of Milton Keynes-based Shanks today. It will recycle waste, generate energy from waste and produce compost.

Businesses and organizations are being motivated to find alternative methods to dispose of waste after the government brought in a landfill tax that makes it increasingly costly to bury trash. The tax that started in April was 64 pounds a ton and it’s set to increase by 8 pounds-a-year until at least 2014.

The facility at South Kirkby includes a 3-megawatt anaerobic digestion plant. It will process organic waste into biogas that can then be used for renewable energy generation. This will power the treatment plant itself and feed electricity into the grid. It’s expected to produce enough clean energy for about 3,000 homes, Shanks said in the statement.

Britain’s Green Investment Bank, which officially started on Nov. 28 with an initial 3 billion pounds of capital, has identified about 6 billion pounds of bioenergy projects. The bank already has provided 100 million pounds to Drax Group Plc (DRX) to help fund its plan to convert the nation’s biggest coal-fired power plant to burn wood pellets.

Building of the plant will begin in March, and the facility is expected to start working in the second half of 2015, Ian Goodfellow, Shanks U.K. managing director, said today by e-mail. The capital cost of the project is about 125 million pounds. Shanks is providing 25 million pounds of equity, he said.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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