uk ad & biogas 2016: day two green seminar 7 july

UK AD & BIOGAS TRADESHOW

6-7 JULY 2016NEC BIRMINGHAM

FINANCE – WHAT FINANCE OPTIONS EXIST FOR NEW AD DEVELOPERS, AND HOW CAN EXISTING PLANTS RE-FINANCECHAIR: RUTH MURRAY, PARTNER HEAD OF ENERGY AND WASTE, ASHFORDS LLP

HITEN SONPAL, HEAD OF SPECIALIST SECTORS, LOMBARD GREEN ENERGY

ANNE LALEMAN, DIRECTOR, ALPHA-FINANCIALS ENVIRONMENTAL

RICHARD BARKER, ADVISER AND INVESTMENT COMMITTEE MEMBER, IONA CAPITAL

FOLLOWED BY OPEN DISCUSSIONPHIL KENT, DIRECTOR, GRAVIS CAPITAL PARTNERS

ASHFORDS LLP Legal advisers to the Energy and Waste Sector

Session Chair – Green Seminar Day 2

Ruth MurrayPartner, Head of Energy and Waste

Ruth is a Projects lawyer and leads teams delivering a range of energy projects including AD, solar and biomass. The team has advised on the successful financial close of numerous AD projects with a capex value in excess of £100million.

r.murray@ashfords.co.uk+44 (0)1392 333857

Finance - what finance options exist for new AD developers, and how can existing plants re-finance?

ASHFORDS LLP Legal advisers to the Energy and Waste Sector

Property risks

Grid connection

Third party rights

Feedstock

Technical due diligence

Financial model assumptionsTechnology Risk

Planning Risk

Offtake solution

Operator

Insurance

Bankabil-ity

Hiten Sonpal Head of Specialist SectorsRenewables | Manufacturing | Agriculture | Commercial Transportation

Lombard, Green Energy Finance

Lombard Green Energy Finance Team

Who are we?

Lombard’s take on Renewables

Dedicated Green Energy Finance Team

Supporting UK SME’s & Mid Corporates in reducing energy costs

Over 1,700 green energy deals transacted in the last 24 months

2015 funding – £102M (2014 – £88M)

Total lending in sector of £0.5bn

Technologies supported for funding

– Wind turbines (on shore)– Anaerobic digestion– Combined heat and power – Air source/ground source heat pumps– LED– Biomass– Solar PV – roof/ground mountedLombard is committed to supporting the green energy market and is looking to continue growing our lending in this sector to support the Corporate and SME markets

Security may be required. Product fees may apply

Lending policies

Serviceability will need to be demonstrated from existing activities

Lombard will include 50% of projected FIT/RHI/ROC for all technologies

Funding can be provided in to an SPV with a cross company guarantee of a trading business which demonstrates serviceability

All associated assets would need to be verified internally by Lombard’s asset management division

Lombard do not usually require land or building security

Solar PV Biomass boilers and

Air Source Heat Pump

Wind Anerobic Digestion

LED Lighting

Term 7 Years

Term7 years

Term 7 Years

Term3 Years

Deposit10% + VAT

Refinance of green energy technologies

For projects originally funded out of cash flow cash could be released to fund other renewable projects or be reinvested in to the core business

For projects funded from VC or expensive asset finance this could be replaced with cheaper Lombard funding

For projects funded against land and building security this security could be released to be used for expansion or working capital etc.

Benefits to the customer

Refinance of green energy technologies

No construction risk and early ‘teething’ issues avoided

Actual track record of performance as opposed to projections

Funding assets that are likely to be attracting a higher level of Government incentive (FIT/RHI) than a new project

Benefit to Lombard

Raise up to the lower of NBV or original invoice price less appropriate depreciation

Max term to match that of a new project

For more information

Hiten SonpalHead of Specialist Sectors - LombardRenewables | Manufacturing | Agriculture | Commercial Transportation

Mobile: 07795801414Email: hiten.sonpal@lombard.co.uk

Alpha-Financials Environmental

Where Environment and Finance Meet

ADBA July 2016 - stand H601www.af-enviro.com

Alpha-Financials EnvironmentalWhere Environment and Finance Meet

Inflation Rate

Inflation Rate Too low

Inflation Rate Too low + 1.13 %

Taxation

Taxation Too high

Taxation Too high + 0.14 %

RHI error

RHI error Parasitic incl.

RHI error Parasitic incl. - 3.75 %

District Heating

District Heating Not included

District Heating Not included + 3.54 %

Alpha-Financials Environmental

Where Environment and Finance Meet

Financing and Refinancing Environment

ADBA Show 7th July 2016

Generating absolute returns from BioEnergy Infrastructure

One page ... only … on Iona Capital• Founded in 2011 by an experienced team of renewable

energy, waste industry and private equity specialists.• Focus on Bioenergy sector in lower risk ‘Infrastructure’

projects with unleveraged project returns of circa 13-15% p.a.

• Currently manages c. £200m under management, with funds coming from Local Authority Pension Funds

• Has invested in 14 AD projects – both food waste and farm AD, from 250kW to >3MW equivalent including 4 gas to grid.

• Also invested in Advantage Biogas, O&M provider to the AD industry and 4 other biomass opportunities

… OK … I lied …. there’s two pages

A bit of context ... still a young industry

With patchy, but improving performance

Funders segmentation view

Food waste AD

Farm AD

Small scale Large scale

Owner operator Professionally managed

• Project finance/ new build

• Refinancing• Non-recourse• Recourse• Full finance • Partial finance (e.g.

equipment lease)• ESCO models

Entering an interesting phase• Limited new builds given incentive economics• Food waste AD consolidation phase

• Questions over sustainable operational performance and food waste availability

• Focus on realistic asset pricing – given gate fee impacts• Probably a protracted period

• Farm AD beginning refi phase• EIS/VCT • Post project completion and timing of re-finance• Asset value and loan to value

Funders like ‘good’ counterparties

• Strong business model which is difficult to ’break’ …feedstock supply, quality of earnings etc..

• Proven reputation/ operational track record

• Experience and capability• … and security …

Funding available/ funder types

• Private equity (e.g Iona)• Mezzanine debt • Bank loans (and evolving market with a

focus on refinancing)• Equipment finance• ESCO• Combination of the above …

Conclusion• This is a tricky sector for funders … compared

to others• Focus on what ‘good’ is and means• Its all about track record, performance and a

robust operational model• IRRs, NPVs, DCRs, LTVs and other TLAs reign• Be realistic about your plant, its performance

and hence how much funding will be given, in what form(s) and at what time

Gravis Capital Partners LLP

ADBA – AD FinancingJuly 2016

Summary – Opportunities and Threats for AD financing

New AD development Re-financing existing AD

Opportunities

Threats

RHI / tariff guarantees;

Direct supply of electricity and / or heat;

Alternative digestate uses?

Capital seeking homes;

Existing accreditations are of value;

Portfolio deals;

Fall in electricity export subsidies;

Food waste availability;

Sustainability criteria;

EIS money no longer available;

Electricity price decreases;

Pricing / leverage expectations;

Operational track record;

Contract structures and counterparties;

New AD DevelopmentOpportunities exist subject to the outcome of the RHI consultation, feedstock strategies and / or accessing additional sources of revenue

RHI tariff guarantees are key to providing certainty in a post-consultation world (e.g. risks of closure of the non-domestic scheme);

Highly competitive feedstock markets, in particular food waste in certain geographies. Drives ‘captive’ feedstock strategies;

Access to direct line electricity / heat offtakes allows retail (rather than wholesale) pricing;

Possible longer term opportunities in alternative uses of digestate (e.g. fertiliser products);

Other uses of bi-products of AD process (e.g. CO2 as part of G2G AD)

Primarily equity finance with some ‘higher risk’ debt available at a premium margin. Lack of traditional PF lower cost debt due to scale and risk profile

Refinancing existing AD‘Optimising the capital structure in recognition of the particular circumstances of an asset or group of assets’

Certainty of underlying asset cash

flows (capex / opex /

revenues)

High cost

Optimising value through reduced costs and flexibility

Optimising value through

certainty driving capital cost /

structure

Low cost

Firm contracts;

Portfolios;

Operational data;

Effective management;

Competitive advantages;

Availability and type of refinance capital will depend on asset class and scale.

Contact information

Philip Kent

Philip.kent@gcpuk.com

020 7850 4773

Gravis Capital Partners LLP

53/54 Grosvenor Street

London W1K 3HU

www.gcpuk.com

Questions and comments from the floor

COST COMPETITIVENESS – IMPROVING OUTPUTS AND REDUCING COSTSCHAIR: OLLIE MORE, MARKET ANALYST, ADBA

JAMES LLOYD, CHIEF EXECUTIVE OFFICER, BIOWATT

WILLIAM HELLER, CHEIF EXECUTIVE, ORGANIC WASTE LOGISTICS

FOLLOWED BY OPEN DISCUSSION

AD cost competitiveness

Can we reach £100/ MWhe by 2020?

2006(smaller scale AD)

2016 2016-2020 reduction required

2020£0

Cost Competitiveness task forceLe

ost £

Yes, if:1. Government action on waste/

feedstock2. Policy certainty and ambition3. Investment in research and

innovation4. Recognition of and training on

digestate5. Public and business knowledge of

• DECC propose setting the AD ‘cost’ at £49/ MWhe (no tariff required)

• DECC propose to pay Hinkley Point C £100/ MWhe

• New gas commissioning in 2019 is estimated to cost £85/ MWhe

SO AD THE CHEAPEST FORM OF ELECTRICITY? OF COURSE NOT.

James Lloyd, chief executive officer, Biowatt

UK AD & BIOGAS 2016 Conference

Prepared by William Heller, Chief ExecutiveOrganic Waste Logistics

6-7 July 2016

Improving Outputs & Reducing Costs

organicwastelogistics.com

It’s all about capacity utilisation!

Anaerobic Digestion Marginal Economics (£ per MWH)

Revenues

Digestate Disposal (£10/T)

Operating Cost (Incremental)

Marginal Contribution

Export Tariff

FIT 86.8

£38-45/Tof input

(Add further £10 if no digestate

organicwastelogistics.com 51

Significant room to improve!

Capacity Utilisation % (Jan–Mar 2016)

Anaerobic Digestion Plants*+250KW < 1MW

Anaerobic Digestion Plants**+1MW

90+% <67% 67-89%

* 80 Plants ** 43 Plants

Contact

William Heller Chief Executive

M +44(0)7734 130 133E wheller@OWL-team.comW www.organicwastelogistics.com

OPERATIONAL PERFORMANCE – WHY ISN’T MY PLANT RUNNING AT 100%CHAIR: ALEXANDER HENDERSON, ORA

DR EMMA BRODRICK, SYSTEMS APPLICATION MANAGER, IMSPEX DIAGNOSTICS

TONY CLUTTEN, PROCESS SALES MANAGER, HUBER TECHNOLOGY

PHIL HOBBS, DIRECTOR, NEW GENERATION BIOGAS

FOLLOWED BY OPEN DISCUSSIONNORBERT ROSSOW, EPRV/FARMGAS COMMUNITY PARTNERS LTD

DR MELANIE HECHT, BIOGAS PROCESS MANAGER, SCHAUMANN BIOENERGY

AD PROJECTS – DISPELLING THE MYTHS SURROUNDING LOCAL AD DEVELOPMENTSCHAIR: JOHN QUINTON-BARBER, MANAGING DIRECTOR, SOCIAL COMMUNICATIONS

MANDY STOKER, DIRECTOR, E4 ENVIRONMENT

PETER ELMS, DIRECTOR, ALPACA COMMUNICATIONS

Chair: John Quinton-Barber, Managing Director, Social Communications

Dispelling the myths surrounding local AD developmentsMandy Stoker Director – E4Environment Ltd.

Who are we?• Environmental Consultancy since 2000• Specialise in Planning and permitting of renewable

energies• Implementing certified systems such as EMS,

ISO14001 • Worked on:

• Over 40 AD sites• Roof and ground mounted solar PV

installations• EIA & planning on over 100 onshore and

offshore wind farms & single turbine installations

This Presentation Covers

Reality of the planning system

Myth busting

Planning Application ProcessPre-application Consultation • Environment Agency and Local Planning Authority

Data Collection• FRA, LVA, Ecology, Transport, Noise, Odour . . .

Submission to Local Planning Authority for Validation (2 Months)

Legal Determination Period (2-3 Months)

Approval Conditions

• Do not assume that the planning process will be completed in this time frame, it usually doesn’t.

• Main things that cause delays:– The validation process– The consultation phase – Subjective issues – Anti campaigners who will work tirelessly to discredit the

project

MYTH No.1 The planning process takes 13 weeks

MYTH No. 2 It’s a level playing field for applicant and consultees

There is a process within the planning system that allows anyone that wishes to express an opinion or ask for more information can do so. This is right and fair.

• There are statutory consultees - The reality is some of the statutory consultees do not respond in the time allowed so extra time can be allocated.

• Then letters are sent out to notify the local public - The public’s opinion is often accepted after the deadline and right up to the committee meeting.

• What you see: nothing except a beautiful piece of engineering that can tick an awful lot of box’s

• What others see: a blight on the landscape, increased transport, the immoral use of crops as fuel not food, odours, devaluation of properties, bio aerosols and disease………………………………………..

MYTH No. 3 That everyone clearly sees all the benefits of the development

Councillors have been known to refuse applications on non-material planning grounds, so decisions can, and are overturned by appeal to the planning inspectorate.

MYTH No. 4 That a “No” decision means “No”

Thank you Mandy StokerDirector - E4Environment Ltd

Email: ajs@e4environment.co.ukPhone: 01743 34 34 03

Address: Hilley Farm, Pentre, Nesscliffe, Shropshire, SY4 1BP

Peter Elms, Director, Alpaca Communications

AD PROJECTS – HOW TO SUBMIT A SUCCESSFUL AD BUSINESS PLAN

CHAIR: DR STEPHEN WISE, ASSOCIATE DIRECTOR, AMEC FOSTER WHEELER

BRIAN FARRELL, PARTNER, ENERGY AND WASTE, ASHFORDS

AMAYA-ARIAS GARCIA, TECHNICAL DIRECTOR, GOALS PROJECT MANAGER & ENGINEERING SUPPORT

Chair: Dr Stephen Wise, Associate Director, Amec Foster Wheeler

Brian Farrell, Partner, Energy and Waste, Ashfords

Amaya-Arias Garcia, Technical Director, Goals Project Manager & Engineering Support

TRAINING – RAISING COMPETENCE ACROSS THE AD SUPPLY CHAIN

CHAIR: DR JANE GILBERT, DIRECTOR, CARBON CLARITY

MARK HYDE, COMMERCIAL DIRECTOR, WAMITAB

TINA BENFIELD, SENIOR TECHNICAL ADVISOR, CIWM

DAN PURVIS, HEAD OF OPERATIONS, FUTURE BIOGAS

Chair: Dr Jane Gilbert, Director, Carbon Clarity

WAMITAB: Building and maintaining competence in ADMark Hyde, Commercial Director

Who are WAMITAB?

Charitable TrustAwarding Organisation

Industry Training and Advisory Board

PARTNERSHIPS

APPROVED NETWORK OF

PROVIDERS

EMPLOYER CENTRES

Skills development in Anaerobic Digestion

• Qualification: A title or attribute gained in education, through examination or by certification

• Training: the action of teaching a person or animal a particular skill or type of behaviour.

CIWM/WAMITAB Operator Competence Scheme

Risk Tiers

PrimaryQualifications

Continuing Competence

Risk Tiers for Anaerobic Digestion

• Anaerobic Digestion falls under MEDIUM RISK

• Risk Tier table based on relative risk taking account of type of activity and type of waste stream ‘handled’

• Agreed with Environmental Regulators, and amended as required.

• Qualifications made of 4, 6 or 12 units.

The New ‘Risk Tier’ Table (Medium)Anaerobic Digestion

WAMITAB Anaerobic Digestion Qualifications Exist

• WAMITAB Level 4 Medium Risk Operator Competence for Anaerobic Digestion (601/8515/6) (MROC5)

• WAMITAB Level 4 Medium Risk Operator Competence for Storage of Digestate (601/8537/5) (MROC6)

• WAMITAB Level 4 Certificate in Waste and Resource Management (601/2388/6) (VRQ, Unit 6b)

How are these qualifications assessed?

• Open entry.

• Suitable for technically competent managers, consultants, site managers and site supervisors.

• Once registered with centre, assessors will visit the site.

• Assessed ‘on the job’.

• Portfolio of evidence.

Alternative: Level 4 Certificate in Waste and Resource Management

• Moves away from observation. Knowledge based

• Assessment: assignments

• Mandatory Units: 5

• Optional Unit (1 specifically for AD):- Managing biological treatment processes (unit 6b)

• Could be seen as more suited for ‘new entrants to the sector’ (academia)

but….

NO formal requirement for Operatives or Supervisors to be qualified, regardless of risk or type and size of

facility….Qualification does exist

WAMITAB Level 2 Diploma for Anaerobic Digestion Operative

Developing the AD Skills Escalator

Employability

Pre-employment

Level 1 Award in Waste and Recycling

Level 1 Award in Reuse & Refurbishment

Operator Level 2 Diploma in….

Supervisor Level 3 Diploma in….

Manager

WAMITAB Medium Risk

Continuing Competence

Gap Exists

AD Entry Level?

Knowledge?

Ambition is to move from a linear economy ….

Future skills needs….

.… to a circular

economy

In summary

Training – raising competence across AD

Tina BenfieldTechnical Manager - CIWM

AD Matrix

Repository for information - live document

Helps to focus needs – wider than direct AD Operations (whole supply chain)

Encourages upskilling/ awareness but development and delivery determined by market forces.

General AD Awareness

H&S Detailed AD process

/ operationTechnical

Competence Plant and

equipmentEnvironmental

MonitoringGas Management BioChemistry

Digestate Management

PAS 110 /ADQP Management Negociation /

communicationPermitting Duty of Care

Economics of Operation

Ongoing Update/ development

Other comments

Procurement include understanding

outputs plus awareness of other

technologies (see General AD

Awareness tab for more details)

not specific to AD other than for

contractual purposes

X X X X X X XAwareness

depending on plans for output use

not specific for AD

Awareness of requirements for tender spec and

evaluation purposes only

(see tab for more details)

awareness (see tab for

more details)

(relevant to initial training requirments)

Sales appreciation of process, how

different feedstock (quantities, waste streams and form) affect process and

outputs. (see General AD

not specific to AD unless site based X X X X X X X Awareness if plant is

certified not specific for AD

Awareness of permit requirements

Regulators

plus awareness of other

normal awareness when

visiting sites (including

confinded space awareness)

level of detail will depend on role

Awareness of requirements

CIWM/ WAMITAB able to provide

awareness training on request -

(England and Wales)(via Alan

Owers)

understand requirements for

odour, noise, bioaerosol

monitoring plus interpretation of

results etc

X X Awareness for

Animal Health, EA, SEPA, NIEA

not specific for AD

(see tab for more

detai ls)

(process best practice, H&S,

regulations, quality

protocols)

Elected Members of Local Councils

plus awareness of other

Not specific to AD X X XAwareness of level of

control through permitting

Awareness of opportunities X X X X X X X X

(relevant to

initial training requirments)

Planning Officers plus awareness of other

normal awareness when

visiting sites.X X X

Awareness of level of control through

permitting

Awareness of opportunities X X X X X X X

(relevant to

initial training requirments)

WDA / WCA include implications of

collection systems on AD and vice

versa. (see General AD

Not specific to AD X X X X X X X X not specific for AD not specific for AD X

Operator – operative level

some ancillary staff may need awareness other = detailed

knowledge/ skills (see General AD

(including confined space

training, ATEX, (see Health and

Safety tab for more details)

? Will depend on company structure

See Technical Competence Tab

for details and contacts

safe maintenance of equipment

understand requirements for odour, noise, bio

aerosol monitoring, monitoring of process plus interpretation of

results etc

day to day operational

knowledge subject to expert advise

some knowledge relating to process control and

feedstock

limitations of use of non PAS 110

digestate

may need supervisory skills ?

(see tab for more

details)

(see tab for more

details)X

(process best practice,

H&S, regulations,

quality protocols)

Operator – Management level

(see Health and Safety tab for more

details)

(but will depend on actual

hands on role - specific to

organisation)

See Technical

Competence Tab for details and

contacts

odour, noise, bioaerosol monitoring,

monitoring of process plus interpretation of

results etc

day to day operational

knowledge subject to expert advise

some knowledge relating to process control and

feedstock

plus limitations of use

of non PAS 110 digestate (see

tab for more details)

(see tab for more

details)

H&S, regulations,

quality protocols)

Gas Utilisation

(see General AD

ATEX Regulations,

Confined space awareness + ???? (see Health and Safety tab for more details)

clean up, CHP

generation/ use, biomethanisaion, injection to grid, use in transport

X X X not specific for AD not specific for AD

H&S, regulations,

quality protocols)

Digestate users

(see General AD

(see Health and

yes if landspreading

waste under permit See Technical

Competence Tab for details and

contacts

X X X X

plus limitations of use

of non PAS 110 digestate

not specific for AD not specific for AD

H&S, regulations,

quality protocols)

consider content of FACTs training - does it cover use of AD digestate suffi ciently? Include landbank availability allowance tool.

Consultants depends on role - all should have general

awareness of technologies

(see General AD Awareness tab for

more details)

depending on

whether involved in on site activities

(see Health and Safety tab for more details)

depends on role X depends on role depends on role depends on role depends on role depends on role not specific for AD

Awareness (see tab for more

details)

H&S, regulations,

quality protocols)

Retail

(see General AD

not specific to AD X X X X X X

awareness only

plus limitations on use of non PAS 110

digestate (see tab for more

details)

not specific for AD not specific for AD X

Waste Producers (see General AD

not specific to AD X X X X X X X X not specific for AD not specific for AD X

Environmental Monitoring

(see General AD Awareness tab for

more details)

(see Health and

X X X odour, noise,

bioaerosol monitoring etc

X X X X not specific for AD not specific for AD

Awareness of permit requirements re

monitoring (see tab for more

details)

Public plus awareness of other

X X X X X X X X X X X X X X

Design and build

(see General AD

(see Health and

include understanding of

end use requirements

Understanding of requirments

X Xensure equiptment

fit for purpose (see tab for more

details)

not specific for AD not specific for AD X X

H&S, regulations,

quality protocols)

Equipment Manufacturing

(see General AD

awareness to ensure

appropriate safeguards built in

(see Health and Safety tab for more details)

in so far as understanding

system requirements

Engineering (mechanical and

electrical) transferable skills from existing UK Engineering

X X X not specific for AD not specific for AD X

As waste producer they will need to

understand Duty of Care

ProcurementSales RegulatorsElected membersPlanning OfficersWDA/ WCA Operator – operative levelOperator – management levelGas utilisation

Digestate usersConsultantsRetailWaste producersEnvironmental monitoring PublicDesign and buildEquipment manufactures

AD Training needs matrix – considers whole AD supply chain

General AD awarenessH&SDetailed AD process/ operationTechnical Competence ( holding a permit!)Plant and equipmentEnv monitoringGas managementBiochemistry

Digestate managementPAS 110 / ADQP (PAS 100) Management Negotiation/ communicationsDuty of carePermittingEconomics of operationOngoing update/ development

Looks at a range of ‘needs’

Looks at more than just ‘operation’

Identifies areas for training / awarenessDoesn’t prescribe a ‘syllabus’ or way of delivering/ obtaining knowledge (other than TCM)Open to market developmentLinks to known/ available quals/ schemes where applicable (see additional tabs for details)

Operations - Operative Level

General AD Awareness H&S

Detailed AD process / operation

Technical Competence

Plant and equipment

Gas Management BioChemistry

some ancillary staff may need awareness other = detailed

knowledge/ skills (see General AD

(including confined

space training,

ATEX, (see Health and Safety

? Will depend on company structure

See Technical

Competence Tab for

details and contacts

understand

requirements for odour, noise, bio

aerosol monitoring,

monitoring of process plus

interpretation of results etc

day to day operational knowledge subject to

expert advise

some knowledge relating to

process control and feedstock

PAS 110 /ADQP Management

Negotiation / communication Permitting Duty of Care

Other comments

plus limitations of use of non PAS

110 digestate

may need supervisory

skills?

(see tab for

more details)

(see tab for

more details)X

protocols)

Operations – Management level

Plant and equipment

(see Health and Safety

(but will

depend on actual

hands on role -

specific to organisation

Technical Competenc

e Tab for details and

contacts

odour, noise, bioaerosol monitoring,

monitoring of process plus

interpretation of results etc

day to day operational knowledge subject to

expert advise

some knowledge relating to

process control and feedstock

Negotiation / communication Permitti ng Duty of Care

Other comments

110 digestate (see tab for more details)

(see tab for more

details)

(see tab for

more details)

protocols)

Design and Build

Plant and equipment

(see General AD

include understandi

ng of end use

requirements

Other comments

ensure equiptment

fit for purpose

not specific for AD

not specific for AD X X

protocols)

Digestate Users

Plant and equipment

(see General AD

yes if landspreadin

g waste under permit

See Technical

Competence Tab for

details and contacts

X X X X

Other comments

110 digestate

(see tab for more

details)

not specific for AD

(see tab for

more details)

protocols)

consider content of FACTs training - does it cover use of AD digestate suffi ciently? Include landbank availability allowance tool.

Industry needs to reinforce training / skills development message.Especially where no statutory requirement exists.Benefits of improved staff training

safetyenvironmental/ regulatory impacts costs………………………………………… and many

Thank you

ciwm.co.uk

Dan Purvis, Head of Operations, Future Biogas

HEALTH AND SAFETY – WHAT HEALTH AND SAFETY PROTOCOLS ARE NEEDED FOR YOUR PLANT?

CHAIR: TERENCE BROWNHILL, BUSINESS DEVELOPMENT MANAGER, CAPITA-PROJEN

ALAN FITZPATRICK, RISK ENGINEER, CAN HARDY

IAN HITCHEN, ROWAN HOUSE

DAN PURVIS, HEAD OF OPERATIONS, FUTURE BIOGAS

JESS ALLEN, ENVIRONMENT & REGULATION MANAGER, ADBA

Chair: Terence Brownhill, Business Development Manager, Capita-PROjEN

BIOGAS

• Power and Renewable Energy• “Keeping Your People Safe and your Plant Insurable”

My Manager says I have an exciting job?

Health & Safety

108108

AGENDA

1 A few slides

CNA Policy Wording

• Feedstock Quality to check, any changes notified to insurer

• Foaming• Maintenance• Limit of incorrect BI figures

The MAXIMUM FORESEEABLE LOSS (MFL) which could occur

This is the most extreme loss that might occur that is within the bounds of reasonable possibility. It includes the consequences of the most severe natural peril as well as explosion, fire and breakdown as appropriate. It assumes the failure of emergency services to attend the site and the failure of all control, protection and detection systems. The consequent interruption is assumed to last throughout the indemnity period with no make up assistance in mitigation of the lost income

Fire and Explosion

HAZOP hazard and operability study

Separation what distance?

Explosion, ATEX, DSEAR

Gas detection

Construction what materials?

Fire Detection, Alarm

Fire Fighting facilities

Pre-site survey to identify issues

Electrical

Missing Hand railNeed to check safety valve

Separation?

DESIGN Electricity Import and Export Arrangements

• The export and import transformers

are located in the same space, with no

separation, no fire / explosion walls, no

fire protection and no bunding.

• The building is open wood slatted

sides this is very unusual for an oil

cooled transformers room

• This room is a single point of failure for

the whole business in the event of an

incident.

• Prefer oil transformers outside, small

transformer minimum 7.6M

separation / 2 hr fire / explosion wall

Testing Biogas Tanks

Typical Biogas tank note the safety device

Site Survey End of Construction Survey

Client states 2 hour fire wallswooden door, cable openings ?

Summary• No Insurance company has to

provide coverage• The premium you pay will

reflect you’re site, attitude to Health & Safety and willingness to Learn

When it comes to business insurance…We can show you more®.

CNA Insurance Company Limited (registered number 950) CNA Switchboard: +44 (0)20 7743 6800 Facsimile: +44 (0)20 7743 6801 Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (number 202777) Hardy (Underwriting Agencies) Limited (registered number 1264271) Hardy Switchboard: +44 (0)20 7105 0382 Facsimile: +44 (0)20 7327 3615 Authorised by the Prudential Regulation Authority

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The information contained in this presentation does not represent a complete analysis of the topics presented and is provided for information purposes only. It is not intended as legal advice and no responsibility can be accepted by CNA Hardy for any reliance placed upon it. No representation or warranty, express or implied, is made as to the contents of this presentation, or for the omission of any material from this presentation. Legal advice should always be obtained before applying any information to particular circumstances.

Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products may not be available in all countries.

ROWAN HOUSELTD www.rowanhouse.co.ukSlide 118

Profitable Safety

Anaerobic Digestion & Biogas Utilisation Plants & Equipment

Ian Hitchen, BA (Hons), C.Eng, MIET, Director Rowan House Ltd

Copyright basis:This presentation is made for educational purposes only. Some photographs and diagrams are copied herein and text is reproduced within for the purposes of study. These items may not be reproduced for

any other purpose without the written permission of the relevant copyright holder

Overview of Risk Assessment

Anaerobic Digestion Plants & Equipment

UK Health & Safety Law

HEALTH and SAFETY at WORK Etc. ACT

Management of Health and Safety (MHSR)Enabling Act for other Safety Regulations (including EU Directives) such as -

Dangerous Substances and Explosive Atmospheres (DSEAR)

Control of Substances Hazardous to Health COSHH

Common theme of Hazard & Risk Assessment

HASWA etc Every employer shall make a suitable and sufficient assessment of the risks to the health & safety of his employees…and of persons not in his employment

MHSR Reg3(1)..suitable & Sufficient assessment of RISK to -Employees

Other Persons

Control of Major Accidents and Hazards (COMAH 2015)

UK Law

Supply of Machinery (safety) Regulations

Regulations 9 and 10 set out the duties placed on designers. These include the duty to eliminate, reduce or control foreseeable health and safety risks through the design process, such as those that may arise during construction work or in maintaining and using the building once it is built.)

Construction (Design and Management) CDM UK Law

DSEARReg 5 Risk Assessment: Where a dangerous substance is or liable to be present every employer shall assess the risk to workers (and others who may be affected) which may arise because of the presence of dangerous substancesThe risk assessment, where appropriate may be part of a goal orientated approach as required by BS EN 61508 / BS EN 61511 (HazOp)

Safety and Anaerobic Digestion Plants & Equipment

Safety - Who is Responsible?

For the plant the employer – the Duty Holder

What about an equipment designer/supplier?

The employee for their own and others safety -

There is a requirement within the UK, (EU) to meet ‘essential ’safety requirements enabling the fixing of the CE mark (Supplier of Machinery Regs., ATEX 95, EMC, Low Voltage, etc.)

What about a supplier of process plant and equipment?

Here there is a combination of responsibilities – the supplier based on the requirements specification and meeting CE. The specification is required from the project team and the operator to ensure equipment is ‘fit for purpose’ meeting all the essential operating and safety requirements.

Construction (Design & Management) Regs., Pressure Equipment Regs, Pressure Systems Safety Regs. Supply of Machinery Regs, DSEAR, PUWER, etc., may apply

'Duty Holders' are deemed to have the resources and the authority necessary to provide a safety management system and can be held legally accountable following a criminal offence. It is essential for 'Duty Holders' to discharge their responsibilities effectively

The prime responsibility is placed on the Duty Holder – Employers, Directors and Managers

Within the European Union the requirement to minimise risk to people set out in ‘Safety of Workers’ Directives

In the UK those Directives concerned with H&S become Safety Legislation

An important question that must be answered by any plant operator -

Is the operation of this unit and associated machinery ‘SAFE’?

What is Meant by Safe?

UK Law

'SFAIRP' and 'ALARP' In terms of what they require of duty-holders, HSE considers that duties to ensure health and safety so far as is reasonably practicable ("SFAIRP") and duties to reduce risks as low as is reasonably practicable ("ALARP") call for the same set of tests to be applied.

What is meant by Safe?

The key case from the courts regarding reducing risks as low as reasonably practicable is Edwards v. The National Coal Board (1949) in which the Court of Appeal held that:

… in every case, it is the risk that has to be weighed against the measures necessary to eliminate the risk. The greater the risk, no doubt, the less will be the weight given to the factor of cost. …

Thus, determining that risks have been reduced ALARP involves an assessment of the risk to be avoided, of the sacrifice (in money, time and trouble) involved in taking measures to avoid that risk, and a comparison of the two.

Various UK legislation uses phrases such as:• ‘So far as is reasonably practicable’• ‘Appropriate arrangements’• ‘All measures necessary’Interpreted (by HSE) to mean

– Reduce risks to as low a level as is reasonably practicable (ALARP)

– (Ref: HSE SPC/Permissioning/12 www.hse.gov.uk)

ALARPRISK UNACCEPTABLE

Broadly ACCEPTABLE

TOLERABLE

TOLERABLE ONLY WHERE FURTHER COST/EFFORT DISPROPORTIONATE FOR THE ADDITIONAL RISK REDUCTION GAINED

Disproportion value depending on the severity of the risk this needs to be demonstrated usually by a Cost Benefit Analysis:

Base Line cost to save a life is circa 2.0E+6 £ (not the value of a life)

UK Law

The determination of control measures forms part of the statutory risk assessment duty-holders are required to undertake.

Such assessments involve duty-holders identifying the hazards in their workplace,

determining who might be harmed and how;

evaluating the risk from the hazards and

deciding whether the existing control measures are sufficient or

'SFAIRP' and 'ALARP' What is meant by Safe?

whether more should be done

A Key Concept

Key Concepts HAZARDS:(Temperature, Pressure: Toxic, Flammable, Corrosive)

CONSEQUENCE HARM to People, Environment, Assets

1 in 200 years

1 employee fatality

RISK: 1 Fatality per 200 yrs

(Trips, Slips Fall, Crushing, Electrocution)

Likelihood of consequence

Severity of consequence

RISK reduced to a Corporate value by Identified Risk Reducers

By safe H&S legislation means that the risk to People is deemed to be ‘TOLERABLE’…. the employer must safeguard "as far as is reasonably practicable" (ALARP) the health, safety and welfare of their employees and others.

1. This requires identification of Hazards 2. Is there a potential to do Harm3. An assessment of how likely they are to occur4. What is the magnitude of the Risk and 5. Is this Risk Tolerable relative to a Target.

Key Concepts

An essential requirement is for the Duty Holder to determine the target risk of harm to people (and environment) that may arise from abnormal operation of a plant unit and to show that these values have been achieved and ALARP over the life time of the plant

People Harm: Injury Serious Recoverable

Injury Serious None Recoverable

A Fatality Several Fatalities

Concept

Front end design

Project sanction

Main Design & Equipment Specifications: DSEAR Hazardous Areas Defined

Fabrication

ConstructionPre-commissioning (DSEAR Reg.7 Verification):

BS EN 61511 SIF Validation Handover

Operation

Hazard study stage 2

Full HAZOP study FATHazard Review stage 4

Hazard Review stage 5

Final review of completed actionsHazard Review stage 6

Final Design

It is strongly recommended that risk assessments are carried out at the following stages of a project:

Hazard study stage 1

Pre Commissioning

Considerations

An assessed Risk v Target Values Methodology

BS EN 61511 has several methods

The most useful in a HazOp is a Calibrated Risk matrix

BS EN 61511-1,2&3 :Ed 2 2015Functional safety. Safety instrumented systems for the process industry sector

Inherent Process Risk

Severity Exposure AvoidanceCol1 Col2 Col3 Col4 Col5 Col6

Rwa1 1 + + + 0 0Pexp1

Rwa2 2 1 1 + + +S1 Rwa1 2 1 1 1 + + Pexp2

Rwa2 3 2 2 1 1 1

Rwa1 2 1 1 1 + +Pexp1

Rwa2 3 2 2 1 1 1S2 Rwa1 3 2 2 2 1 1 Pexp2

Rwa2 4 3 3 2 2 2

Rwa1 3 2 2 2 1 1Pexp1

Rwa2 4 3 3 2 2 2S3 Rwa1 4 3 3 3 2 2 Pexp2

Rwa2 ***** 4 4 3 3 3

Pexp1 ***** 4 4 3 3 3S4 Pexp2 ***** ***** ***** 4 4 4

Serious: Slight to moderate pain for 2-7 days. Thereafter some pain/discomfort for several weeks. Some restrictions to work and/or leisure activities for several weeks/months. After 3-4 months return to normal health with no permanent disability.

Severe: Permanently incapacitating injury: Moderate to severe pain for 1-4 weeks. Thereafter some pain gradually reducing but may recur when taking part in some activities. Some permanent restrictions to leisure and possibly some work activities.

S3 = one fatality

S4 = up to ten fatalities

Probability of presence in the danger zone: Pexp1Unlikely to be present less than 10% of work periodPexp2May be present, more often than 90% of work period

Probability of risk avoidance Rwa1 a warning with a correct avoidance response Rw2 Ano warning or incorrect avoidance respose

Inherent Process Risk Block: No independent layers of risk reductuin taken into account Col1 Likelihood of Hazard 1 per yr. Col2 Likelihood of Hazard 1 in 5 yrs. Col3 Likelihood of Hazard 1 in 10 yrs. Col4 Likelihood of Hazard 1 in 30 yrs. Col5 Likelihood of Hazard 1in 50 yrs., the hazard might occur but wih a low likelihood within the lifetime of the plant Col6 Likelihood of Hazard 1 in 100 yrs., the hazard might occur but wih a very low likelihood within the lifetime of the plant

An assessed Risk v Target Values Methodology

Where there is an assessed residual risk then further Independent Risk Reducers Must be provided in order to meet the target values and to enable ALARP to be demonstrated

For reducing risk to people this may be a Safety Instrumented Function, (SIF) with a defined Safety Integrity Level, (SIL)

Where The SIF has a SIL then its design and lifetime maintenance MUST conform to the requirements of BS EN 61511

NOTE: BS EN 61511 is considered as Good Practice for the Management of Functional Safety it is a Plant Life Cycle approach

It is essential that any Package units are fully specified and that they are included in the Hazard and Operability review and all considerations have recorded responses

A HazOp is Internationally ackowlegleded method:

When facilitated by a good Team Leader at the right phase of a project with a Knowledgeable team it will

SAVE MONEY

By avoiding costly late changes

Project completed on time

Plant commissioned within programme

Plant soon up to Design Production & Quality

A plant that is Safer and Operable throughout its life

In Summary it is essential that all associated plant unit’s including the integrated packages hazards and associated risk have:

been Identified

Reduced to ALARP

That the life time requirements to achieve this legal requirement is communicated to the Duty Holder (plant operator)

HEALTH AND SAFETY: BEST PRACTICE SCHEME FOR AD

JESS ALLANENVIRONMENT AND REGULATION MANAGER

AimsThe Best Practice Scheme aims to help the industry to:

• Improve environmental performance.• Improve safety performance.• Improve operational performance.

These aspects are all inter-linked and the scheme has a strong overall emphasis on risk awareness and management and competence.

To draw together the expertise in the UK AD industry and raise awareness of best practice across the sector.

Steering GroupChaired by Amaya Arias-Garcia (Goals-PME)ADBAChartered Institute of Wastes Management (CIWM) Chartered Institute of Water and Environmental Management (CIWEM)CNA Hardy (insurer)Country Land and Business Association (CLA)Energy Networks Association (ENA)Environmental Services Association (ESA)Institute of Chemical Engineers (IChemE)Jelf (insurance broker)NFUNFU CymruNFU ScotlandRenewable Energy Association (REA)Water UKWRAPZero Waste Scotland

Plus input from regulators: APHA, EA, HSE, NRW, SEPA

Steering Group Conclusions• Priority topics identified included: odour management, containment,

digestate quality, risk management, training and competence.

• Scheme should improve awareness of existing guidance, standards and legislation and make it more accessible.

• Checklists were proposed as a first step towards a certification scheme.

Health and Safety ExecutiveHSE are supportive of the scheme and have attended workshops:

‘It is excellent to see ADBA’s drive to develop a Best Practice scheme for the Anaerobic Digestion industry come to fruition. The extensive industry consultation, particularly with operators, insurers and regulators, really draws in a wide range of knowledge and experience into the scheme. I hope that this guidance, produced by the industry for the industry, will enable small and large companies alike to raise their own health and safety standards and the overall performance of the Anaerobic Digestion industry.’

Rick Brunt, Head of Waste and Recycling at the Health and Safety ExecutiveClick here to see the HSE’s strategy ‘Helping Great Britain Work Well’: http://www.hse.gov.uk/strategy/

Delivery Plan

Step 2: Best Practice Certification Scheme

(July 2017)Develop a certification scheme, informed by the

checklists.

Step 1: Best Practice Checklists (July 2016)Develop a series of Best Practice checklists

which bring together regulations, guidance, standards relating to best practice.

Best Practice Checklists

• Checklist-style guides on key topics identified through industry engagement:

Operational Performance Risk Management Procurement

• Raise awareness of existing guidance, regulations and standards that contribute to best practice.

• Collate guidance to make it more accessible.

• Provide a foundation for a certification scheme.

Risk Management

• Covers identifying and managing risks to:

- Health and safety- Environment

• Explains benefits of effective risk management.

• Promotes instilling risk awareness for all individuals involved in operating a plant, from senior management to site operatives and contractors.

• Encompasses risk management at different stages of an AD project.

• Guide to making procurement decisions for items of plant, equipment or machinery, and services such as maintenance contracts.

• Focuses on ensuring:

- Compliance with legislative requirements- Safety and environmental protection- Suitability for intended purpose- Cost-effectiveness

Procurement

Operational Performance• Focuses on identifying and overcoming barriers to good

performance.

• Features guidance and tips on:

- Monitoring operational performance- Ensuring competence- Managing digester biology- Understanding feedstock- Making the most of digestate

Next Steps• July 2016 – end year

• Will be seeking feedback and actively engaging with individual organisations and working groups.

Test the checklists

• July 2016 – throughout 2017

• Will entail devising suitable assessment criteria, working with UKAS and third party accreditation bodies.

Design the certification

scheme • Intention is to start from summer 2017

• Will be looking for operators to help us pilot the scheme.

Pilot the certification

scheme

Get Involved

• Stakeholder Meeting – this afternoon (15:00, Piazza Suite)• Food Waste Operator Group• Crop Operator Group• Training, Safety and Environment Working Group• Finance Forum• Visit ADBA website• AD & Bioresources News• ADBA events• Get in touch with Jess

Thank you

Jess Allanjessica.allan@adbioresources.org

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