I have dealt with the insolvencies of Biomass/EfW facilities and I find that although technologically impressive they are fraught with a web of pros, cons and necessary financial wizardry to make them work.  For the uninitiated, these facilities burn waste to generate electricity.

I have set out some thoughts below on some of the challenges they face along with why they remain attractive to investors and politicians alike. 

Benefits of EfW facilities:

1. Waste Reduction: EfW can dramatically decrease the volume of waste headed for landfills by 70-90%, crucial for areas where land space is limited.

2. Renewable Energy: As these plants generate energy from waste, it reduces reliance on fossil fuels and boosts energy security. This helps politicians tick certain boxes regarding promises made.

3. Reduced Greenhouse Gases: By diverting waste from landfills, EfW plants help lower methane emissions, a potent greenhouse gas.

4. Resource Recovery: Post-incineration, valuable metals can be recovered and recycled from ash residues.

5. Economic Growth: EfW projects create jobs and can significantly stimulate local economies.

6. Financial returns: If the construction can be managed appropriately and financed in an affordable way, with costs controlled and predicted accurately, then they should in theory produce a steady financial return. 

However, with these projects comes a number of concerns:

1. Environmental: Despite advanced technology, EfW plants still emit pollutants, which may affect human health and the environment.

2. High Costs: These facilities require substantial initial investments, alongside ongoing operational and maintenance expenses.

3. Efficiency Issues: Energy efficiency in EfW plants typically falls short compared to traditional power plants. Achieving the theoretical efficiency of the plant is often very difficult.

4. Impact on Recycling: There is concern that the convenience of EfW might deter efforts towards recycling and composting.

5. Community Resistance: Public opposition based on environmental, traffic, and property value concerns can impact project progress. I was reading yesterday that projects across Australia have been paused due to public concerns, and Wales currently has a moratorium on planning permission for new plants.

Financial distress

Initial capital investment is a major hurdle, as EfW plants require substantial upfront costs for construction and the installation of advanced pollution control technologies. The recovery of these investments is often slow and can be financially burdensome, especially if the plant doesn't operate at full capacity, which as mentioned above is quite likely.

Operational and maintenance expenses further complicate financial stability. EfW facilities demand ongoing maintenance to ensure efficiency and compliance with strict environmental standards, which involves regular system upgrades and skilled employees. Moreover, the efficiency of these plants is highly dependent on the consistent supply of waste. Variations in waste availability or its calorific value can directly impact the energy generation capacity and operational costs. Given the nature of the fuel, this is quite likely. Even those types of facilities that burn wood are often affected by impurities and moisture.

Market dynamics also play a critical role. The revenues from the energy produced are at the mercy of fluctuating energy market prices. When market prices dip, the generated revenue might not suffice to cover operational costs or justify the initial investments. The risk of this is often mitigated by fixed price power purchase agreements. Additionally, stringent regulatory requirements can lead to increased compliance costs or necessitate further investment to meet new environmental standards. This often puts the financial success of the plants at the whim of politicians.

Public opposition and legal challenges can lead to delays and increased costs due to prolonged permitting processes or legal disputes. Furthermore, the reliance on debt financing exposes EfW projects to financial market volatility, affecting their cost of capital and overall financial health.

For EfW facilities to be financially viable long-term, they require not just robust operational strategies but also supportive policies that acknowledge and mitigate these financial complexities. 

In summary, whatever people’s views on the “renewable” nature of these facilities and whether they should be built, their financial stability relies on a substantial investment backed up by predictable costs, and by their nature returns on investment can only be expected after many years of stable operation. As part of that process, restructuring and financial monitoring can often play a key part in managing the facilities and ensuring that they are a success.