Repowering Landfill Gas Sites: The End of a Contract
 Topic: landfill gas |  Read Time: 8 mins |
 Landowner type: Institutional landowners |  Energy: Landfill gas |
13th December 2024Are you trying to figure out what goes into repowering landfill gas sites? Are you unsure of what happens when your contract with a landfill gas operator ends? Join me as I explain what you need to know as you navigate the repowering process.
Landfill gas projects typically operate under long-term contracts, often spanning several decades. With landfill gas-to-energy projects only emerging in the late 1970s, it’s possible that your site is nearing the end of its first contract.
But reaching the end of a contract doesn’t necessarily mean the gas reserves are depleted. Instead, you might have the opportunity to repower your site and continue generating income.
There’s lots to consider, but there’s no need to panic. This guide will walk you through what happens at the end of a landfill gas contract and how you can keep benefiting from the gas your site produces.
What is a Landfill Gas Project and How Does it Produce Energy?
Once a landfill is full to the brim with rubbish, it’s ‘capped.’ In other words, it’s covered with an impermeable lid to stop any contaminants from seeping out and harming the environment. As the refuse contained within decomposes, it produces natural gas.
After a few years of decomposition, the mix of gases produced (collectively known as landfill gas) is roughly half methane and half carbon dioxide. Methane is the valuable component used for energy production.
The landfill gas site collects the produced methane through wells on the landfill’s surface. The gas is then routed to a series of engines and combusted. The combustion powers the engines and the engines generate electricity. This electricity is then sold to the national grid, producing income for the site.
Landowners with capped landfills often invite bids from landfill gas operators. The landowners grant the winning operator the rights to construct and operate a landfill gas project on the site.
What happens next?
After signing a lease, the operator brings their own equipment, produces the electricity, connects the plant to the national grid and sells the electricity to one or more electricity suppliers (otherwise known as energy off-takers).
The landfill owner (i.e. the landowner) will charge the operator(s) rent for the use of their landfill site. This rent is typically a percentage of the revenue earned from selling the electricity.
Depending on the size and scale of the project, these operations can be highly profitable. Contracts between landowners and operators often span several decades, allowing both parties to benefit from the methane gas for years – provided a solid commercial agreement is in place.
The 454 landfill sites across the UK generate an average income of £800,000 a year from the sale of their landfill gas. This highlights the substantial financial potential for landfill owners. With the right knowledge and strong negotiating skills, you could unlock even greater income from your site.
What Happens at the End of A Landfill Gas Project’s Life?
When the contract between the landowner and landfill gas operator ends, it’s rarely as simple as renewing it under the same terms. This is because methane gas from a landfill site is a finite resource.
As the waste in the landfill continues to decompose, the rate of methane production will gradually decline. Eventually, decomposition slows to the point where the site produces little to no methane. At this stage, the landfill can no longer generate electricity.
Deciding what to do when your landfill gas contract ends can be challenging. Typically, the contract for your site will last for less time than your site produces gas. For context, a standard landfill gas contract runs for 20 years, but sites can produce gas for 50 years or more.
At the end of a contract, the landowner must assess how much gas there is left in their landfill and whether it is financially worth entering into a new contract for electricity generation.
This is where repowering or repurposing landfill gas sites becomes an important consideration.
Broadly speaking, your options at the end of a landfill gas contract are:
- Repower: Sign a new contract with the same (or a different) landfill gas operator and continue to produce electricity at the site.
OR
- Repurpose: Wind down the landfill gas operation entirely and utilise the land for something else (like a solar project).
In the next section, I’ll give you all the information you’ll need to help you decide whether to repower or repurpose your landfill site.
Reaching the end of a landfill gas contract doesn’t mean your income potential is over. In fact, it could be the beginning of a smarter, more profitable chapter – especially if you understand what’s next for this technology and the policies driving it. Read our guide to see where landfill gas projects are heading in the UK.
Want to Stay Ahead of the Curve on Landfill Gas Opportunities?
Our essential guide breaks down what the end of ROCs means for landowners.
Whether you’re already hosting landfill gas infrastructure or exploring the opportunity, this guide will help you understand:
- How Contracts for Difference (CfDs) really work.
- What you need to know about strike prices, auction rounds, and revenue certainty.
- The pros and cons of entering a CfD agreement.
Get the guide now and make informed decisions about the future of your site.
To Repurpose or Repower?
There’s one question that you need to answer if you’re planning on repowering a landfill gas site in the UK. It’s quite a simple question – “Is there still untapped gas left on my site?”.
If there’s a significant amount of gas being produced at a good rate, then there’s still money to be made. Therefore, you’re better off repowering any landfill gas sites in your portfolio.
This can either be with the same landfill gas operator on a new contract or with a different operator entirely.
I’ve written a dedicated blog that details all of the best practices of repowering as it’s a fairly involved process. But one thing is clear: operators will want the gas your site is producing.
Before I move on, here are a few of my top tips to keep in mind when repowering your site:
When you come to repower, I highly recommend doing the following things before negotiating a new landfill gas contract:
1. Checking your current contract
When you’re checking your contract, you’ll want to ensure that rental payments are fully up-to-date, you’ve confirmed all decommissioning procedures, and you have a set process in place should you be transferring operators.
You’ll also want to think about whether you’re happy with your existing payment arrangement as per contract or if you’d prefer to switch things up.
2. Open negotiations with your existing operator
It’s often easier to stick with the same operator for a new contract, but this isn’t always the most financially viable option. So, you’ll want to ensure that there is sufficient time to re-negotiate sound commercial terms before the current lease expires.
Not only will this give you time to research new operators should you wish to, but it will allow negotiations to play out properly. In short, you won’t be rushed into a less-than-ideal situation because you’re running out of time to renew.
3. Doing your research
I’m a huge believer in doing as much research as possible before signing a new contract for any renewable energy project. One of the most important things you can do is research current market rates for projects across the country. It’s worth noting that the market will have changed significantly since you last negotiated a contract for your site, so, it’s in your best interest to investigate the current market and use it to your advantage.
If you’re looking to save time and energy, our Lumify SiteScan™ solution is an excellent way to maximise the income potential from your landfill gas site. By comparing your site to similar projects across the country, you’ll be able to bring solid evidence to the negotiating table that will drive up your payments.
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4. Open bids to get the best possible deal for a new contract
It’s a legal grey area as to whether you need to put a landfill gas contract out to tender before settling on an operator. However, it’s usually in a landowner’s best interest to do so. Not only does this cover every eventuality, but it’s possible that you’ll receive a better deal than your current operator is offering.
5. Other important steps
In addition to the above points, you’ll also want to make sure you do the following things:
- Serve notice to your existing operator in good time (if you plan to move on)
- Inform the regulator of any changes to the site (especially if there will be a change of operator)
- Put new contracts into place early to avoid delays and uncertainty
- Arrange for the new landfill operator to install all relevant equipment
A small thing to remember
When repowering, be aware that your previous operator may use scare tactics to keep the site. While not always malicious, they will want to hold onto the income the site generates. I’ve seen everything from threats to retain Grid connection to refusal to transfer permits. Realistically, these things rarely transpire and are simply scaremongering.
The most important thing to focus on is whether the new contract will be financially beneficial to you.
Repurposing
Out of gas? Fear not. Repurposing your fully tapped landfill site is a smart way to ensure continued income from your land once the gas is gone.
Closed landfills are prime examples of brownfield land, which means they may face redevelopment restrictions due to potential contaminants or environmental hazards. Once you de-power a landfill gas site, these limitations must be taken into account when considering repurposing options.
One of the best repurposing options might be to redevelop your site into a solar farm.
As you were running a landfill gas site, you’ve likely got some of the required infrastructure in place to enable the export of electricity to the grid. It’s not easy to build on top of a landfill, but it’s possible to install an array of solar panels on the land.
The UK Government’s most recent National Policy Statement for Renewable Energy Infrastructure highlights its commitment to large-scale, ground-mounted solar deployment across the country.
This message signals strong support for renewable energy projects, including solar, which could provide an opportunity to repurpose your landfill site for solar energy generation once the gas production has slowed.
A deeper look at solar projects
The government is primarily encouraging solar development on ‘brownfield, industrial and low-to-medium grade agricultural land’. In other words, repurposing your landfill site into a solar farm has full governmental policy support.
With Labour backing a strong move toward net zero, support for such projects is only expected to grow.
This policy backing should also make planning approval for solar farms on landfill sites relatively straightforward. In addition to policy support, landfill sites are often remote and flat – ideal conditions for accommodating solar farms.
Many landowners are already taking advantage of this opportunity. For instance, SITA UK, one of the country’s largest landfill site owners, has partnered with BSR (British Solar Renewables) to ‘pursue solar projects on [their] landfill estate’. This is an excellent example of repurposing on a large scale.
Case studies: Veolia and Viridor
Veolia and Viridor are excellent examples of landfill gas sites that have been successfully turned into solar sites.
Veolia’s Ling Hall landfill site is tucked away near Rugby’s Town Centre. While it’s still operational, it already has planning approval for a solar site. Veolia plans to transform the site once it has insufficient gas.
However, this isn’t Veoila’s only solar farm venture. Veolia has an up-and-running solar site at Ockenden in Essex that can power 15,000 homes. With 107,000 bi-facial solar models, it can absorb light on both sides, which maximises power production.
Viridor has also made waves by transforming a landfill site into a solar site. Its Westbury Landfill site contains 12,780 solar panels and has generated a notable £4.1 million in turnover in the first six years of operation.
As you can see, there’s no need to be distressed if your gas supply is coming to an end. There are certainly options available to you and they’re worth exploring if you wish to continue earning income from your land.
Final Thoughts on Repowering Landfill Gas Sites
Landfill gas contracts often span several decades. So, it’s easy to forget to consider what will happen when the project comes to an end.
I hope that this guide on repowering landfill gas sites has given you some helpful insights into the processes and options at your disposal for when your landfill gas contract approaches its end.
Remember, knowledge is power. Whether you’re repowering your landfill gas site to continue generating revenue or pivoting to solar energy, at Lumify Energy, we’re here to support you every step of the way.
Get in touch, and we’ll guide you through the many options available to you when repowering landfill gas sites in the UK.
