Three key funding opportunities most local authorities waste departments miss out on
|Author: Travis Benn||Read time: 6 mins|
|Client type: Institutional landowners||Technology: Landfill gas|
Local authority waste departments are up against it. And for most, managing the everyday logistics of collection from thousands of households in the UK is only part of the picture.
Add to that their efforts in driving behaviour change through compelling campaigns and consistent work assessing the most efficient technologies—all while staying on top of waste material trends and prices—and you start to build a clearer picture of what’s going on behind the scenes.
What’s more, they’re doing it all against a backdrop of economic hardship, and in turn, ambitious environmental goals seem to be bearing the brunt of service budget cuts.
But that doesn’t—and shouldn’t—stop councils from realising the funds available to help them reach their environmental aims. It may require some innovative thinking and expert guidance (introducing: Lumify Energy), but there is ample opportunity to make the most of the funding on offer for a greener future.
The importance of probing your assets
Tons of organisations are eligible for landfill gas royalties, but most of them aren’t aware of the numerous areas where potential problems can occur. In fact, Lumify Energy co-founder and head of strategy and innovation, Freccia Benn, estimates that up to 75% of reviews conducted by our team have identified underpayments.
The sums can add up substantially, especially when you consider that the UK landfill gas industry contributes £400 million to the country’s economy. Therefore, checking payments is crucial to ensure nothing is missed.
Where opportunities get missed
Many local authorities that previously or currently operate landfill sites work in partnership with landfill gas companies. Most of these arrangements began back in the ‘90s when most UK sites installed gas equipment. Under standard contracts, a local authority will own the land and lease the rights to install and run the equipment to a third party. The landowning council then receives royalties based on the level of gas generated.
Here’s where things get tricky: recognising anomalies in royalty payments is challenging for the untrained eye, and those in charge often have many other jobs to do. Because there aren’t readily available benchmarks or a manual to hand, it takes dealing with hundreds of cases and experience who have enough experience and reference points to spot something that doesn’t look quite right.
1. Lease agreements
Lease agreements are always distinctively different from one another. The landowner and site operator negotiate their terms, and they remain confidential.
For local authorities with a stake in the land and activities of the landfill site, it’s vital that transparency is achieved. This will ensure local authorities know what is being agreed (and avoid any ambiguity).
One way to achieve this is to ask a qualified advisor with experience of checking lease agreements for their expertise.
2. Power purchase agreements
A strong power purchase agreement is another essential for optimising all the funding opportunities at your fingertips. These agreements are in place on landfill sites between different parties, including landowner and site operator and site operator and the third party to whom they sell the energy which has been generated.
This agreement can sometimes be misunderstood, as they change frequently and are often inherently flexible. The power purchase agreement can change from day to day or month to month, and often key parties are not fully aware of their implications.
Local authorities should ensure they know the terms of these agreements (including how long they’ll last, or when a new change is expected) to make sure no funding is lost.
3. Engine optimisation
Every landfill site operates using multiple engines. They are often widely variable, with differences in size and scale. These engines are also often operated by different entities, and prone to rapid change.
Each of the engines on any given site has a unique identity, and the results from all engines are prone to be recorded as a separate entity. This provides many valuable insights, but it can also lead to gaps in financial information, to the detriment of local authorities with a stake in the process.
A simple way of resolving this issue is to find out how many engines are on site, and ensuring the output anticipated is recorded each month. This may lead to reconciliation becoming necessary between the various parties with a stake in the site.
It usually takes an analytical review trend analysis to spot discrepancies, and all payments can be re-calculated and repaid once identified.
How to gain funding leverage from additional royalty earnings
Lumify Energy estimates that around 25% of the country’s local authority waste sites host landfill gas equipment. As such, it’s crucial to recognise the funding opportunities that lie untapped in royalty back payments and revising agreements. Just because councils might not have the time or in-house expertise to investigate agreements, there’s no need to miss out.