BMI View : We believe that the new waste-to-energy (WTE) project being built in Jawaharnagar, India is a viable alternative to carry out waste disposal in India. Due to a lack of proper infrastructure, waste disposal is becoming increasingly problematic in India and will continue to be a thorn in the government's side as waste generated is expected to grow significantly even in the long-term. We also believe the project highlights significant scope for growth in WTE technology in India and many other countries in the region.
Ramky Enviro Engineers, a waste management and environmental services company based in India, will begin construction of a 48MW waste-to-energy (WTE) facility in Jawaharnagar, according to a report by The Hindu. The US$115mn project will consume 2400 tonne of waste per day, and is expected to be operational within two years of construction should all government approvals be secured. The facility will reportedly benefit from the technological support of Chinese WTE specialist Sanfeng-Covanta - a joint venture 40% owned by New Jersey based Covanta Energy.
We believe this project is a viable alternative for the proper disposal of waste in India. Waste disposal has become increasingly problematic in India as the country lacks the infrastructure - namely incineration plants and sanitary landfills - used by more developed countries to dispose waste. To be sure, studies conducted by the government have shown that up to 90% of municipal solid waste (MSW) is unsatisfactorily disposed, even in developed cities.
|Demographics Driving Waste Generation|
|India - Population, Mn (LHS); Urban Population As A % Of Total, % (RHS)|
The amount of waste generated in India is expected to grow significantly over the long-term, making the case for WTE even more compelling. Waste generated in the country grew significantly over the last decade as a result of urbanisation and higher per-capita consumption, and will continue to grow going forward as these trends - and the country's population - grow further. To be sure, the country's Ministry of New and Renewable Energy (MNRE) has estimated that MSW generated in India will grow at a rate of 1-1.33% annually for the foreseeable future.
That said, we highlight that WTE projects implemented in India are likely to experience several difficulties:
No public system for primary collection of waste.
No storage of waste at source.
Ineffective and manual waste transportation systems.
Processing of MSW is hardly conducted, even in major cities.
We believe that to address the above problems, the Indian government will have to invest in infrastructure that facilitates a large-scale WTE programme and cleaner waste disposal processes. As Ramky is a private partner of state-owned Greater Hyderabad Municipal Corporation, we believe that it would be able to bypass some of these problems by receiving additional assistance from the government.
WTE: Growing Across The Region
We believe there is significant scope for growth in WTE technology across Asia. This is not just in India, but in many other countries in the region. Per capita waste generation in many less-developed countries in the region is still significantly lower than in more developed areas, and this gap is likely to close over the long-term on the back of economic growth and urbanisation.
|Per Capita Generation Still Low|
|Asia - Daily Urban MSW Generation By Country (1997), kg/capita|
Our belief is further underpinned by the nature of waste produced by the different countries in the region. In particular, compostable waste, which is appropriate for WTE plants, accounts for approximately 40% or more of total waste generated in many low- and middle-income countries.
|Compostable And Paper Waste Positive For WTE|
|Asia - Waste Composition By Country Income Bracket (1999), %|
We have already witnessed an increase in WTE projects in the region, particularly in emerging economies. In April 2013, the Asian Development Bank announced that it would be extending US$200mn in loans to Dynagreen Environmental Protection Group to develop WTE projects in small- and medium-sized cities in China. While the country is the second largest producer of solid waste in the world, per capita production of MSW in China stands at only 20% of the average in industrialised nations. The government has also said that more than 100 new WTE plants are in the planning stages.