Pennon wins London waste contract

Water and waste group Pennon has signed a 25-year South London Waste Treatment Services Public Private Partnership (PPP) contract for the London Boroughs of Croydon, Kingston, Merton and Sutton.

Pennon's subsidiary, Viridor South London, will treat the boroughs' residual municipal waste through the financing, construction and operation of a new Energy Recovery Facility (ERF) at Viridor's landfill and recycling site in Beddington, Sutton.

Viridor will treat around 200,000 tonnes of waste a year and the contract is designed to achieve around 92% landfll diversion. The ERF will have additional capacity to treat around 75,000 tonnes of commercial and industrial waste and will have a power generation capacity of 26 megawatts of electricity.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Viridor will invest around £200m in the plant, financed from internal funds as required. It is expected to be earnings enhancing in its first full year of operation.

Colin Drummond, the Chief Executive of Viridor, said:"The Beddington ERF in south London will make a major contribution towards the Capital's ambitions to achieve self-sufficiency in waste treatment and to maximise renewable energy generation. It is a further important step in the roll out of Viridor's PPP pipeline and represents a key part of Viridor's growth strategy."

The contract is subject to the approval of planning permission for the plant, which was submitted to the council in August.