Identifying Likely Late-stage UK WTE Projects UPSTREAM MIDSTREAM DOWNSTREAM FUEL & TRANSPORT

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1 Identifying Likely Late-stage UK WTE Projects Chris Cothran, Analyst, Gasification UPSTREAM MIDSTREAM DOWNSTREAM FUEL & TRANSPORT

2 Our Research Divisions Strategic insights across the energy value chain Upstream Midstream Downstream Fuel & Transport Drill down with a groundlevel look at the fields, wells and companies involved in E&P. Move confidently in new frontiers that are being shaped by changing supply/ demand dynamics coupled with investments in pipeline, rail and ship logistics. Thrive in an environment where crude oil supply dynamics and product demand trends are structurally evolving. Accelerate innovation with a comprehensive understanding of policies pertaining to petroleumbased fuels, biofuels and other alternative fuels. Stratas Advisors. All rights reserved. 2

3 Objectives: 1- Highlight opportunities in United Kingdom WTE gasification. 2- Isolate and highlight specific indications of successful projects. 3- Present findings of research and investment projections. Stratas Advisors. All rights reserved. 3

4 The UK Advanced Waste Gasification Project Landscape Aberdeenshire WTE EnergyPark Sutton Bridge North London WTE APP Birmingham Glasgow WTE South Wales WTE Advanced Plasma Power Gloucestershire Project Staffordshire WTE Barr Killoch Energy Recovery Park Great Blakenham WTE Stockton-On-Tees WTE Beddington WTE GreenSky Stoke on Trent WTE BH EnergyGap WTE Grimsby WTE Stoneyhill Resource Recovery Park Bilsthorpe Energy Centre Hertfordshire WTE Surrey WTE Birmingham Bio-Power Honda Energy Centre Sutton Bridge WTE Birmingham WTE Houghton WTE Tees Valley 1 Bombardier WTE Hull WTE Tees Valley 2 Bradford WTE Irvine WTE Thames Gateway Power Facility Bristol Recovery Park Isle of Wight WTE Plant Trident Park WTE CHO-Power Knowsley WTE Welland WTE Clay Cross WTE Lanark WTE/Levenseat WTE West Sussex WTE Derby WTE Milton Keynes Waste Recovery Park Wiltshire WTE East Lothian WTE New Earth Solutions Group Energy Works Newry WTE Stratas Advisors. All rights reserved. 4

5 1. Assessment 2. Scoring 3. Weighting 4. Ranking 5. Projections Score Technology Permitting Structural Financial Proponents Size (Combined) 5 Market Leading Fully Permitted 4 Commercially Available 3 Commercially Available W/Innovations Air Permits, Wastewater Permit Siting Permit Share Site, Part of Major Complex Proximal to Infrastructure, Modular Construction Advantageous Location FID, fully financed Majority equity, good support (company size consideration) Some Equity, Government Support Project Size (Inverse Score) Major <$10 million Large $10 million to $100 million Medium $100 million to $1 billion Project Progress Under Construction, Commissioning, Production Ramp-Up FEED, Post-FEED, Pre- Construction, Preliminary Construction, Long Lead Items Ordered Major Contracts/Agreement s Secured, Supportive Indications 2 Demonstration Only 1 Unproven/None Selected Proposal Remote Some Equity Small $1 to $5 billion None Remote, Complex None/requires incentives, government support No revenue $5 billion + Preliminary Design, Permitting Ongoing Announcement, Feasibility Study Stratas Advisors. All rights reserved. 5

6 Stratas Advisors Top 20 Plant CAPEX (B$) MW EL Stratas Advisors Score Tees Valley Glasgow WTE Great Blakenham WTE Tees Valley Welland WTE Birmingham WTE Thames Gateway Power Facility Birmingham Bio-Power Surrey WTE Milton Keynes Waste Recovery Park Derby WTE Stockton-On-Tees WTE Grimsby WTE East Lothian WTE Hertfordshire WTE South Wales WTE Energy Works Lanark WTE/Levenseat WTE Gloucestershire Residual Waste Project North London WTE Stratas Advisors. All rights reserved. 6

7 Key Drivers for UK WTE Gasification Development ROC Program (Advanced thermal gasification treatment projects receive double credits). UK government banding review Top 25 Additional Capacity Contribution in MW EL North Sea gas supply declining. Shift to renewables. EU Landfill Directive- By 2020 reduce the biodegradable waste landfilled to 35% of that produced in Stratas Advisors. All rights reserved. 7

8 Industry Milestones of Note: Accelerating UK WTE commercialization Timeframe Development March 2015 Levenseat Renewable Energy (400 KTPA, $166M, 12 MW) FID March 2015 April 2015 Mid 2015 Hertfordshire (90 KTPA, $90M, 10MW) FID Northamptonshire (60 KTPA, $77M, 9 MW) FID Air Products continues commissioning of Tees Valley facility. August 2015 Milton Keynes construction peak (60 KTPA, $100M, 9MW) Dec 2016 start Construction underway in Tees Valley, Glasgow, Northamptonshire, Birmingham, London, Buckinghamshire, and Gloucestershire. Air Products Tees Valley Renewable Energy Facility under construction (2014). Stratas Advisors. All rights reserved. 8

9 STRATAS ADVISORS SCORE Project Viability Distribution Distribution of Top 25 Projects by Viability/Capex/Size Top 11 projects utilize commercially proven advanced thermal treatment gasification technology by companies such as Alter NRG, ENERGOS, Nexterra, and Chinook Energy The presence of large companies in the waste-to-energy space in the UK is novel but growing trend. Supermajority of high-viability projects are under $321 million in capital expenditure and typically of 9 MW to 30 MW CAPITAL EXPENDITURE IN BILLION USD Average high-viability project size : 22 MW. Stratas Advisors. All rights reserved. 9

10 Our Assessment: MSW will increase marginally in line with population growth. Advanced thermal treatment incentives will help kick off broader commercialization efforts. Operational High-Viability CHO-Power projects 100 UK advanced gasification waste-to-energy projects by We project 32 operational in Concentration around major urban centers to support >100,000 tpa of MSW per project. Stratas Advisors. All rights reserved. 10

11 Opportunity in Focus: UK Gasification Where is the opportunity? Where is the growth? What is this growth expected to facilitate? Answer: The United Kingdom has a confluence of factors that indicate strong support for thermal treatment technologies, including gasification. As a result, by our assessment to 2021 we project: ~1 Gigawatt of electrical capacity from the gasification of waste $7.73 billion ( billion) of potential investment from Total waste processing capacity of 978,000 tonnes per annum in Stratas Advisors. All rights reserved. 11

12 Stratas Projections to 2025 The UK gasification opportunity is dominated by waste gasification for power applications some 3.2 GW of proposed capacity. Some limited cleaner coal applications (Post-2021)-- likely integrating offshore EOR and CCS. Stratas Advisors. All rights reserved. 12

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