Hundreds of millions added to cost of new incinerator

The North London Waste Authority insists the controversial project “continues to be the best value option by far”

Construction at the incinerator site near Chingford (credit: NLWA)

The estimated cost of rebuilding North London’s rubbish incinerator has risen by hundreds of millions of pounds.

In 2019, the North London Waste Authority (NLWA) began work on a project to build a new, larger incinerator just over the border from Chingford, alongside new recycling facilities, at Edmonton EcoPark.

At the time, it estimated the overall cost of the project would be £1.2billion. However, a recent report for the NLWA board, chaired by Waltham Forest Council deputy leader Clyde Loakes, revealed the current estimate is now £1.42bn-£1.52bn.

The report explains the original budget “did not include subsequent inflation”, which the Bank of England believed at that time would remain at around 2% in the coming years. Last October, inflation rose to just over 11%.

The report reads: “The NLWA has successfully mitigated its exposure to the subsequent exceptional levels of inflation, unlike many other major infrastructure projects which have been more adversely affected.

“The upward pressure on the project’s cost has been effectively mitigated with the careful management of borrowing and appropriate risk-sharing with contractors.

“Over 80% of costs for the project are now secured under contract, and it is possible to forecast the outturn cost with a degree of certainty.

“As more of the project is delivered, NLWA’s exposure to inflation risk will continue to diminish, though there is still some uncertainty given the ever-changing financial climate, which is outside the project’s control.”

Construction at the incinerator site (credit: NLWA)

The NLWA insists the current incinerator, built in 1969, is on its last legs and argues it has “a duty… to provide facilities to deal with waste” from the seven North London boroughs it serves “in the best possible way”.

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Environmental campaigners meanwhile have viciously opposed the project, arguing the new incinerator’s capacity of 700,000 tonnes a year will greatly exceed demand, while releasing more pollution.

The NLWA awarded a contract to rebuild the incinerator to Spanish company Acciona in December 2021, estimating it would cost £960million. Work on the foundations is “approximately 75% complete” and Acciona “remains on plan” to finish in late 2026.

When contacted for comment, a NLWA spokesperson argued the project is “on time and budget to deliver at £1.2bn in 2019 prices”.

They said: “Given that it is a project lasting over 10 years with record high levels of inflation currently affecting the economy, it shows careful management that we are expecting outturn costs to include relatively low inflation.

“The project also continues to be the best value option by far for North London’s waste disposal. Sending the waste elsewhere would add at least £20 million per year to the cost for council taxpayers, as well as being worse for the environment.”

NLWA chair Clyde Loakes added: “Many other large public and private infrastructure projects are facing challenges due to the economic uncertainty generated by the mini-Budget of 23rd September, which unleashed well-documented and major inflationary pressures throughout the economy.

“We are all still feeling the consequences of that mini-Budget, whether in the increased cost of our shopping or in the many infrastructure projects that are now far more expensive and, in some instances, delivering scaled-back plans. Despite this, NLWA has been able to successfully mitigate against inflation and continues to deliver value for the residents of North London.”

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