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Veolia gives UK £750m vote of confidence

Cooling towers stand within the Drax Group Plc.'s power station complex near Selby, U.K., on Wednesday, May 4, 2016. Drax Group Plc, the utility converting the U.K.'s biggest coal station to a plant generating heat from compressed waste, says its commitment to curbing pollution could result in getting government support. Photographer: Simon Dawson/Bloomberg©Bloomberg

Veolia said it wanted reassurance from the UK government about its commitment to green energy

France’s Veolia is expecting to create about 600 jobs in the UK over the next five years as part of a £750m investment, in a welcome sign of business confidence in the country following the vote to leave the EU.

The French water and waste management group said it wanted reassurance from the government about its post-Brexit commitment to green energy as its investment plans include schemes to convert waste material into low-carbon electricity and heat.

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Estelle Brachlianoff, head of Veolia in the UK, said that while the EU referendum result had not altered the fundamental appeal of the British market, she was anxious for clarity on energy policy.

“Everything was thrown up in the air [by the Brexit vote] so I’m looking for reassurance that the government is going to keep the same direction of travel on green energy,” she told the Financial Times.

Her comments reflect uncertainty in business circles about the implications of the move by Theresa May, the new prime minister, to merge the Department of Energy and Climate Change into an enlarged business ministry under the leadership of Greg Clark.

However, Veolia’s decision to press ahead with its UK investment drive despite the political turbulence will be seen as a vote of confidence after mixed signals about the economic impact of the referendum.

The closely watched Markit/CIPS purchasing managers’ survey of activity in the manufacturing and services sectors on Friday showed its sharpest drop for seven years. A survey by the Bank of England’s regional agents had earlier found “no clear signs” of a slowdown.

Veolia’s plans include a new agreement with Hertfordshire council to build a 33MW waste-fired power station in Rye House, 20 miles north of London, at a cost of about £270m.

The scheme will add to an expected rush of French investment in UK energy infrastructure this week, with EDF, another Paris-based utility, due to give the long-awaited go-ahead to its £18bn plan to build two nuclear reactors at Hinkley Point in Somerset.

The new plants proposed by Veolia will make a more modest contribution to UK energy needs but Ms Brachlianoff said that, in the long term, waste-fuelled power had the potential to meet 2 per cent of total demand, compared with 7 per cent from the Hinkley reactors.

Incinerating waste to produce heat and electricity is not considered a fully renewable energy source but it emits less carbon dioxide than burning coal — and avoids the methane emissions that result from burying waste in landfills. Environmentalists have raised concern about air pollution from burning waste but Ms Brachlianoff said filters were able to remove dangerous particles and gases before they enter the atmosphere.

Veolia already operates a 35MW plant in south-east London with the capacity to produce enough power for 48,000 homes, as well as heat and hot water for 2,500 local properties, from 420,000 tonnes of waste per annum.

The French group, which employs 14,000 people in the UK, also works with businesses to recover value from industrial waste.

Veolia, spun off from the Vivendi conglomerate 16 years ago, generated just over half its €25bn revenues last year from waste and energy, with the rest from water. The UK is the group’s largest market outside France, with annual sales of about £2bn.

Copyright The Financial Times Limited 2016. You may share using our article tools.

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