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Construction firm Interserve has exited the energy from waste market due to the “unique challenges” of the sector.
The firm expects to take a £70 million hit over the next year or so as it backs out of six contracts worth £430 million, which it entered into between mid-2012 and early 2015.
“We have taken the decision to exit business where we take contractual process risk on the construction of energy from waste facilities,” the firm said. It made the announcement as it reported its first half trading results, which it said had been “overshadowed by the deterioration in the outlook of our energy from waste contracts”.
The contracts include a £146 million deal signed with Viridor in 2012 to undertake engineering, procurement and construction for the Glasgow Recycling and Renewable Energy Centre. The firm noted a “deterioration” in the contract in a first quarter trading update in May. At the time it blamed the issue on the “design, procurement and installation of the gasification plant” as well as “continuing challenges with the supply chain”.
Work on the 15MW plant began in 2013 and it is expected to be completed later this year. The plant will handle up to 200,000 tonnes of waste annually and prevent about 90 per cent of it from going to landfills.
SSE gave the go-ahead to a new £360 million energy from waste plant in May.
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