Veolia wins operations contracts for two Japanese biomass plants

Paris-based Veolia, through its subsidiary Veolia Japan, has won two contracts to operate two biomass power plants in northern Japan in partnership with local environmental services company Takeei. The 20-year contracts represent cumulative revenue of €90 million ($96.33 million) for Veolia.

The two facilities, located in the cities of Hirakawa and Hanamaki in the Tohoku region, will produce 100 gigiwatt hours (GWh) of electricity per year, the equivalent consumption of 22,000 households, Veolia says.

The two contracts are based on the circular and local use of resources: the wood used to fire the boilers comes from neighboring forestry industries. Veolia says it will manage the overall operations of the biomass facilities, including the plants’ 40 employees. Operations will start in Hirakawa in November 2015 and in Hanamaki in December 2016.

The operations are being carried out within the framework of the AssetCo-OpCo financing package, in which funding is provided by the Asset Company held by Takeei associated with municipalities and local foresters. The operations side is undertaken by Veolia via an “Operating Company.”

Through the development of “AssetCo-OpCo” partnerships, Veolia says it is prioritizing the development of attractive business models for cities. The company says its model is based on the group’s ability to attract private partners to fund investment needs while guaranteeing operational performance.

With the operations, Veolia and Takeei plan to increase the production of renewable energy on Honshu Island and to diversify the country’s energy sources. In all, the facilities will make it possible to avoid the emission of more than 40,000 metric tons of CO2, Veolia says.

Régis Calmels, senior executive vice president Asia for Veolia explains, “It was Veolia’s expertise and ability to adapt to the Japanese customs that enabled us to win the two contracts. These first energy services contracts are confirmation of Veolia’s growth in this field in Asia. Japan wants to triple the share of renewable energies in its energy mix by 2030, and that is opening up significant prospects for the company, in particular in the area of biomass power plant operation.”

After having won contracts to operate two of the largest biomass power plants in North America and, recently the largest one in Ireland, Veolia says the new contracts further confirm its global expertise in biomass power plants.

Active in Japan since 2002, Veolia designs and implements water and wastewater management solutions for local authorities and industries. In Osaka and Tokyo, Veolia recently renewed its customer service management contracts serving 4 million customers. Veolia also manages the public water service for the city of Hakone, west of Tokyo, which includes operation of water supply to the “onsens” or traditional Japanese bathing facilities. With this contract, Veolia says it has become the only foreign private operator in Japan to operate a complete water service under a public service delegation contract.