Our environment correspondent, PAUL LUSHION, on the backroom deals that have been going on to try to salvage Sutton Council’s struggling heat network business
Helen Bailey, the chief exec at Liberal Democrat-controlled Sutton, has been holding emergency talks with incinerator operators Viridor in an urgent effort to salvage SDEN, the council’s struggling heat network.
The discussions included Bailey making a rare visit to the Beddington incinerator – a visit she has tried to keep secret from the borough’s councillors.
Sources at Sutton’s civic offices suggest that Bailey has offered to support profit-hungry Viridor’s application to vary the terms of its licence for its polluting incinerator at Beddington, increasing the volume of other people’s rubbish that they burn by an extra 35,000 tonnes per year, provided that they don’t pull out of their agreement to supply hot water to the 800 Barratt-built homes at New Mill Quarter.
Soaring fuel prices have prompted KKR, Viridor’s new owners, to seriously reconsider dumping their SDEN deal to seek even bigger profits elsewhere.
SDEN, the Sutton Decentralised Energy Network, was the greenwashing cloak used by Sutton’s LibDems in the planning process to justify building the polluting incinerator at Beddington Farmlands, with “green energy”, the water heated by the rubbish-burning furnaces, being pumped to public buildings and customers around the area.
After six years, New Mill Quarter’s residents remain the only customers of SDEN, their pipe network having been built with the help of a £100,000 grant from… Viridor.
Although the incinerator fired up in 2017, so far the heating provided has mainly come from a Viridor land fill “engine”. Bailey and SDEN want Viridor to connect the incinerator to the heating network.
The SDEN project has lurched from disaster to disaster. The mis-firing company has been raised in questions in the House of Commons no less than six times in its brief history.
Amid calls for a full-on fraud inquiry, Sutton Council was forced to order an investigation into SDEN’s finances, where it was confirmed that the business model that underpinned the project’s finances had greatly exaggerated demand and therefore the profitability of the company. By any reasonable estimates, even with the cheap, but not-so-very green, energy pumped from the incinerator, SDEN won’t manage to break even before 2069…
In its accounts, it is stated that SDEN is financially supported by Sutton Council. Without ongoing subsidies paid out of Sutton residents’ Council Tax, SDEN would be bust.
But what has put SDEN under greater pressure has been the 2019 acquisition of Viridor by KKR, an American company whose assets exceed $200billion (or about £200billion, after the damage done to the pound when Croydon South MP Chris Philp was in the Treasury).
The Beddington incinerator was built to burn the rubbish generated from four boroughs – Kingston, Merton, Sutton and Croydon, who together formed the unaccountable local quango, SLWP, the South London Waste Partnership.
Between them, SLWP agreed a contract with Viridor to operate the incinerator worth £1billion over 25 years.
But KKR’s plans for the Beddington incinerator do not involve connecting SDEN to their moneymaking incinerator.
KKR, also known as Kohlberg Kravis Roberts & Co, is a global investment company that manages alternative asset classes, including private equity, energy, infrastructure, real estate, credit and, through its partners, hedge funds.
The smart suits at KKR’s New York offices have become increasingly wary of having any dealings with the small-fry civic officials in Sutton, following a series of damaging reports appearing in the Rotten Boroughs column of Private Eye magazine, which have made LibDem Ruth Dombey the second-most toxic council leader in the country, narrowly trailing Croydon’s discredited Tony Newman. Reputational damage is anathema to hedge funds…
And then there’s money, several millions of it, the likely cost to Viridor of connecting the incinerator to the heating network.
Diverting hot water to SDEN is also likely to have a cost to the KKR profit-driven business plan, which includes the incinerator powering electricity-generating turbines that sell energy to the National Grid.
Delivering hot water to SDEN will mean less hot water to be turned into steam for the turbines, generating less electricity. With prices soaring in the fuel crisis, it is likely that Viridor could get around £40million a year in electricity sales alone.
Sources at Sutton suggest that on her visits to Viridor, Bailey has gone armed with legal advice from a King’s Counsel, hired at great expense by the council.
Should Bailey fail to charm Viridor into a bail-out for the struggling SDEN, New Mill Quarter residents could soon face the prospect of their fuel bills multiplying three, even four times – likely dooming the election prospects at the next General Election of LibDem hopeful Bobby Dean.
Read more: Man behind failing SDEN’s plan is re-hired on £800 per day
Read more: Heat network’s plan depends on 75 homes that don’t exist
Read more: Opposition renews call for full-scale fraud probe into SDEN
Read more: Sutton heat network director quits as fraud inquiry begins
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