Waste Incineration: Its Role in Circular Economy
What role does waste incineration play in the circular economy and in the transition away from fossil fuels?
Sebastian Siewers, Head of Energy at EEW, talks about the contribution of waste-to-energy plants to the circular economy, and the energy system.
What you’ll hear in this episode:
- The business model behind waste to energy: where the revenue comes from, what drives costs, and why CO2 is becoming a major factor.
- What grid flexibility means, why it has become more important than total energy supply, and how negative pricing hours in Germany have more than doubled since 2023.
- Why heat and steam are local infrastructure products and how German municipalities are starting to plan around them.
This is the second episode in “Incineration in the Circular Economy,” a series sponsored by NEEW Ventures.
Video Impression
People
Sebastian Siewers, Head of Energy at EEW
https://www.linkedin.com/in/sebastian-siewers-2494731b4/
Patrick Hypscher, Circular Business Strategist, PaaS Expert
https://www.linkedin.com/in/hypscher/
Chapters
0:00 Intro
1:43 Role of Waste Incineration in Circular Economy
4:36 Business Model Behind Waste-to-Energy
7:40 Costs and Carbon Regulation
10:29 Energy Transition Impacts
14:02 Steam and Heat Infrastructure
20:25 Flexibility Needs
23:34 Flexibility Infrastructure
28:28 What Consumers Can Do
30:52 Outro
About
EEW Energy from Waste GmbH (EEW) is one of Europe’s leading companies in the field of thermal waste and sewage sludge recovery. Today, EEW makes an important contribution to climate and resource protection and is therefore an essential part of the circular economy. At the company’s 17 current sites, around 5 million tonnes of waste per year can be used for energy recovery.
More than 1,400 employees take responsibility for using the energy in waste, reducing waste volumes, safely and harmlessly eliminating hazards from waste, and recycling scrap metal and composite materials. In addition, the energy contained in waste is used efficiently to generate process steam for industrial plants, district heating for residential areas and electricity produced in an environmentally friendly way.
Further Links
https://www.neew-ventures.com/
https://www.eew-energyfromwaste.com/
Transcript
[00:00:00] Intro
Sebastian Siewers: We are moving away from simple disposal to really to resource recovery has a huge impact to our business model as well as to society and to circular economy. And it is really about the energy, it’s about the carbon and the circularity. Residual waste is inevitable but wasting it is not an option.
Patrick Hypscher: My name is Patrick Hypscher. And this is Circularity.fm, the podcast about understanding, building and managing circular business models.
Here we are at our second episode of the series Incineration in the Circular Economy. In the last episode, Philipp Böhm, managing director of NEEW Ventures, took us on a tour through a waste incineration plant. If you ever wondered what happens to the waste in your garbage bin, you should definitely listen to that one.
Today we zoom out and talk about the contribution of such a plant to the circular economy, the energy system, and the role of waste to energy in carving out fossil fuels. If you want to get the key learnings from this conversation and an overview of upcoming circular economy events around the world. Sign up for the Circularity.fm newsletter. You can find it at www Circularity.fm.
[00:01:43] Role of Waste Incineration in Circular Economy
Patrick Hypscher: He’s an engineer by training and worked for over a decade in energy sales already. One and a half years ago, he joined EEW where he is now, the head of energy. Welcome Sebastian.
Sebastian Siewers: Thank you very much Patrick. Highly appreciate to be here.
Patrick Hypscher: Sebastian, we want to talk about energy. But let’s first start with a personal perspective. When do you personally feel the most energetic?
Sebastian Siewers: Yeah, that is a good question. Business wise, certainly on private terms it’s different, but business wise, even in the past it has always been just the interface between economical processes, between markets and when this hits the physical constraints, that makes it really interesting to myself. So I like, how markets are able to really find efficient ways of allocation. And this is something what, obviously in the energy market, especially in the power market, is something what is really crucial that’s something what really energized myself. We’ve seen already in the crisis, 2022 in February in Ukraine, where EU took a lot of effort really to let the market run, even though they did subsidized on the one side and taxes on the other.
But they still want to have the market. And that was, from my point of view, even though it created a lot of effort, what was right decision because this creates efficiency and that energizes me. Yes.
Patrick Hypscher: Okay. And is this like a single moment? You can measure in minutes or hours because what you described to me as a fairly outsider sounds like a period of time that right now, already last four years. So are you at your highest energy level since four years already? Or how does that fluctuate?
Sebastian Siewers: Treat it as a constant flow of energy. That’s how I really keep it. And, even though there, there are obviously peaks in it and special market phases are kind of, of more energizing. You need to put more effort in it. What we see currently in the crisis in the rain is certainly a very dramatic situation. But from the market perspective, this is always something what puts you more effort into analyzing, into creating decisions out of it. And yeah it’s kind of also energizing to myself as well situations.
Patrick Hypscher: Yeah. Cool. Fortunately you seem to have the job for that.
Sebastian Siewers: I suppose so. I did the right thing and it’s also good to be at EEW and we have lots of potential and great people around us that really makes a lot of fun.
Patrick Hypscher: Yeah. Sebastian one week ago Philipp took me on a visit to Premnitz and he showed me and us and the listeners how a waste to energy plan actually works. Today, we want to zoom out a bit and talk about the overall business model and where waste to energy sits, in the energy system, but also in the circular economy. So let’s kick off that conversation with the overall question. What’s the role of waste incineration, uh, in the circular economy?
[00:04:36] Business Model Behind Waste-to-Energy
Sebastian Siewers: Yeah. What’s the role in the circular economy? Let me put it very simple. From my personal point of view, even in the fully circular economy, there will be the residual waste and this will remain. So there’s no real way around it. But the really crucial question now is do we waste it or are we able to use it intelligently? That is the point. if you are asking about our role as, for example, EEW with our waste intonation plants in Germany, we have a very specific role. You can probably summarize it very much as the critical infrastructure. That’s what we are since we offer a safe treatment of waste. Which is really crucial in, in order to avoid all the circumstances which are connected to if you can’t have any proper waste treatment and the waste is around the streets, et cetera, obviously also why we are critic. Um, but the second role and a very important role is the energy generation. We do produce energy. that was why I asked do we wanna waste it? No. We take waste as a resource and the resource is being converted to energy. And this may lead to power, and to steep also very important role. And the last point from these three is the material recovery. Once we are able to burn the waste. obviously part of the waste are really potential resources. are different kind of metals in it, et cetera, and these are produced more or less converted from the insulation process. And everything what is recovered from the burning part can be recovered and it goes back into the value chain. So, that’s from my point of view our role in, in the circular economy. We are moving away from simple disposal to really to resource recovery a huge impact to our business model as well as to society and to circular economy. And it is really about the energy, it’s about the carbon and the circularity. Residual waste is inevitable but wasting it is not an option.
Patrick Hypscher: Right. So technically it’s a pragmatic approach where for you, what others regard as waste is not, waste is a resource where you get as much energy out of it, or sometimes even like, methods or other, resources, but, mainly energy and let’s say not waste the waste .
Sebastian Siewers: Let’s not waste the waste. Waste. Exactly. That’s the punching line for it.
Patrick Hypscher: Yeah. Okay. So this is a bit the macroeconomic and circular view. We also want to talk about the business model. What’s the model behind waste to energy for EEW?
[00:07:40] Costs and Carbon Regulation
Sebastian Siewers: Yeah, our name states it very good energy from waste. you can imagine that this already has something to do with our business model, but to put it very simple. We are on, on disposal for burning waste and we get actually the fee for it. There are municipals and different counterparties, which need to get rid of the waste. This in ideal cases are recycled before, so everything which is valuable should have been taken out of it before. And yeah then we get the waste to our plants. We get an get a gate fee for it, and once we burn it, we have different factors of output. And these output factors are quite valuable . that also plays into our business model. The output is electricity. We produce electricity we have on turbines and on generators, and are able to produce this for the grid as well as part of the thermal process we have heat is something you usually use for classical approaches in warm water or heating of living districts.
That is possible. And the last opportunity for an additional value stream, part of our business model is the steam. Steam is also something which can be used in different processes as well. So these are the key factors of our business model. We have obviously a very crucial responsibility in society as everyone will see what’s going to happen if the rubbish doesn’t get rid of the streets and still plays a role there, or it’ll be dumped somewhere else, which isn’t really an option for us. So, yeah. We get it, we burn it and different kind of resources afterwards.
Patrick Hypscher: And on the revenue side, you mentioned the gate fees. Is it stable? Do you get the same fees for the same kind of waste? Or are there different kinds of waste that also make a difference in terms of the fees?
Sebastian Siewers: Yeah, well, the market for waste is a market which also has demand and supply in itself. So there are times where you have probably recessions where not as much waste is accessible. All these different times of availability and supply and demand curve do have an actual impact on the gate fee. That is something which isn’t that much predictable things like the economical crisis in 2008 or 2009, or Corona or maybe Iran. No one is expected and these have an impact on what’s gonna be produced on the waste side.
Patrick Hypscher: Okay. And so far about the revenue side of the business model, on the cost side what are main cost positions? I imagine EEW does have cost.
[00:10:29] Energy Transition Impacts
Sebastian Siewers: Yeah, of course we do have costs. Yeah. Once you own and use and and plant that obviously is not getting younger. We use it for a thermal process, so the entire maintenance cost are certainly in a very significant part of our cost block. We are very qualified and very highly qualified colleagues in our roles. From engineers to technicians to people in the office, which do actually make it sure that we can deliver the process we have sold. But these are probably what’s major drive? This drives our balance sheet. It’s, the cost from keeping our plans alive letting them run as well as very qualified personal. That’s probably the main drivers of our business model today.
Patrick Hypscher: Okay. Can you give also a rough indication about the importance of like carbon credits? I assume EEW has to pay for the emissions that’s caused by the waste. Is it relevant on the cost side?
Sebastian Siewers: Oh yeah very much relevant. The thing about taking the credits or more or less putting the CO2 in the atmosphere is something which obviously comes about in our process. but we are not those who really create the waste. So in most cases the customers do actually pay the fee for the CO2. But the market itself is a very highly regulated market. We have different regimes. We came into BEHG we are facing least it’s within discussion but postponed and postponed to go into the ETS two. So these are different markets kind of mechanisms which try to avoid additional CO2 emissions, which totally makes sense. We get it, we actually would like to reduce our CO2 footprint as much as possible. But it comes about in, in the process of burning the waste we’re receiving from others. We have invested, we have created different techniques of capturing the CO2 from the steam gas. These do work, but it’s highly costly to do so. You have to put a lot of energy into it to separate the CO2 and even the models behind it. What can you do with it? Will you storage or will you utilize it? That these models are very costly and there are no mechanisms so far to really be able to do so on large scale. To back to your question, yes, CO2 is a, has major impact um, our customers and we try to reduce the CO2 impact as much as possible. But we always see where it comes from and it’s not from us. Actually only burn it
Patrick Hypscher: Yeah okay. And we will have a deep dive on carbon capture with Jörn Jakob in one of the upcoming episodes, anyway, and also with Fabian Böhmer as head of circularity on the report and ETS and the carbon. Let’s come back to the energy dimension.
EEW and any other company operating in that field get gate fees, and you get paid for the energy you produced. And you already mentioned at the beginning where kind of living in interesting times to put it in a neutral way. So, the energy market is pretty dymamic
these days, weeks, years for geopolitical reasons, but also for reasons of climate change and energy transformation. So, let’s start with this overall transformation. What are the consequences of this transition from fossil fuels to renewable energy for a waste incineration operator, like, EEW.
[00:14:02] Steam and Heat Infrastructure
Sebastian Siewers: Patrick there’s not just one consequence. So we’ve started in Germany with the in Energiewende, the energy transition. This is actually huge process, which has not been totally delivered in five years, in 10 years. This is an ongoing process, which already lasts since probably 2000 in Germany. I would say energy has become a much higher value itself. If we look on an it’s a nation process where we win heat, where we win steam and electricity, we can actually treat the waste as in very high, more as in high valuable resource, which can be converted into energy. And in this transition process, all kinds of energy a huge impact on the availability and the, even the possibility to transform the entire system. Let’s start with heat. Heat and district heating is something what can substitute classical fossil gas. You don’t need any extra power once you are able to have heat from and thermal process. So in this transition, heat, especially in heating in, in larger areas, really has a high value as well as steam. Steam is used in chemical processes. It’s been used in industrial processes around food, as well as in different other manufacturing processes. And that’s something what probably in the history has not been so much value. You look very much into where’s the next Autobahn? Where’s the opportunity to have good transport. But this is something probably today you would look at differently. If you are able to be around one of our sites, you can have steam. Which is green steam, which can be used for your processes and that at an attractive pricing. So it really is an advantage of your location. If you, maybe, for example, the round of one hour sites, something what is also an implication, the value of heat, the value of steam, and as well as the value of electricity. Electricity in the conversion from, or more or less going away from fossil fuels, um, into more of a wave with the more renewables in the system has also a big impact. Let’s look at the forecast, we expect something around 400 gigawatts of renewable capacity by 2030. In the same time the nuclear has gone, the coal has been phased out and we have the attempt to have the entire system much more clean. On the other side, we obviously have aspects like EVs more mobility application. We have heat pumps, we have huge demand, which is expected from data centers. Something roughly about 15 gigawatts at least that’s the current expectation we want to have, green hydrogen so we need electrolization capacity. All these do lift the current peak situation the peak demand in the network of 70 to 80 gigawatts to expect expected 150 gigawatts, so higher need, more need of electricity. And this combined with the generation of more or less, more renewables in the system. Shows the entire shift of an structure, which has been, where the power has been produced, centralized and delivered from the different grid areas to the customer. Now it’s being produced, decentralized and also used decentralized, so an entire different system. And the big change is that in the past the production was very much stable. Yeah. That there were different plants, which we were able to, go for peak demands, but that what we call the base load was produced by different facilities, which were mainly driven either by nuclear or by coal. So these are more or less gone and we have renewables on the other side. And the effect was basically and that’s what you asked for, is a much higher volatility in the market from 50 minutes to 50 minutes. If you look on the negative hours, which is maybe quite a good indicator, in 2023, we had roughly 300 hours of negative pricing so that there was less demand than supply. In 2024, it was about more than 450 hours, the expectation even in the next years, something between 600 and maybe more than 1000 hours, which will be on negative pricing. So how the loop comes about to EEW now we need to look into the future. The value of being able to produce electricity whenever it’s needed has a total different value now. So we look at this issue very intensively. We try to flexibilize our production. We have included battery storage systems Patrick, I’m sure you’ve seen it in Premnitz in our, on our sites, we really need to be able to produce the electricity whenever it’s needed in the market. And that shows flexibility on our side. You know, we still need to burn the waste and whenever it comes but have to find different ways of reacting into this market signals and different ways to, to support the energy vendor to, to support the energy transition. And that is a big challenge for us, I can assure you, but it’s worth it. It’s worth it since all of us are still heading for this big goal of supporting a renewable society, a renewable industry in Germany.
Patrick Hypscher: Okay. Basically because of the phase out of fossil fuels, there is a higher demand and also more appreciation and attention on energy from waste. And on top of that, since the supply and demand is changing there is a higher need for flexibility, which also puts some pressure and changing demands on EEW.
Sebastian Siewers: Yeah, on a punchline Patrick. Flexibility is the new base load and the system does not have an energy problem and has a timing problem.
[00:20:25] Flexibility Needs
Patrick Hypscher: Mm-hmm. Mm-hmm. And let’s, unwrap that a bit based on the three, kinds of energy you mentioned. Let’s start with steam. You already mentioned it a bit, but what do you mean by steam in terms of temperature or humidity? And, can you give, one or two examples of companies using it?
Sebastian Siewers: Yeah, of course. If you look into steam, we are looking onto different temperatures as well as different pressures. these, you wouldn’t go for any standard. Yeah. You or less look on the different applications you see on your customer side, then you have roughly temperatures of close to 300 degrees, and pressure is about 35. That’s what you see basically. Yeah, there, there are different customers with different needs on one of our sites in Delfzijl in the Netherlands we are integrate in a chemical park, so in this chemical processes. Our customers need the steam on a different temperature and on a different pressure level to use it in their chemical processes. That’s what they need it for. And yeah, all different applications from chemicals to food that’s what we basically see our customer share.
Patrick Hypscher: Okay. And this is basically also kind of infrastructure decision you mentioned already that some companies who are in closer proximity to a waste to energy site benefit from this steam, which you probably can’t transport across 100 kilometers. You have to be close to a plant to keep the pressure and the, temperature.
Sebastian Siewers: Totally right? Yeah, it’s always pipeline driven. You always need to build a pipeline for for heat as well as for steam. So if you look in the steam process in a site, mainly they are above ground for all different pressure streams. If you look on a middle pressure, it’s something about five to 2020 bar and 160 to 220 degrees.
That’s the basic range. The high pressure is something 20 to 80 bar, as well as 220 to 480 degrees. These are always connected by pipeline systems aboveground. If you look into district heating, yeah, we have levels around something 110 degrees that’s not untypical. And here you also need civil works, civil engineering, and these are underground. So, yeah, it’s always quite a lot of infrastructure. You need be able to deliver heat or steam to the end customer.
Patrick Hypscher: And when you, uh, say district heat, this is basically the heat that goes into the, the flats.
Sebastian Siewers: Housing exactly for warm water, or as well as for a classical heat in the house or in the roof.
Patrick Hypscher: Okay. And you mentioned flexibility is the new base load. Is there also increasing need for flexibility when it comes to steam and heat provisioning?
[00:23:34] Flexibility Infrastructure
Sebastian Siewers: I wouldn’t say it’s an increased need for flexibility because people need to heat their house whenever it’s cold. Industrial processes in chemicals, as well as in food, they need the steam whenever the process does afford it.
So the flexibility isn’t really there, but once you wanna flexibilize your power production, you need flexibility in steam and heating. And this can also be done by additional flexibility providers. Yeah. You can have different storage system. It doesn’t necessarily has to be power storage system. It can also be heat storage system, which helps to really be able to decouple the heat, the steam with electricity production. So the customers they don’t need the flexibility.
It’s us who need the flexibility and obviously we discuss this with our customers as well, whether they can offer us any flexibility so we can use it in an electricity market to make the energy transition, to make it work. But once they’re very much process driven it only helps to decouple the electricity production from the heat and steam. And this by any kind of technique to provide storage.
Patrick Hypscher: Okay. And last question on steam and heat. There is at least in Germany, this ongoing debate, again about phrasing out fossil fuels when it comes to heating. And cities are supposed to have energy transition plans. Is there actually already an increasing demand from cities, municipalities to consume heat for the citizens?
Sebastian Siewers: Yeah we have in Germany something which is called the Kommunale Wärmeplanung. Yeah. So in all communes there is a big plan of where is the heat being produced and where is the off take. So with this picture, the municipality is in the responsibility to have a good idea of bringing these two the supply and demand together. And that is the point where they come to us and ask, “hey, dear EEW is there any flexibility in your current plant?” If yes, that’s the best answer. Yeah. Then we look on the different look, on the different the distances. How far is it away? Yeah. What is the effort for pipeline system? Is it is it affordable? Can you make it go? you don’t have any flexibility and don’t have any additional heat, you always look into opportunities, how you can produce additional heat. That’s something what we’re doing in negotiation with a heat pump, an additional heat pump on site, that could be possible. Yeah so, so, whenever there’s the need. Most of the municipal have the need to make their entire system green, they come to ask and ask for the green heat and yeah whenever we have flexibility, they’re pretty happy to take it off from us. So that is an entire game changer.
Patrick Hypscher: Okay, cool. Good to know. And now comes again, electricity. You mentioned this is where, flexibility is highly needed. To make sure we understand it correctly. So does EEW provide energy to the grid and then to the whole system? Or are there also constellations where it’s embedded in a industrial park where you have specific contracts with companies just producing nearby is both happening? Does it play a role or how does it actually work?
Sebastian Siewers: Yeah, both things happen
Heat and steam is always a local product. The power can either be sold on site to customers, which are very close to connected. That’s something what works, as well as we sell it to the grid. Grid is the case where the flexibility really is needed on site. It’s more or less of a low price. That’s what the current customers look for. So both things work and yeah, none of our sites is always the same, yeah. They look different. they have dre different restraints, they have different customers. Yeah, whenever there’s an advantage of selling the energy on site, that’s something what we do. Otherwise, it goes into the grid and the grid obviously, the need for the flexibility is very high.
Patrick Hypscher: Okay, and then let’s look at this topic of flexibility. So if I just reflect upon the, let’s say, incoming waste stream that is more or less stable, I guess depending on sometimes, your types of waste. Of course if it’s shortly after Christmas, yeah, you get, a lot of packaging waste or if the gardening season starts, you get flower pots and so on.
So there, there are probably some peaks, but I guess in comparison to the flexibility in the energy grid. You need to balance that a bit. , How can you make this flexibility happen?
[00:28:28] What Consumers Can Do
Sebastian Siewers: Yeah. First of all you need to be able to price the flexibility You
Patrick Hypscher: Mm-hmm.
Sebastian Siewers: to be able to trade it. Otherwise you can’t use it. So that’s sign of something of crucial infrastructure, which has to be done on your own side. Once you’re able to do so, you can predict, therefore you can forecast, you look on the flexibility on our different sites. The boldest thing would be to reduce the capacity of the plant. Yeah. To really run it lower on a lower capacity. That’s something what always works yeah, you, you always have to fulfill your contracts on the waste side. Long as you’re fully booked, there’s not much of a flexibility.
That’s what you are intended already in the question. Then you look into different techniques. So maybe you are able to use more energy on the generator and less for heat was steep, either because flexibility on a storage you discussed the option with your customer. Or you use the capacity of a network. Yeah, especially heat network has a different capacity and you can sometimes run it a bit higher or a little bit lower that is a creator of flexibility. You look in all different options without getting rid of the energy. Yeah. That’s not an option. You don’t wanna waste it. Use the flexibility you have on site from contracts, from storage, from network. That’s what you look at basically. And extreme scenarios, yeah, and maybe for a couple of days, negative prices. Maybe you would even look onto not producing and putting waste into the storage and maybe burning it later when the market needs more of the electricity as well.
That is an option. What you could take as long as you’re able to predict and forecast and then make the right decision for obviously ourselves as a company, but as well for the entire network and the requirements we have there.
Patrick Hypscher: Mm-hmm. Okay. Sounds like a tough cookie and a nice riddle and puzzle to solve,
Sebastian Siewers: very much
Patrick Hypscher: internally. Yeah.
Sebastian Siewers: that has to only be done by lots of intelligence and yeah. That, that’s not so something what you have in your own mind, these
Patrick Hypscher: Yeah.
Sebastian Siewers: processes which work in behind.
Patrick Hypscher: yeah. Definitely can imagine that.
Sebastian, my last question is on that, but more from the perspective of the listeners who mostly sit on the consumer side of energy. Either in companies or as private persons. So is there one thing consumers can do to speed up this transition to a more efficient and flexible energy system?
[00:30:52] Outro
Sebastian Siewers: Yeah. That is actually a very good question. What can customers do? I think the first thing would be to really look into their own flexibility. Knowing what the history has been, that electricity always has been there and you can use the whenever you want. That time is certainly gone. So whoever has flexibility. Will help the entire system to become, or to go a large step into our energy transition. As well as obviously reducing the consumption of energy itself. Yeah. Either on the fossil side as well on the power side. Reducing is probably the best answer to it. I know that most of the customers already have really benchmarked their potential and have very ambitious targets for what they’re going to do and how to save energy. I think it’s the combination of reducing as well as doing measurements to, to ize and help therefore the entire market to be more efficient. If not, so yeah the entire overall cost will certainly be in a factor in Germany, since we need even more capacity on the renewable side, which is only used to the times of solar and wind. Other in the other times they’re not used. And we need a lot of investment in the entire grid to do so. So to avoid these costs, all of us should be really tempted to reduce consumption and the availability of flexibility.
Patrick Hypscher: Okay. And I mean this also makes from a commercial point of view, totally sense. If you reduce yeah, you, you reduce costs. And I guess also flexibility of course requires a couple of investments. But there is a benefit also commercial benefit and having my consumption flexible.
Sebastian Siewers: Totally agree.
Patrick Hypscher: Sebastian, thanks for giving that overview and sharing your insights about this pretty energetic topic.
Sebastian Siewers: Patrick, thank you very much. Highly appreciated to be here and had a good time. Thank you.
Patrick Hypscher: This was the second episode in our series Incineration in the Circular Economy. If you want to get the key learnings from this conversation and an overview of upcoming circular economy events, sign up for the Circularity Circularity.fm newsletter.
You can find it at www dot Circularity.fm. In the next episode, we will see how the waste process can be more digital and transparent, and how this helps to get more energy from waste. Until then let’s drive a profitable circular economy. And please don’t forget, the most abundant renewable resource is your imagination.
My name is Patrick Hypscher And this is Circularity.fm, the podcast about understanding, building and managing circular business models.