Pennon Group Plc, owners of South West Water, has just announced that its subsidiary, Viridor South London Limited, has signed a 25 year South London Waste Treatment Services Public Private Partnership contract with the South London Waste Partnership of the London Boroughs of Croydon, Kingston, Merton and Sutton.

The contract requires the treatment of the Partnership's residual municipal waste through the financing, construction and operation of a new Energy Recovery Facility (ERF) at Viridor’s landfill and recycling site in Beddington, Sutton. The contract requires the treatment of around 200,000 tonnes per annum of waste and is designed to achieve around 92% landfill diversion. The ERF will have additional capacity to treat around 75,000 tonnes of commercial and industrial waste and will have a power generation capacity of 26 megawatts of electricity.

The contract is subject to Viridor's gaining planning permission to build the plant. Viridor submitted a planning application to the London Borough of Sutton in August 2012.

The project requires capital investment of approximately £200 million by Viridor and the plant will be built by Lagan-CNIM as the EPC Contractor. Viridor's investment is to be financed from internal funds as required. It is expected to be earnings enhancing in its first full year of operation.

Commenting on the deal, Colin Drummond, Chief Executive of Viridor, said:

"The Beddington ERF in south London will make a major contribution towards the Capital’s ambitions to achieve self-sufficiency in waste treatment and to maximise renewable energy generation. It is a further important step in the roll out of Viridor's PPP pipeline and represents a key part of Viridor's growth strategy.”