Waste management group Cleanaway (ASX: CWY) has entered into a joint venture (JV) to generate electricity from the gas at its Lucas Heights landfill in southern Sydney, with its partner LMS Energy set to invest $46 million in new bio-electricity assets.
LMS, an Australian bioenergy and methane abatement company, will build a 22MW generation facility to replace existing electricity generation infrastructure owned and operated by a third party.
Cleanaway will contribute exclusive rights to the landfill gas at Lucas Heights for 20 years through the joint venture, in which both parties hold equal ownership.
The waste management company expects incremental earnings of $5 million in FY25 and $10 million in FY26, thanks to the sale of landfill gas, provision of services, as well as from the JV itself.
Beyond FY26 and after the full commissioning of the assets, assuming current operating and regulatory conditions, Cleanaway expects the partnership will deliver incremental earnings of $15 million annually.
"Optimising our landfill gas opportunity is a key focus area of our Blueprint 2030 strategy and is part of our Operational Excellence program of work," says Cleanaway chief executive officer and managing director Mark Schubert.
"Today’s announcement is particularly rewarding, as it represents a meaningful step towards achieving our target of more than $50 million of EBIT in FY26 from the Operational Excellence program.
"The JV aligns with our commitment to disciplined capital management, and utilising capital-lite approaches to grow earnings and drive improved returns for shareholders while also supporting our commitment to reduce greenhouse gas emissions."
The JV remains subject to customary third-party approvals.
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