Following is a question by the Hon Chan Hak-kan and a written reply by the Secretary for Environment and Ecology, Mr Tse Chin-wan, in the Legislative Council today (April 30):
 
Question:
 
     It is learnt that the Government is currently selling the surplus electricity generated by waste-to-energy facilities to the power companies at the prevailing fuel costs of the power companies. It has been reported that the relevant sale prices of electricity are too low, but the power companies are selling electricity to consumers at normal prices. There are views that the Government should make public the criteria for determining the sale prices of electricity, so as to ensure that the electricity generated by waste-to-energy facilities can be sold to the power companies at reasonable prices. In this connection, will the Government inform this Council:
 
(1) since the commissioning of T·PARK, O·PARK1 and O·PARK2, of (i) the amount of electricity generated by such facilities, (ii) the prices at which the surplus electricity generated by them was sold to the power companies, (iii) the criteria for the sale of electricity (including why the surplus electricity from such facilities was sold to the power companies at fuel costs), and (iv) the respective prevailing average tariffs charged by the power companies; the revenue received by the Government from the sale of such electricity;
 
(2) given that the Integrated Waste Management Facilities Phase 1 (i.e. I·PARK1) is expected to come into operation within this year, whether the authorities have drawn up plans for the sale of electricity in respect of the facilities;
 
(3) as it is learnt that the Government sells the surplus electricity generated by waste-to-energy facilities to the power companies at the prevailing fuel costs of the power companies, whether the tariff revenue concerned has been deducted from the permitted rate of return stipulated in the Scheme of Control Agreements (SCAs); if so, of the details; if not, whether the relevant provision will be added when formulating SCAs in the future; and
 
(4) whether it will require the power companies to offer corresponding tariff discounts to the grass roots, or residents living in the vicinity of waste-to-energy facilities; if so, of the details; if not, the reasons for that?

Reply:
 
President,
 
     To achieve the goals of "Zero Landfill" and carbon neutrality set out in the Waste Blueprint for Hong Kong 2035 and Hong Kong's Climate Action Plan 2050, the Government is pressing ahead with the development of a network of advanced and highly efficient modern waste-to-energy (WtE) facilities, including modern WtE incineration facilities and food waste treatment facilities, with a view to moving away from the reliance on landfills for direct disposal of municipal solid waste and transforming waste into energy for the daily operation of such facilities, while the surplus electricity generated can be exported to the power grid of the power companies. According to the existing arrangement, the Government would sell the surplus electricity to the power companies at the prevailing fuel costs of the power companies. The relevant revenue generated would be paid into the general revenue of the Government. My reply to the question raised by the Hon Chan Hak-kan is as follows:
 
(1) and (3) T·PARK, Organic Resources Recovery Centre Phase 1 (O·PARK1) and Phase 2 (O·PARK2) are all WtE facilities. T·PARK is a sludge incineration facility dedicated to treating sludge generated from sewage treatment works. The heat energy generated from the sludge incineration process is recovered to generate electricity. On the other hand, O·PARK1 and O·PARK2 adopt anaerobic digestion technology to convert food waste into biogas for electricity generation. From their commencement of operation till December 2024, the cumulative amount of electricity generated and surplus electricity exported to the power grid by T·PARK and O·PARK1 are tabulated below:
 

Facility	Period	Cumulative electricity generated (million kWh)	Cumulative surplus electricity exported to the power grid (million kWh)
T·PARK	April 2015 to December 2024	492.9	59.9
O·PARK1	July 2018 to December 2024	64.8	18.6

     O·PARK2 began receiving food waste for operational testing in March 2024, during which the contractor was required to test and fine-tune each combined heat and power generation unit in phases. The electricity generated and utilised during normal operation was not reflected, and there was no surplus electricity exported to the power grid. Hence, there are no detailed records for O·PARK2 from March to December 2024.
      
     The sale of surplus electricity generated by WtE facilities to the power companies by the Government does not cause an increase in overall electricity demand. Its actual effect is saving the fuel that power companies would otherwise need to generate an equivalent amount of electricity. If the sale price is set at a level higher than the fuel cost thus saved, it will lead to an increase of the fuel cost. On the contrary, if the sale price is set at a level lower than the fuel cost thus saved, it will be equivalent to subsidising the fuel cost by the Government. The Government has therefore used the prevailing marginal fuel cost of electricity generation saved by the power companies for purchasing such surplus electricity as a basis for setting the price of the surplus electricity, to avoid affecting the tariff. According to the Scheme of Control Agreements (SCAs) signed between the Government and the power companies, the amounts paid by the power companies for purchasing the surplus electricity generated by the Government's renewable energy systems are counted as part of their fuel costs, which are accountable expenses. The power companies are not permitted to earn a return from such electricity purchases.
 
     Over the years, the surplus electricity generated by T·PARK and O·PARK1 has been sold to CLP Power Hong Kong Limited at actual prices ranging from approximately $0.2 to $0.8 per kWh, while the average net tariffs have been charged at rates ranging from approximately $1.1 to $1.5 per kWh. The sale has yielded a total revenue of around $52 million to the Government.
  
(2) The Integrated Waste Management Facilities Phase 1 (I·PARK1) is expected to commence operation this year. The aforementioned existing arrangement will apply to I·PARK1. Upon full operation of I·PARK1, apart from generating electricity for its daily operation, it is estimated that approximately 480 million kWh of surplus electricity can be exported to the power grid each year.
 
(4) Under the framework of the SCAs, the power companies have provided the energy saving rebate scheme and concessionary tariff schemes to offer discounts in the electricity bills to low consumption customers and customers in need, thereby encouraging energy saving and reducing their expenditure on electricity tariff. In addition, through programmes under their respective Community Energy Saving Fund and Smart Power Care Fund, the power companies would assist the disadvantaged in alleviating their expenses on electricity tariff, including the provision of cash subsidies to eligible grassroots families and households of sub-divided units. The Government will continue to encourage the power companies to provide assistance for customers in need having regard to their operating situations.

Ends/Wednesday, April 30, 2025
Issued at HKT 11:55

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