Waste-to-Energy investments: global picture — and what it means for Central Asia and Uzbekistan

Preamble: To Waste or not To Waste

The life of a human being is inseparable from waste production — there’s no question about it. The richer, more sophisticated and advanced a society becomes, the higher the correlation with the waste it produces.

So waste production seems to be an inevitable evil. The aim, then, must be to reduce the amount of waste and thereby limit the damage inflicted on the environment.

Yet making money from waste would have sounded bizarre in the times of Roman emperors, in Shakespeare’s day, or even one generation ago. Now things are different. People have invented ways to make a fortune out of garbage and landfills.

Let’s crunch the numbers and see if one can really get good returns from waste-to-energy projects.

Waste-to-energy (WTE) — converting municipal and industrial solid waste into electricity, heat, fuels or biogas — has moved from a niche environmental project into a mainstream infrastructure class in the last decade. Investors are now treating WTE as a hybrid: part waste-management concession, part energy plant and (sometimes) part industrial recycling business. Below, I summarise the market, why capital is flowing, how projects make money (and how profitable they can be), the main risks and mitigants, and the specifics for Central Asia and Uzbekistan. (Where useful, I cite up-to-date public reports and press coverage; my snapshot is current as of Nov 26, 2025.)

1) Global market and recent momentum

Global investment in low-carbon energy has surged, and WTE sits inside that wave. Market research firms estimate the WTE market at tens of billions of USD today, with projected double-digit growth in many forecasts: one estimate puts the 2024 market near USD ~42–45 billion and projects strong growth toward the end of the decade. Meanwhile, broad energy-sector investment continues to rise into the trillions, helping mobilise capital for waste-to-energy projects as part of clean-energy portfolios.

Key takeaways: market size is growing, development finance and project finance are increasingly available, and governments in many regions are actively tendering WTE projects as part of urban-waste and energy strategies.

2) Why are investors attracted

Investors — green infrastructure funds, utilities, strategic industrial players and some private equity/infrastructure owners — are drawn by a mix of commercial and policy drivers:

• Stable, multi-stream revenues. Typical WTE projects get paid by (a) tipping fees (gate fees) from municipalities or waste operators, (b) sale of electricity (or steam/heat) under power purchase agreements (PPAs), (c) sale of recovered materials (metals, RDF), and (d) sometimes carbon/ESG credits. This mix can give predictable cash flows resembling regulated infrastructure.

• Policy support and circular-economy agendas. National and city plans to reduce landfilling, meet renewable energy targets, or cut methane emissions drive long-term off-take and concession frameworks that de-risk projects. Development banks and multilateral agencies often provide concessional finance, guarantees, or technical support.

• Portfolio diversification for infrastructure investors. WTE projects behave like energy and waste infrastructure: long concession lives, inflation-linked fees, and asset backing — attractive to institutional investors seeking yield and ESG alignment. Recent M&A and buyouts in the sector illustrate the appetite for scale players.

3) How WTE projects make money — the business model

The classic WTE financial model centres on two dominant revenue lines:

1. Tipping / gate fees. Municipalities or landfill operators pay per ton to have waste processed. These fees are often the most valuable and stable revenue for waste-heavy projects.

2. Energy sales (electricity, heat, steam). Power is sold under long-term PPAs to the grid or nearby industrial customers. In colder climates or industrial districts, the sale of heat/steam can add a high-value revenue stream.

Other modest revenues: recovered metal sales, RDF sales, ash disposal/beneficiation, and potentially carbon credits or renewable certificates where those exist. The exact split depends on local tariffs, calorific value of waste, plant technology (incineration, anaerobic digestion, gasification), and plant scale.

4) Profitability and expected returns — realistic ranges (with caveats)

There is no single “IRR for WTE” — outcomes vary heavily by location, feedstock certainty, tariffs and financing. That said, case studies and feasibility studies commonly report project IRRs ranging from low single digits (when public policy support is weak or tariffs are low) up to the mid-teens (10–25% range) for well-structured deals where tipping fees + firm PPAs adequately cover capital and operating costs. Academic case studies and feasibility reports frequently find IRRs >10% in viable markets; some private projects report higher equity IRRs when the concession and revenue model are favourable.

Important drivers of profitability:

• Tipping fee level and escalation: the biggest single lever. A modest change in gate fee or its annual escalation materially moves NPV/IRR.

• Power price / PPA terms: long-term fixed or indexed PPAs help. Merchant exposure reduces returns and raises risk.

• CapEx and technology choice: incineration plants have high upfront costs but predictable output; AD (anaerobic digestion) often has lower CapEx but depends on organic fraction and contamination levels.

• Financing costs & blended finance: concessional or ECA/IFC/ADB backing can transform a marginal IRR into an investable one.

  
  

So, for a project-finance investor, a realistic underwriting band is often 8–15 % project IRR / higher equity IRR, depending on leverage and risk allocation — but every deal must be modelled from local inputs. In emerging markets, however, opportunities sometimes arise to reach project IRR in the range of 25 % to 50 %, which can compensate investors for higher risks.

5) Risks (and how investors mitigate them)

Major risks:

• Feedstock risk: lower waste volumes or poor segregation reduces calorific value and revenue. Mitigants: long-term waste supply contracts, minimum tonnage guarantees, municipal concession contracts.

• Technology & O&M risk: uptime and emissions compliance matter. Mitigants: experienced EPC/O&M contractors, performance guarantees.

• Off-take and price risk: weak power markets or low tariffs. Mitigants: government PPAs, indexed tariffs, diversified revenue (heat/RDF).

• Regulatory and social/environmental opposition: emissions and ash disposal can provoke pushback. Mitigants: modern emission controls, community engagement, and transparent environmental assessments.

Development banks and export credit agencies often bridge the early risk gap with partial guarantees or blended finance, which is a major reason projects in emerging markets become bankable.

6) Exits and investor appetite — evidence from deals

Large strategic acquisitions and private equity play have occurred: Covanta and other major players have been targets of infrastructure investors, and there are precedent exits where strategic players or infrastructure funds bought WTE portfolios — demonstrating liquidity for well-executed assets. These exits show strategic buyers (utilities, industrial groups) see value in owning the whole waste-to-energy chain.

Bottom line: for investors who structure risks (supply, offtake, permits) and secure predictable cashflows, a credible exit path to strategic owners or PE/infrastructure funds exists.

7) Central Asia and Uzbekistan — opportunity map

Central Asia historically has underdeveloped formal municipal waste infrastructure and a comparatively low penetration of modern WTE. That means two things:

1. High need/greenfield opportunity. Cities and countries face growing municipal waste volumes and landfilling problems — creating an addressable market for WTE solutions (landfill gas capture, incineration, AD). Development and PPP opportunities are appearing.

2. Policy and capacity gaps raise project risk. Securing long-term waste supply, tariffs and environmental permits is more complex than in mature markets; reliance on international EPCs and DFIs is common to reach bankability.

   
   

Uzbekistan specifics

• Active government programmes and new projects. Uzbekistan has publicly announced substantial commitments to WTE: press reporting in 2024–2025 referenced government plans and investments (reports mentioned a USD ~1.3 billion commitment toward WTE projects and new tenders/partnerships with foreign firms). There are also specific landfill-gas PPP projects in Tashkent and bids involving international/Chinese firms. Those indicate the government is prioritising WTE to address a mounting waste problem and diversify energy supply.

• Where profitability comes from in Uzbekistan: local returns will be driven by the negotiated gate fees (often set by municipalities or national policy), the contracted power tariffs under any PPA, and the availability of concessional or ECA finance. If Uzbekistan continues to offer long-term concessions and attracts experienced EPC/O&M partners, project economics can look similar to other emerging-market WTE deals — i.e., potentially mid-single to mid-teens IRRs for well-allocated risk deals. But outcomes depend heavily on contracts and foreign-exchange / payment risk mitigants.

  
  

8) Who is investing/financing these projects?

• Strategic industrial players and utilities (they buy or operate asset portfolios).

• Infrastructure & private equity funds (seeking yield and ESG-aligned assets).

• Development finance institutions (DFIs) — EBRD, IFC, ADB, EIB — which provide loans, guarantees, and technical assistance that make early projects bankable.

• Export credit agencies and Chinese/European EPCs — especially in Central Asia, where EPCs sometimes provide vendor finance or turnkey packages.

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9) Practical advice for investors or developers interested in the region

1. Underwrite feedstock carefully. Secure minimum tonnage contracts and plan for lower-calorific waste mixes.

2. Seek blended finance. Engage DFIs or ECAs early to reduce the cost of capital and cover political/regulatory windows.

3. Structure inflation-linked, FX-sensible revenues. If power is local currency, ensure tipping fees or PPA indexes protect against inflation and FX-transfer risk.

4. Partner with experienced EPC/O&M operators. Operational reliability and emissions compliance are deal-makers.

   
   

10) Conclusion — risk-adjusted opportunity

Waste-to-energy sits at the intersection of essential public services and clean energy — which is precisely why investors are increasingly active. Globally, the market is growing, and precedents of large strategic exits show a path to liquidity for scale assets. In Central Asia and Uzbekistan, the need is acute and governments are issuing programmes and tenders; that creates greenfield opportunity but also requires disciplined project structuring — secure waste supply arrangements, credible PPAs/tipping fees, technical partners and often DFI support — to deliver attractive, bankable returns. For investors who can get the commercial, policy and technical packaging right, WTE can be a profitable, portfolio-diversifying, and impactful bet.