Waste: at the hearth of the growth in the Plan to 2026

Almost 1.2 billion euro: Waste investments double

Hera enjoys a leading competitive position in the Waste business in Italy. The new Plan to 2026 outlines a clear strategy: to leverage the Group’s existing widespread plant base and its ability to intercept annual waste volumes of over 6.7 million tonnes to increase its competitive advantage.

The idea is set in a context that is favourable from several points of view: the issue of protecting the environment through proper waste treatment and disposal is felt by citizens and is a legal responsibility for the companies that generate the waste. Both the new tariff framework for the treatment of municipal waste and the Italian government’s PNRR contain mechanisms that incentivise investment in the business, while the market price-trend has been positive for six years.

So, how will Hera’s strategy in the Waste business take shape? Through an expansion of treatment capacity, both organic and by external lines, which will also allow new vertical segments to be covered, though innovative technologies for material recycling. The business scope will also expand internationally. What about the operating philosophy? Hera aims to provide business customers with a 360-degree service of true Global Waste Management, which also includes consulting services with high added value.

In the five years covered by the Plan, Hera will therefore invest almost 1.2 billion euro in the Waste business, with beneficial effects for the Planet, the customers and the shareholders of the Company, considering the attractive returns that a solid and forward-looking player like Hera is able to generate.

A unique opportunity in the industry today


Hera is the ideal operator to seize the
benefits of a context that has never
been so favourable.

Hera already enjoys a leadership position in the Waste industry in Italy, with a base of waste treatment and disposal plants widely spread across the territory, a proven quality of service and a key role as a player in the circular economy. The portfolio of certified assets on which Hera can rely is unique, with nine Waste-to-Energy plants, the plant in the Bologna area that generates biomethane by treating organic waste, and the unmatched value-added plastics regeneration capacity of its subsidiary Aliplast, acquired five years ago and rapidly expanding.

Overall, each year Hera already recovers around 90% of incoming materials, in line with European regulations – including the Waste Framework Directive (WFD) – which aim to combat Climate Change through a collection system that minimises sending to landfill and promotes the correct treatment of waste, so that it can be put back into circulation in the economy as regenerated products or as energy produced.

Within the framework of the WFD legislation, several directives have been introduced over time that address specific segments, such as the Single Use Plastic Directive, which aims to reduce the consumption of plastics, or the Ecodesign Directive, which sets minimum energy efficiency requirements to improve the environmental performance of household appliances and technological and engineering devices.

Therefore, business customers today need to dispose of their waste in a way that complies with the principles of the legislation, which requires direct producer responsibility up to the moment of delivery to an authorised intermediary, who – as in Hera’s case – is qualified to demonstrate that he has facilitated the return of the waste itself, as required by Extended Producer Responsibility.

Policy makers and regulators have realised the need to create measures that incentivise operators in the waste management business to invest to achieve the objectives set by European Directives and thus transposed into Italian legislation. The PNRR, the Italian government’s National Recovery and Resilience Plan, provides significant funds to incentivise the recovery of paper and cardboard, the regeneration of rigid plastics, and the diffusion of smart bins, with several tenders that have already started and new ones that will open in the coming months. On the other hand, the new tariff system for the treatment of municipal waste envisages a switch to a RAB-like calculation methodology, with a return of 6%, as well as a revenue sharing mechanism for recycling and energy produced.

While volumes of waste destined for
landfill will gradually decrease, Hera can
find a great deal of compensation in the
returns that its circular mission will bring.

In the liberalised part of the business, Hera can also take advantage of the continuous increase in the price of services that has taken place in Italy over the past six years, due to the small number of existing plants and the complicated authorisation processes that discourage the construction of new plants.

Hera’s significative investments have visible returns


Hera has developed a clear strategy to
seize the current opportunities in this

Given the pressure from economic policies and regulation, in the new Plan to 2026 Hera decided to leverage its unparalleled leadership in the Italian industry landscape to invest heavily, further strengthening its competitive advantage. Underlying this decision is an accurate assessment of the returns that can be achieved while maintaining a limited risk profile.

In the five-year Plan’s period, to fuel the business expansion, Hera will invest 1.18 billion euro: 100 million more than the amount presented in the previous Plan. Against this considerable financial effort, Hera aims to reap attractive benefits in terms of EBITDA, which is in fact expected to grow from 292 million euro in 2021 to 441 million euro in 2026.

The Plan takes shape, first and foremost, through projects for the development of new plant capacity. One way will be to build two additional biomethane plants, extend and make more efficient the existing WTE lines, by building line 4 of the Padua plant, expand the Pozzilli depurator and the landfills of Cordenons, Loria and Serravalle.

At the same time, the plan includes the involvement in new vertical segments, with the construction of new PE_PET plants in Novara, pilot plants for PEHD in Modena, and plants to process carbon fiber in Imola, in the heart of Italy’s Motor Valley.

From the investment projects dedicated to
organic growth, Hera expects to achieve
more than 70% of the overall increase in
Group EBITDA over the Plan’s period.

The remaining part of the 150-million-euro increase will instead be driven by the contribution of development projects by external lines, through M&A transactions that will target key operators in Hera’s reference territories within the scope of sectors that are complementary to the Group’s core ones. A first transaction is already widely configured, with the closing of the acquisition of ACR Reggiani expected by the end of March 2023.

The strategy also envisages the creation of international partnerships: cross-border logistics is in fact essential to guarantee a safe disposal of business customers’ waste at third-party plants, for a prompt and complete response to the growing demand, considering the long authorisation process required to open new plants in Italy. Being able to count on a brokerage component as well, in fact, allows the Group to offer customers a true Global Waste Management, through which Hera can cover the needs of the waste producer at 360 degrees, starting with a high-profile consultancy service. 

The EBITDA growth Hera indicated in the Plan to 2026 is therefore not only based on a wider consolidation perimeter or a pure increase in plant capacity, but draws a fundamental contribution from the price trend, which is expected to remain positive, and from a favourable mix effect, as the Group expects to be able to ride the growing demand for innovative, higher value-added services.

Not all operators, however, will have the same opportunities. Just think of the high competition that has developed in the recovery and regeneration of plastic waste – an area affected by major bottlenecks in the supply of waste.

Being an integrated operator, managing the entire process – from collection to treatment, disposal and recycling – allows Hera to directly collect waste from customers and then transfer it to its own recycling plants.

Operating in high value-added segments also protects against fluctuations in commodity prices; in the case of Aliplast, for example, changes in oil prices do not have an immediate impact on profitability.

Innovation has always been a strategic priority for Hera, but particularly crucial in this Plan that envisages its entry into new operating segments. To this end, the existing strategic partnership with Maire Tecnimont in the plastics sector will be strengthened, extending it to the regeneration of rigid plastic waste, which is attractive due to its high volumes. Hera laboratories can conduct new experiments directly, by leveraging the contributions offered by the PNRR, with positive outcomes from which the Company can then continue to benefit in the long term.

8 February 2023
Site Manager:
Jens K. Hansen
Concept and editorial content:
Blue Arrow - Lugano