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Covanta to close energy-from-waste plant in New Jersey in early 2019


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Covanta to close energy-from-waste plant in New Jersey in early 2019

Covanta Holding Corp. expects to close its energy-from-waste plant in Warren County, N.J., in early 2019, as part of its portfolio optimization plan.

"[G]iven its size and the challenging local market conditions, we didn't see its potential to be a significant financial contributor going forward," President and CEO Stephen Jones said during the July 27 second-quarter earnings call. No material impact on the company's financial metrics is expected with the planned closure.

The Warren facility started commercial operation in July 1988. It can process about 550 tons per day of municipal solid waste, generating up to 13.5-MW of renewable energy, according to the company's website.

Covanta saw its waste and service revenue increase to $333 million in the second quarter of 2018, from $310 million in the prior-year period. Its energy revenue also grew year over year to $76 million from $75 million.

According to the company, it signed a new 15-year power purchase agreement at its Marion County energy-from-waste facility in Oregon. The power sales will begin in the later part of 2019, Jones said.

"The pricing in this agreement reflects the plant's capability as a baseload renewable energy provider, and we expect it to improve the plant's overall, economic proposition," Jones added. The Marion facility processes 550 tons per day of municipal solid waste and generates up to 13.1 MW of renewable energy.

Covanta also entered into a new one-year power contract for a portion of the output of its 80-MW Fairfax energy-from-waste facility in Virginia. The facility, which processes more than 3,000 tons per day of municipal solid waste and sells more than 80 MW of energy, resumed operations in December 2017 after being damaged by a fire.

Jones noted that short-term power purchase agreements drives values to the Fairfax facility and the company is looking forward for more similar agreements in the future.

In the 2018 second quarter, Covanta reported an average contracted revenue of $64.81 per MWh, which excludes capacity revenue. This compares to an average contracted revenue of $67.70 per MWh a year ago.

"Looking longer term and echoing comments I've made previously, we continue to review our fleet and the profitability of all the plants to ensure that our resources are best utilized," Jones said.

Covanta expects to receive about $12 million in proceeds from the sale of its 50% interest in the 13-MW Koma Kulshan hydro project in Whatcom, Wash., to Atlantic Power Corp., upon deal completion. It also is looking at monetizing a number of smaller assets in the coming months as part of a broader plan to rationalize noncore operations.