Covanta sells 2 EfW plants, reaches financial close on UK plant

By Erin Voegele | April 29, 2019

Covanta Holding Corp. has shut down an energy-from-waste (EfW) plant in New Jersey, and announced plans to sell two other EfW facilities. The company also reached financial close on its U.K-based Rookery EfW project in late March.

The announcements were made as part of Covanta’s first quarter 2019 financial results, released April 25, and its quarterly earnings call, held the following day.

During the earnings call, Steve Jones, president and CEO of Covanta, spoke about the company’s efforts to optimize its fleet by exploring alternative options for some of its less profitable facilities. As part of that effort, he said the company has closed its EfW facility in Warren County, New Jersey. That facility began commercial operations in 1988, can process 550 tons of municipal solid waste (MSW) per day, and generates up to 13.5 MW of energy. Jones also said the company has reached an agreement to divest its assets in Springfield and Pittsfield. The 9.4 MW Springfield EfW plant, located in Massachusetts, also began operations in 1988 and can process up to 408 tons of waste per day. The facility in Pittsfield, Massachusetts, began operations in 1981 and can process up to 240 tons of solid waste per day, producing 450 million pounds of steam and 3.5 million kWh of electricity. According to Covanta, the Pittsfield plant is one of the oldest continually operating EfW facilities in the U.S.

Jones said that while all three plants were well run, they are relatively small sized and the company saw limited opportunities for improved economics under Covanta ownership. He also said the new owner of the Springfield and Pittsfield plants will focus solely on their operations and will continue to support the local communities. The transaction is expected to close during the second quarter.

Jones also discussed projects under development in partnership with the U.K.-based Green Investment Group, noting that financial close was reached on the Rookery project in late March. Once complete, the company is expected to process more than 500,000 metric tons of waste annually and produce more than 60 MW of energy. Construction on the plant is expected to take approximately three years, with commercial operations scheduled to start in 2022. The company is also developing the Earls Gate Energy Center in Scotland in partnership with GIG. The companies reached financial close on that plant in December 2018, with operations expected to begin in 2021.

Jones said Covanta is still working to bring the Protos and Newhurst projects to financial close and into construction. Those projects are under development in partnership with Biffa.  

Overall, Covanta reported quarterly revenue of $496 million, down slightly from $458 million during the same period of 2018. Net income was $5 million, down from $201 million during the first quarter of last year. Adjusted EBITDA was $84 million, down from $100 million. For the full year 2019, Covanta expects to achieve adjusted EBITDA in the range of $440 million to $465 million, compared to the $457 million in adjusted EBITDA reported for 2018.