Covanta provides operational update during investor call

By Anna Simet | February 18, 2016

Covanta Energy executives discussed progress on ongoing projects, new prospects and upgrades of existing facilities during its Q4 2015 and full-year results conference call on Feb. 17.

Decreased in energy, recycled metals and construction revenue were responsible for a total revenue decrease of $37 million year over year, from $1.68 billion in 2014 to $1.65 billion in 2015, but those decreases were partially offset by new waste and service revenue. While lower commodity prices negatively impacted results, said Covanta President and CEO Stephen Jones, operationally, the company had a strong year.

Jones, who recently completed his first year as Covanta’s CEO, provided brief updates on two of the company’s newest projects, the first being its 17.5-MW energy-from-waste (EFW) plant, the Durham-York Energy Centre, in Ontario’s Durham Region. The plant’s first fire was a year ago, and Jones said the project was put into commercial operation in January.

Construction of the Dublin Waste-to-Energy Facility, located in Poolbeg, Dublin Port, Ireland, is past the halfway point, Jones said. “We’ve secured approximately 60 percent of the waste capacity for the Dublin facility…the market is shaping up as expected there. We’re very pleased to have taken some of the risk for this project off of the table, well before first fire of the facility, which is expected in about a year.”

Construction of the facility began in Q4 2014.  A public-private partnership between Covanta and Dublin City Council, the facility will process approximately 600,000 metric tons of waste annually and will power 80,000 homes. It has been designed with technology and infrastructure to provide enough heat to meet the equivalent needs of over 50,000 homes if a district heating system is built in the future.

On existing facilities, Jones said Covanta would continue to run the two Maine wood-fired biomass facilities that the company recently announced would be closing, for the remainder of Q1. “We continue to explore options for our biomass portfolio,” he said.

Reporting that Covanta expects maintenance spending to be up about 8 percent in 2016, Jones said it’s primarily the result of two large capital projects. The company’s contract for the 39.5-MW EFW facility it operates in Onondaga, New York, was extended earlier this year, and will require some maintenance. “Part of that extension was an agreement to make some upgrades to the facility that will be funded by project debt that sits on our balance sheet,” Jones said.

The second major maintenance project will be at the company’s 80-MW Fairfax, Virginia, facility, the company’s largest plant. Jones said it was an appropriate time for a rebuild of the baghouse and replacement of some other components there.

Jones said Covanta has several opportunities in various stages of development, but was not able to publically discuss them yet. As a response to a caller question, he said Covanta is evaluating Europe for more development opportunities, particularly eastern countries like Poland that are beginning to move toward energy-from-waste applications. “Dublin [facility] gives us a bit of a beachhead to look more closely at European opportunity,” he said. “The U.K., for example, has a number of facilities already built, and some are already coming back on the market for potential sales…we’ll look at those.

He added that the company is seeing more opportunities in the U.S. for EfW development. “We’re seeing a change….we’re hoping that will continue.”

Also during the call, Jones said Covanta would like to put its gasification technology, Covanta CLEERGAS, into commercial operation—the company has a prototype facility operating in Tulsa, Oklahoma that is “running well,”—but the jury is still out as to whether the gasification of waste on a larger scale is economical. “From an emissions output, mass burn verses gasification are pretty much the same, depending on the backend cleanup system you put up there…but some larger players that have moved in that direction are still working to prove it out,” Jones said. “They’re difficult from an economic standpoint, but over time, I think both technologies will have a place in the market.”