Covanta Energy to Decommission Two Maine Biomass Power Plants by End of First-Quarter 2016

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Covanta Energy Corporation (NYSE:CVA) (Morristown, New Jersey) has announced plans to decommission and perhaps permanently close two biomass power plants located in Maine, reducing the company's generating capacity portfolio by some 50 megawatts (MW). As fossil fuel prices continue to decline, operating a biomass power plant has lost its competitive edge. The plants are expected to close by the end of March of this year.

The company acquired the identical plants in 2008 for $52 million from co-owners Ridgewood Maine LLC (Ridgewood, Maine) and Indeck Energy Services Incorporated (Buffalo Grove, Illinois), which operated the plants since 1987.

Both Convanta West Enfield LLC (West Enfield) and Covanta Jonesboro LLC (Jonesboro) process 550 dry tons of biomass waste materials each day, producing 24.5 MW hours of electricity. The power was sold to ISO-New England Incorporated (Holyoke, Massachusetts).

The plants are the main markets for the Maine logging companies that sell wood waste from forest operations, thinnings and local sawmills. One dry ton of biomass material can be sold from $30 to $50 per ton, depending on market conditions.

Last week, the Professional Logging Contractors of Maine issued a statement urging Maine Governor Paul LePage's administration and legislative leaders to take action to sustain Maine biomass electricity. The decline of paper mills and sawmills in Maine is hurting the logging industry. Currently there are fewer than half the number of mills in Maine as there were in 1980.

Covanta Energy still operates five biomass power plants in California. The parent company of Covanta, Covanta Holding Corporation (Morristown, New Jersey), has a U.K. subsidiary, Covanta Energy Ltd (Kingswinford, England), which recently began construction on a $544 million, 58-MW municipal solid waste-to-energy in Dublin, Ireland, which is expected to go into operation in early 2018.

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