US waste to energy giant, Covanta Holding Corporation (NYSE: CVA), has achieved financial close on the Earls Gate Energy Centre with strategic development partner Green Investment Group (GIG).
Covanta and GIG will each hold a 25% equity ownership in the project, with co-investor and developer Brockwell Energy owning the remaining 50% stake.
"With today's announcement we mark our entry into the UK market alongside GIG, following on the heels of our very successful partnership on the Dublin project earlier this year," said Covanta's President and Chief Executive Officer, Stephen J. Jones.
According to Covanta, the combined heat and power facility located in Grangemouth, Scotland, Earls Gate is a well-structured project with long-term waste and energy contracts.
Each year, the facility will prevent approximately 216,000 tonnes of mixed household, commercial and industrial waste that cannot be recycled from entering landfills. Instead, the waste will be used as fuel to generate low-carbon heat and power that will be supplied to a co-located industrial site host.
Construction of the facility will be led by Constructions Industrielles de la Mediterranee (CNIM), which Covanta said has deep experience in energy from waste construction, primarily in Europe and the UK, and is expected to take approximately 36 months to complete.
CNIM will also provide operations and maintenance services when the project commences operations in late 2021. Covanta will provide technical oversight services during construction and operations.
Chemical manufacturer and site service provider, CalaChem, has entered into a long-term Energy Supply Agreement (ESA) for the offtake of electricity and steam produced by EGEC. The steam will be used in the manufacturing processes of CalaChem and others on site.
The ESA is expected to decarbonise CalaChem’s annual energy consumption by approximately 39kt CO2e per year – the equivalent of taking approximately 17,000 cars off the road for a year. The remaining electricity will be exported to the grid.
Earls Gate Project and Covanta Investment Details
- 216,000 metric tonnes per year of waste processing capacity
- 21.5 megawatt equivalent generation capacity
- 75% of the waste secured under long-term agreements
- 100% of electricity and steam output under a long-term agreement with industrial site host
- Total project cost of £210 million with approximately 70% financed through non-recourse project-based debt
"Earls Gate is the first of four advanced development projects in the UK to reach financial close, with the Rookery South, Protos and Newhurst projects lined up close behind,” said Jones.
“We are very pleased with our partnership with GIG and expect it to continue to add meaningful value as we bring additional projects to market. Our expectation remains that these UK projects alone will provide $40 to $50 million in incremental annual free cash flow to Covanta when they are all fully operational," concluded the CEO.
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