Covanta reaches FC in Dublin waste-to-energy project
The Dublin Waste-to-Energy Facility will provide the Dublin region with a long-term sustainable and environmentally waste management solution. The facility will generate clean renewable energy to supply 80,000 homes. Facility construction is expected to take approximately three years, with commencement of operations targeted for late 2017.
Covanta also announced that it has achieved financial close. The total project investment will be approximately €500 million (US$642 million), funded by a combination of third party non-recourse project financing (€375 million) and project equity invested by Covanta (approximately €125 million). The third party project funding includes €300 million of project debt, representing approximately 60% leverage, and a €75 million convertible preferred investment by the energy infrastructure arm of First Reserve.
Covanta subsidiaries have contracted on a fixed price basis with the project company for engineering, procurement and construction (EPC) and operations and maintenance (O&M) services, and Covanta has guaranteed the performance obligations under both contracts. In addition, Covanta will provide working capital and other support to the project company.
The project agreement executed with Dublin will cover 45 years of facility operations, after which facility ownership will revert to Dublin. Under the project agreement, Covanta will be responsible for sourcing waste supply for the facility, which will consist of residential, commercial and industrial waste streams from Dublin and surrounding areas. During the first 15 years of operations, Dublin will share in any upside or downside in facility waste revenue relative to a baseline projection. Dublin will also share in energy revenue generated by the project for the full 45 year term of the contract.
Over 50% of the facility's renewable electricity generation is expected to qualify for preferential, inflation-escalated pricing under Ireland's renewable feed-in tariff through 2031, with the remainder of electricity sold at market rates.