Covanta Holding Corp. executed an agreement with the Dublin city council to build, own and operate a new 661,000-ton per year, 58 MW energy-from-waste facility in Dublin, Ireland (the Dublin Waste-to-Energy Facility).
The company also announced that it has achieved financial close on a comprehensive project financing package and plans to commence construction of the project immediately. Facility construction is expected to take about three years, with commencement of operations targeted for late 2017.
The Dublin Waste-to-Energy Facility will provide the Dublin region with a long-term waste management solution, enabling it to divert post-recycled waste from landfills and become locally self-sufficient in managing waste, consistent with regional, national and EU waste policies.
When complete, the facility will generate clean renewable energy to supply 80,000 homes, reducing Ireland‘s reliance on imported fossil fuel, and has also 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 implemented in the future.
The total investment in the construction of the facility will be about $642 million, funded by a combination of third party non-recourse project financing ($482 million) and project equity invested by Covanta (about $160.5 million). The third party project funding includes $385 million of project debt, representing about 60 percent leverage, and a $96 million convertible preferred investment by the energy infrastructure arm of First Reserve.
Macquarie Capital has served as exclusive financial advisor to Covanta in connection with structuring and raising capital for the project.
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 percent of the facility’s renewable power 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. If a district heating system is developed by Dublin, then the facility will also sell energy in the form of steam heat and receive an enhanced renewable incentive for a portion of the electricity sold.