Energy from waste: A clean energy source that’s building steam by Sophie Vorrath

While the trends are varied across individual countries, significant progress continues to be made globally in the deployment of renewable energy and energy efficiency measures. We thought it timely to provide an insight into certain lesser-known clean energy sectors. One such area is the Energy from Waste (EfW) sector.

We find the Energy from Waste sector fascinating. It involves the incineration of waste to create electricity, steam or heat. It is very well developed in certain northern European countries, showing it is a proven and viable source of renewable energy. In Germany, some 32% of all waste is processed in Energy from Waste facilities, while Denmark is a world leader at 51%. In America, industry estimates put EfW share at a relatively low 7% of waste disposal. What are the attractions of Energy from Waste?

– It is a source of baseload renewable energy with availability factors consistently in-excess of 90% pa (higher than coal at c. 80%!).

– EfW incineration dramatically reduces landfill and can work very effectively in conjunction with waste recycling programs (for example paper, plastics and metals).

–For every 10 tonnes of landfill waste diverted to EfW, 9 tonnes of carbon dioxide emissions are avoided.

– The annuity style revenue associated with waste disposal and electricity generation is well suited to public-private partnerships.

– The rapid urbanisation of China and India and lack of landfill capacity means there is a huge need and opportunity for the development of EfW projects.

Covanta Holdings (NYSE listed) is a world leader in the EfW sector. With a sole focus on EfW, Covanta is significantly smaller than its key global rivals, the more diverse Waste Management in North America and Veolia Environment in Europe,, but has the added bonus of electricity and steam generation. The Covanta model is premised on being paid to take waste and also being paid to generate renewable, baseload electricity. Covanta operates 43 facilities across North America, two in China and one in Italy. Covanta has a current market capitalisation of US$2.3 billion and is 11% owned by interests associated with Sam Zell, a US property billionaire.

Covanta operates facilities that generate over 10 million MWh (megawatt hours) annually, the equivalent to 1,300 MW of generation capacity with an average availability of over 90%. Covanta estimates it holds a 65% share of the American Energy from Waste sector. Add to EfW their other renewable energy facilities and Covanta represents 8% of all US non-hydro renewable energy production.