1

Informational Workshop On Renewable Energy Presentation

Before the Florida Public Services CommissionPresented by

Joseph R Treshler Covanta Energy, Inc.

Undocketed

Safe Waste Disposal and Clean Energy Solutions… For Generations To Come.

January 19, 2007

2

Introduction Purpose

Highlight the current contribution Waste to Energy makes to the State’s Renewable Energy Production

Quantify the additional contribution Waste to Energy can make going forward

Recommend actions that should be taken to assist further development of new Florida Based Renewable Energy Sources including Waste to Energy

Presentation outline Background on Covanta Energy The role of Waste-to-Energy (WTE) as renewable resource in

FL Comments and Recommendations

3

Coal50%

Nuclear20%

Oil3%

Natural Gas18%

Hydro7%

Geothermal16%

Wind16%

Biomass67%

Solar1%

88,000 GWh

Total U.S. Electricity Generation

U.S. Non-Hydro Renewable Generation

3,970,000 GWh

The Role of Renewable Electricity Generation in the United States

Source: US Department of Energy, Energy Information Administration 2004 Report

Non-Hydro Renewable

2%

88,000 GWh

9% of electrical generatio

n is renewable

4

Waste-to-Energy Generates 34% of the Nation’s Biomass Renewable Electricity

•is a leader in •renewable generation

• 7,800 GWh produced from Covanta owned and operated facilities

• 31 Waste to Energy Facilities

• 3 Wood Waste Facilities

• 5 Biogas Facilities

Source: US Department of Energy, Energy Information Administration 2004 Report

Biomass

67%

= Total U.S Biomass Renewable Generation

Note: Waste to Energy energy value derived from biomass and non-biomass sources.

Wood 62%

Waste to Energy 34%

Other BioMass 4%

60,000 GWh

5

Covanta Energy Corporation

The 31 WTE facilities Covanta operates: Dispose of nearly 7% of nation’s waste Process about 15 million tons Produce about 1,200 megawatts of clean, renewable energy.

In FL, Covanta operates: 4 WTE facilities:

Pasco County, FL Hillsborough County, FL Lee County, FL Lake County, FL

these facilities: Process over 1.25 million tons per year of MSW Generate about 114.5 megawatts

6

The “Power” of WTE in Florida

One ton of MSW(energy equivalent)

One barrel of fossil fuel oil or 10 MCF of natural gas!Saves 630 lbs of CO2!

WTE is a proven large source of FL renewable energy The MSW Floridians generate every year is the energy

equivalent of 31.2 million barrels of oil. Currently 6.5 million tons (17,900 tons per day) of MSW can

be processed annually by Florida’s 12 WTE Facilities. This eliminates the need for 6.5 million barrels of oil or 65

million MCF of natural gas & the generation of over 2 million tons of CO2.

506 MW of renewable electrical energy is generated on a daily basis by Florida’s WTE Facilities

This also saves annually over 8,125 acre feet of precious landfill space through volume reduction.

7

More Is Being Done…

By 2010, Renewable Energy from FL WTE is planned to increase by 85 MW:

Lee County 20 MW Hillsborough County 17 MW Palm Beach County 28 MW Pasco County 20 MW

Bringing to 591 MW the WTE Renewable Energy made available while processing less than 25% of the FL MSW being generated.

8

More Can Still Be Done…

Over 18 million tons of raw MSW is still be landfilled every year in Florida. A significant number of highly developed areas of the State still heavily

dependent on land filling raw MSW as their primary method of solid waste management.

Orange County 1,820,638 TPY Duval County 1,483,456 TPY Brevard County 704,476 TPY Volusia County 499,242 TPY Collier County 477,095 TPY Manatee County 343,095 TPY Seminole County 303,015 TPY Sarasota County 297,421 TPY

Developing new WTE capacity to manage only half of the nearly 6 million tons of MSW available from these areas would increase the State’s Renewable Energy generation by approximately 186 MW while eliminating the need to import approximately 3 million barrels of oil each year.

This will only be possible with the right incentives

9

Encouraging FL Renewables

Current Situation 63% of Florida’s generation capacity is fueled by oil and gas Yet the low rates and contracting structures that have been offered since

the early 1990’s for new WTE capacity have inhibited further development FL has no functional wholesale electricity markets to support WTE or other

renewable energy development

The Future 81% of FL capacity additions will be fueled by oil and gas Must encourage renewables including WTE New (and renewed) WTE contracted energy generation should be valued

based on avoiding the most expensive fossil fuels Encourage the development of functional and liquid wholesale electricity

and renewable credit trading markets Offer Long-Term contracts to secure financing Encourage/require IOU portfolio with FL generated renewable energy

10

FL Renewable SOC – Choice of Avoided Unit/Avoided Cost

Avoided Unit/Avoided Cost Choice – Encourages Renewable Development

Will encourage the development and commercialization of renewable technologies.

Will provide incentives for development of capital intensive renewable energy generation projects

Best matches the capital outlay/O&M profile to the various renewable technologies.

Provide greater certainty of revenue streams for these capital intensive projects

Allows low-cost financing Provides flexible choices that match the financial requirement of

various types of renewable technologies Provides WTE-served communities fair energy pricing to

efficiently address waste disposal issue. Will reduce reliance on fossil fuels including natural gas

11

FL SOC – Additional Concerns

Threshold question:

Do all operative provisions of proposed SOCs fully and fairly support utilization of existing FL renewable energy sources as intended by FS 366.91, and fully and fairly promote development and utilization of new in-state renewable energy sources as intended by FS 366.91 and by the proposed FL DEP Energy Plan?

12

FL Renewable SOC – More Issues to be addressed

Current SOC come with many issues Based on current “QF” standard offers that failed to

attract new development in the past five years (at the least)

Not clearly understood and do not meet the intent of FL 366.91

Onerous terms and conditions, examples: Unreasonable availability and performance requirements Some appear to require “QF” status Projects undergo subjective “evaluation criteria” that might

result in the “rejection” Payment terms and performance penalties that may totally

eliminate capacity payments.

13

FL Renewable SOC - Our Recommendations The Key Issues

Develop and make available now a State-wide Coal Avoided Cost Unit

Provide for SOC Terms of at least 20 years Thorough SOC review to conform to Section 366.91 Establish Renewable Generation Goals (25%)

Encouraging Renewables requires “paradigm Shift” The old QF regime did not encourage new FL

renewables in the past 5 years (at least) Repackaging the “old regime” will not encourage

substantial FL renewable development

14

Additional Information

15

WTE Energy IS Renewable Energy

MSW is sustainable resource for “local” power

MSW is biomass. WTE efficiently converts energy value of MSW to electricity and/or steam WTE contributes to fuel diversity WTE facilities are located near power users, increasing cost efficiency. WTE avoids vehicle fuel consumption/emissions associated with increasingly distant

transportation to landfills. WTE avoids landfill greenhouse gases and toxic emissions

16

Typical WTE Facility Process Inputs and Outputs

MSW2000 lb

CO2: biogenic, nonbiogenic

Fe/non-Fe Metals: 55 lbs

Ash: 500 lb

20% ThermalEfficiency

Power 550 kWh

Flue Gases

WaterAirLimeCarbon

Process Wastewater:Typically zero

17

18

19

WTE: A Success Story

“Upgrading of the emissions control systems of large combustors to exceed the requirements of the Clean Air Act Section 129 standards is an impressive accomplishment. The completion of retrofits of the large combustion units enables us to continue to rely on municipal solid waste as a clean, reliable, renewable source of energy. With the capacity to handle approximately 15 percent of the waste generated in the US, these plants produce 2,800 megawatts of electricity with less environmental impact than almost any other source of electricity.”

-- letter to IWSA from Assistant Administrators Jeff Holmstead and Marianne Horinko, US EPA

February 2003

20

Industry Overview of Waste-to-Energy

US EPA -- WTE disposes of 13% of the nation’s waste 89 facilities 29 million tons per year 36 million people served 27 states generation capacity in

excess of 2,700 MW 16 million MWhrs of

renewable power generated annually

21

WTE: A Renewable Energy Component of Comprehensive Waste Management

FL (+ 11 other states and Washington DC) define WTE and/or municipal solid waste as eligible for Renewable Portfolio Standards

Efficiently recovers/exports over 500 KWhrs/per ton of MSW processed

WTE is clean - “Exceeds requirements of the Clean Air Act” – US EPA

Most advanced pollution controls of any energy generation source

Reduces landfill requirements in excess of 90% Offsets landfill release of toxic emissions and greenhouse gases WTE and recycling are compatible: Recycling rate of WTE

communities exceeds the national average by over 5%

22

Proven, Utility Grade Technology

Exclusive North American licensee for Martin GmbH Reverse Acting Stoker Grate technology – successfully processed more refuse worldwide than any other system available,