WEST ENFIELD, Maine — News that Covanta Holding Corp. is planning to take its local biomass energy plant and one in Jonesboro offline in March has caused one of the company’s biggest suppliers of waste wood to worry about his employees.
“I’m hopeful that something will change,” Brian Souers of Treeline Inc. of Lincoln said Friday. “If it closes, it’s not good.”
Between a quarter and one-third of Treeline’s business is with Covanta, said Souers, who has 65 employees.
Covanta Maine Energy in West Enfield, with 24 employees, and the Covanta Jonesboro Power Station, with 20 employees, will be closing at the end of the quarter because “energy prices are not sufficient to cover the costs of operation and fuel supply,” James F. Regan, Covanta spokesman, said Thursday in a statement.
He said Friday that Morristown, New Jersey,-based Covanta, which owns more than 40 waste-to-energy plants across the country, is not abandoning either of the plants in Maine.
“The future of the facilities will continue to be evaluated,” Regan said. “If the economics improve, they could be restarted, as we have done in the past.”
“We do not expect any impact on local property taxes in the near term [and] we have no plans to file bankruptcy,” Regan said.
While lower fossil fuel costs that make it cheaper for competitors to produce power are a major factor in Covanta taking the plants offline, increased efficiency of plants demanded by renewable energy customers are also to blame, according to an industry expert.
“It’s no coincidence that these closures were announced so soon after the facilities ceased to qualify for the Massachusetts Renewable Energy Portfolio Standards,” Carrie Annand, Biomass Power Association spokeswoman, said in an email. “As of Jan. 1, 2016, Massachusetts implemented new efficiency standards for biomass facilities, which require biomass facilities to meet standards beyond what is possible for any standalone biomass power plant. Because of the interconnected New England power grid, Maine power facilities can be affected by other states’ energy policies.”
The new Massachusetts standards are based on the overall efficiency of a plant’s wood-burning operation and the amount of greenhouse gases it produces, according to a report by the Clean Energy States Alliance.
Souers said he’s hopeful that Gov. Paul LePage and legislators in Augusta can improve the situation.
“The administration plans to work with the region to ensure that biomass is equitably treated as a renewable resource and that we retain jobs in the biomass industry,” LePage said Friday in a statement.
Dana Doran, Professional Logging Contractors of Maine executive director, said Covanta was able to sell Class 1 renewable energy credits, or RECs, to Massachusetts up until Dec. 31. As renewable generators produce electricity, they create one REC for every 1000 kilowatt-hours (or 1 megawatt-hour) of electricity placed on the grid, according to the Environmental Protection Agency. He said there is a renewable energy market in Maine, but strict requirements limit the number of participants, which is why companies such as Covanta and ReEnergy Holdings LLC, which operates the state’s other four biomass plants, turn to markets in southern New England.
“We may face a similar issue in the beginning of 2018,” Sarah Boggess, ReEnergy company spokeswoman, said Friday. “We participate in the Connecticut renewable energy credit program. Unfortunately, we are in the same situation where Maine economics are subject to policies in southern New England.”
Their renewable energy credits with Connecticut lapse at the end of 2017.
Biomass electric power makes up the largest share of renewable energy in Maine, at about 25 percent, according to recent estimates by the U.S. Energy Information Administration. Wood accounts for almost one-third of New England’s entire renewable supply, with Maine supplying a significant amount to the region, according to Biomass Magazine.
“If Maine made policy changes to expand our Class 1 market … it would send a strong signal,” Doran said.
Establishing incentives for long-term power purchase agreements and a biomass thermal energy credit market, would help biomass plants diversify to make both heat and electricity, which was done in New Hampshire and Massachusetts two years ago, “very, very successfully,” Doran said.
Boggess said between Covanta and ReEnergy, there are approximately “150 direct jobs and nearly 1,000 indirect jobs” and Eric Dumond, ReEnergy’s wood procurement manager, estimates biomass is a $50 million industry in Maine.
“Hundred of loggers, from Fort Kent to Biddeford rely on our facilities,” Dumond said.
Some that deliver materials to Covanta have already reached out to ReEnergy.
“I have received inquiries,” he said. “Right now, we’re just talking. We can’t take it all, that is for sure.”
Souers said he already takes some wood to ReEnergy, which has plants in Ashland, Fort Fairfield, Livermore Falls and Stratton, and he may inquire about sending more their way but added that “geographically” it is a long way to travel. His hope is that Covanta finds a way to stay operational.
If the Covanta plant in West Enfield closes permanently, “I don’t know how we would avoid layoffs,” Souers said. “It would take some real magic.”