Agenda - Council - 11/25/1980 - Laserfiche WebLink

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DOE WASTE TO ENERGY PLAN SURFACES DOE's new Office of Ene. gy~ from Municipal Wastes plans to rely heavi.ly on price sup. port loans to encourage the more rap~d commercialization of waste to energy technol. ogies, a draft of a cc:-prehensiv¢ plan for waste to energy DOE ~s directed to PreDate" by the Energy Security Act says. The draft is due to be submitted to Congress in the next few weeks. ~l~e Energy Security Act authorized DOE to make price support payments to a project for the first seven years of a new project and for five years for an existing project to help cover the difference between revenues and costs. The ~.ount of the payment is based on the difference between the world market price 6f No. 6 low sulfur oil on June 30 and the cost of the conventional fuel the energy from waste displaces. This unit value declines over the term of the payment. The cumulative price support must be re- paid over the remaining life of the project. According to the plen, the office proposes to allocate $160 million of the $205 ~il- . lion allocated for financial incentivea in fiscal 1981 to price support loans. "Of the $160 million, it is ~nticipated that $120 million, or ~9 percent, .will be spent on new projects while $~O million, or 25 percent, will be allocated to existing pro- Jects.'' The plan says that the price support loan "is expected to be a major factor in helping to remove political and economic impediments in early years of a project by utilizing the positive life-cycle economics to reduce early-year d~sposal fees. In dodng so, it will improve the position of economically sound projects against competing waste disposal alternatives." Loan guarantees will be used to stimulate the upgrading and expansion of existing waste to energy plants, the plan says. "Guarantees will apply to loans for incremen- tal investments to complete startup and/or acceptance for commercial.facilities or for upgrading and expanding existing_projects to augment current waste-to-energy produc- tion capacity. Projects that have completed construction and have made a good faith effort to complete startup activities, but have not achieved full commercial operation, may be assisted. Also, projects that have passed acceptance tests but have not oper- ated satisfactorily at projected throughput would be eligible for assistance." ~e plan says $2~ million has been allocated in fiscal 1981 for loan guarantees for these purposes. The Office "will require reasonable nssurances of achieving succe~4s o~the proposed plant modification," it says. "Clearly, the federal government should not seek to bail out companies or underwrite defective technologies. However, such expenditures can insure greater reliability and encourage confidence in waste to ener- gy processes. The plan says another $15 million has been allocated for cooperative agreements that would be used to bring a project from the initial determination of project feasibility to successful financing. "Where needed, such assistance, coupled with later price support loan assistance, could expedite implementation and speed up the production of energy from municipal waste," the plan says. The $1~ million would support approximate- ly 40 projects. The plan calls for thu use of loan guarantees to support fir.~t-of-a-kind installation of commercial-scale equipment "so that multiple line or module scale-up for economic viability can be accomplished with less uncertainty about expected system ec0n0m~cs." (Con~. on p. 12) Pag~ 8 October 20, 19,$0