SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549
            ----------------------------------------------------

                                 FORM 10-K

(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the fiscal year ended October 3, 1998.

[   ] Transition Report Pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934.

                       Commission file number 1-13572

                         THERMO ECOTEK CORPORATION
           (Exact name of Registrant as specified in its charter)

Delaware                                                             04-3072335
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

245 Winter Street
Waltham, Massachusetts                                              02454-9046
(Address of principal executive offices)                            (Zip Code)

     Registrant's telephone number, including area code: (781) 622-1000

        Securities registered pursuant to Section 12(b) of the Act:

                   
                                                       Name of exchange on 
           Title of each class                           which registered
      ----------------------------                   -----------------------
      Common Stock, $.10 par value                   American Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act:
                                    None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of October 30, 1998, was approximately $25,316,000.

As of October 30, 1998, the Registrant had 35,927,771 shares of Common Stock
outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended October 3, 1998, are incorporated by reference into Parts I and II.

Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on March 10, 1999, are incorporated by reference into
Part III.

<PAGE>
                                   PART I
                                     
Item 1.    Business

(a) General Development of Business

    Thermo Ecotek Corporation (the Company or the Registrant) is an
environmental company that operates in two segments: Energy and Biopesticides.
The Energy segment operates independent electric power-generation facilities
through joint ventures, limited partnerships, or wholly owned subsidiaries (the
Operating Companies) and also operates a subbituminous coal-beneficiation
facility and a natural gas business. The Biopesticides segment manufactures and
sells biopesticides through the Company's majority-owned subsidiary, Thermo
Trilogy Corporation.

    Initially, the Company designed, developed, and acted as general contractor
for the construction of cogeneration systems fueled by natural gas and diesel.
These turnkey facilities were generally sold to third-party operators upon
completion and had a total generating capacity of approximately 60 megawatts. In
the mid-1980s, the Company began developing biomass-fueled power plants to take
advantage of a favorable regulatory environment and attractive power-sales
agreements. Biomass plants use environmentally responsible fuels, including wood
and agricultural wastes. The Company currently operates seven biomass facilities
in the U.S. with a total electric generating capacity of 140 megawatts.

    In January 1998, the Company, through a wholly owned subsidiary's
participation in a joint venture, indirectly acquired a majority interest in the
assets of a 12-megawatt energy center near Tabor, Czech Republic, along with the
business of five auxiliary boilers in the town of Pribram, Czech Republic. The
Company has begun construction to expand the 12-megawatt facility to 50-megawatt
capacity.

    The Company has also entered into the field of engineered "clean" fuels
through a partnership agreement with KFx, Inc. In August 1995, the Company,
through two wholly owned subsidiaries, entered into a Limited Partnership
Agreement with KFx Wyoming, Inc., a subsidiary of KFx (the K-Fuel Partnership).
In return for a 95% equity interest in the K-Fuel Partnership, the Company has
provided approximately $63 million for the design, construction, and operation
of the first full-scale coal production facility to use the patented K-Fuel
"clean coal" technology (the K-Fuel Facility). The K-Fuel Partnership has been
granted, in exchange for future contingent royalty payments, a nonexclusive
right and license to use this patented clean coal technology. The K-Fuel
Facility transforms high-moisture, low-energy coal into as much as 500,000 tons
per year of low-moisture, high-energy, solid fuel. The K-Fuel Facility commenced
operations in April 1998.

    During fiscal 1998, the Company established its Star Natural Gas subsidiary
in Dallas, Texas, to pursue opportunities in the natural gas gathering,
processing, storage, and marketing business.

    The Company has expanded beyond biomass power generation into other products
and processes that protect the environment. In May 1996, the Company, through
Thermo Trilogy, acquired the assets of the W.R. Grace & Co.'s biopesticide unit
for approximately $8.1 million and the assumption of certain liabilities. In
addition, the Company will pay a royalty fee of seven percent on annual sales of
the acquired business in excess of $14 million through the year 2000. Thermo
Trilogy develops, manufactures, and markets environmentally friendly products
used for pest control. Derived from naturally occurring microorganisms,
biopesticides safely and effectively control insects, diseases, and mites on
numerous crops. In January 1997, Thermo Trilogy acquired substantially all of
the assets of biosys, inc., a biopesticide company, through bankruptcy
liquidation for approximately $11.2 million in cash and the assumption of
certain liabilities. In November 1997, Thermo Trilogy acquired the sprayable
bacillus thuringiensis (Bt)-biopesticide product line of Novartis AG and its
affiliates for approximately $19.1 million in cash and the assumption of certain
liabilities. In fiscal 1998*, Thermo Trilogy issued shares of its common stock
in private placements for net proceeds of $14.9 million.
--------------------
* References to fiscal 1998, 1997, and 1996 herein are for the years ended
  October 3, 1998, September 27, 1997, and September 28, 1996.

                                       2
<PAGE>

    The Company operated as a division of Thermo Electron Corporation's Energy
Systems Division from 1979 until its incorporation as Thermo Energy Systems
Corporation in November 1989. At October 3, 1998, Thermo Electron owned
approximately 94% of the Company's outstanding common stock, giving Thermo
Electron the power to elect all Directors of the Company. Thermo Electron is a
world leader in monitoring, analytical, and biomedical instrumentation;
biomedical products including heart-assist devices, respiratory-care equipment,
and mammography systems; and paper recycling and papermaking equipment. Thermo
Electron also develops alternative-energy systems and clean fuels; provides a
range of services, including industrial outsourcing and environmental-liability
management; and conducts research and development in advanced imaging, laser
communications, and electronic information-management technologies. Thermo
Electron intends for the foreseeable future to maintain at least 80% ownership
of the Company, so that it may continue to file consolidated U.S. federal income
tax returns with the Company. This may require the purchase by Thermo Electron
of additional shares of the Company's common stock from time to time as the
number of outstanding shares issued by the Company increases. These and any
other purchases may be made either on the open market or directly from the
Company. During fiscal 1998, Thermo Electron purchased 1,499,400 shares of the
Company's common stock on the open market for a total price of $23,588,000. In
addition, Thermo Electron converted $68.5 million principal amount of the
Company's subordinated convertible debentures into 10,815,846 shares of Company
common stock. See Notes 6 and 12 to Consolidated Financial Statements in the
Company's Fiscal 1998 Annual Report to Shareholders for a description of
outstanding stock options and convertible notes issued by the Company.

    Forward-looking Statements

    Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report on Form
10-K. For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
"seeks," "estimates," and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those detailed under the heading
"Forward-looking Statements" in the Registrant's Fiscal 1998 Annual Report to
Shareholders, which statements are incorporated herein by reference.

(b) Financial Information About Industry Segments

    Financial Information concerning the Company's industry segments is
summarized in Note 13 to Consolidated Financial Statements in the Registrant's
1998 Annual Report to Shareholders, which information is incorporated herein by
reference.


                                       3
<PAGE>

(c) Description of Business

    (i) Principal Products and Services

Energy

Clean Power Resources

Operating Projects

    The following table summarizes certain information relating to the Company's
projects currently in operation. With the exception of the Mendota plant, at the
end of each leased facility's applicable lease term, the Company has the option
to renew the lease for a specified period or purchase the facility at fair
market value. The Mendota plant may be purchased for a fixed amount at the end
of its lease term.

Project       Location      Plant Size   Ownership   Inservice     Lease/Own
                             (net mw)   of Operating   Date
                                          Company
-------------------------------------------------------------------------------

Hemphill      New              13.6           67%    December        Lease
              Hampshire                              1987

Gorbell       Maine            13.6           60%    December        Lease
                                                     1987         

Whitefield    New              13.6          100%    July 1988       Own
              Hampshire                                           

Mendota       California       25            100%    May 1990        Lease
                                                                  

Woodland      California       25            100%    May 1990        Lease
                                                                  

Delano I      California       27            100%    January        Own
                                                     1991         

Delano II     California       22            100%    January         Own
                                                     1994         

Tabor         Czech            12             87%    January         Own
              Republic                               1998*        

* Represents date facility was acquired by the Company.

    Hemphill. The Hemphill facility is a 13.6-megawatt wood waste plant located
on a 50-acre site in Springfield, New Hampshire. The Operating Company is a
joint venture in which the Company has a 67% interest. The generating equipment
at the Hemphill facility is owned by BankBoston Leasing Services Inc., which
leases the facility to the Operating Company through March 2003, with an option
to renew or purchase the facility at fair market value. Public Service of New
Hampshire (PSNH) purchases power produced by the plant at a fixed rate under a
rate order issued by the New Hampshire Public Utility Commission (NHPUC)
expiring in 2006. The Operating Company purchases wood waste pursuant to two
contracts with affiliates of the Company's joint venture partner, each of which
expires in 2003. The contracts provide for the supply of wood waste to the
Operating Company at market prices. In 1990, a plan of reorganization (the Plan)
for PSNH was approved by the U.S. Bankruptcy Court for the District of New
Hampshire. Pursuant to the Plan, Northeast Utilities (NU) acquired the assets of
PSNH. An agreement between NU and the State of New Hampshire contains language
to the effect that PSNH will seek to renegotiate some of the terms of certain
rate orders with small power producers, including the Whitefield (discussed
below) and Hemphill Operating Companies, and that the state will support PSNH in
such efforts. PSNH reached an agreement in principle with these two Operating
Companies to settle the renegotiation of their rate orders. The settlement
agreement is subject to the approval of NHPUC on terms acceptable to both PSNH
and the Operating Companies. The principal terms of the agreement generally call
for the two Operating Companies to reduce the amount of power sold annually to
PSNH to

                                       4
<PAGE>

70% of the plants' capacities, and to reduce the price per kilowatt paid by PSNH
to $0.06 per kilowatt hour, escalating three percent per year for the remainder
of the term of the original, applicable rate order. In consideration of these
reductions, the Operating Companies would receive certain cash settlement
payments, paid over several years. The settlement agreement has technically
expired; however, no party to the settlement agreement has notified the other
that it would not proceed in accordance with the terms thereof if approved by
NHPUC, nor was any party required to do so. The settlement, if approved and
executed, is not expected to have a material impact on the Company's results of
operations or financial condition. Should the matter not reach resolution, the
Company does not believe that PSNH has the right to take unilateral action to
reduce the price of purchased power under such arrangements. Rejection of the
Company's rate orders would result in a claim for damages by the Company and
could be the subject of lengthy litigation. In January 1997, NU disclosed in a
filing with the Securities and Exchange Commission that if a proposed
deregulation plan for the New Hampshire electric utility industry were adopted,
PSNH could default on certain financial obligations and seek bankruptcy
protection. In February 1997, NHPUC voted to adopt a deregulation plan, and in
March 1997, PSNH filed suit to block the plan. In March 1997, the federal
district court issued a temporary restraining order which prohibits the NHPUC
from implementing the deregulation plan as it affects PSNH, pending a
determination by the court as to whether PSNH's claim could then be heard by the
court. In April 1997, the court ruled that it could hear the case and ordered
that the restraining order continue indefinitely pending the outcome of the
suit. In addition, in March 1997, the Company, along with a group of other
biomass power producers, filed a motion with the NHPUC seeking clarification of
the NHPUC's proposed deregulation plan regarding several issues, including
purchase requirements and payment of current rate order prices with respect to
the Company's energy output. In May 1998, NHPUC issued a written ruling
rejecting the settlement agreements and modifications that would impact PSNH's
ability to finance and secure the settlement agreement. An unfavorable
resolution of this matter, including the bankruptcy of PSNH, could have a
material adverse effect on the Company's results of operations and financial
position.

    Gorbell. The Gorbell facility is a 13.6-megawatt wood waste plant located on
a 56-acre site in Athens, Maine. The design of the facility is substantially
similar to the Hemphill plant. The Operating Company is a joint venture in which
the Company has a 60% interest. The generating equipment at the Gorbell facility
is owned by BankBoston Leasing Services Inc., which leases the facility to the
Operating Company through March 2003, with an option to renew or purchase the
facility for fair value. Power produced by the plant is sold to Central Maine
Power Company (CMP) through 2007 at a fixed price per kilowatt hour that is
indexed annually to the rate of inflation. The Operating Company's fuel is
purchased from an affiliate of the Company's joint venture partner pursuant to
an agreement expiring in 2002 under which the price escalates based upon a
prescribed index.

    Whitefield. The Whitefield facility is a 13.6-megawatt wood waste plant
located on a 46-acre site in Whitefield, New Hampshire. The power produced by
the plant is sold to PSNH at established rates under a power-sales agreement
that expires in 2005. This plant is also subject to a dispute with PSNH (See
"Hemphill" above). Fuel is purchased at a fixed price pursuant to an agreement
expiring in 2001. The Whitefield facility was originally owned by Chrysler
Capital Corp., and leased to the Operating Company. The Company purchased the
Whitefield facility in August 1992.

    Mendota. The Mendota facility is a 25-megawatt agricultural and urban wood
waste plant located on an 80-acre site in Mendota, California. The Operating
Company is a limited partnership, 100% of which is owned by the Company. The
generating equipment is owned by Chrysler Capital Corp., which leases the
equipment to the Operating Company through 1999 at which point the Company will
have an option to purchase the facility for $5 million. In June 1995, the
Operating Company amended the facility lease which resulted in the agreement
being treated as a capital lease. The power generated by the plant is sold to
Pacific Gas & Electric (PG&E) under a standard offer #4 (SO#4) contract expiring
in 2014. Under the contract, PG&E is required to purchase the plant's
electricity at predetermined prices until 2000, and at a price equal to PG&E's
avoided cost for the remainder of the contract. Payments for capacity are fixed
throughout the life of the contract. PG&E has asserted that the fixed rates
under this contract will terminate mid-1999; however, the Company disputes this
assertion. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" incorporated by reference into Item 7 hereof.
Approximately 28% of the fuel for the plant is purchased pursuant to long-term
contracts terminating between 1998 and 2002, under which prices increase in
accordance with prescribed schedules or market-based indexes. The remainder of
the plant's fuel is purchased by the Operating Company on the spot market.

                                       5
<PAGE>

    The power-sales agreements between the Mendota and Woodland (discussed
below) Operating Companies and PG&E allowed PG&E to curtail the quantity of
power purchased under these agreements by up to 1,000 hours of generating
capacity annually at each plant. PG&E normally exercised its curtailment rights
during periods when cheaper hydroelectric power was available, which generally
occurred following periods of heavy rain or snow. Curtailment reduces the power
payment received by the Operating Companies and, therefore, has an adverse
effect on the financial results of those Operating Companies. In November 1997,
the Company renegotiated PG&E's curtailment rights limiting PG&E to 500 hours
per year effective January 1, 1998. The Company experienced approximately 780,
860, and 930 hours of utility-imposed curtailments at each of the two plants
during fiscal 1998, 1997, and 1996, respectively.

    Woodland. The Woodland facility is a 25-megawatt agricultural and urban wood
waste plant located on a 38-acre site in Woodland, California. The design of the
plant is essentially the same as the Mendota plant. The Operating Company is a
limited partnership, 100% of which is owned by the Company. The generating
equipment is owned by BankBoston Leasing Services Inc., which leases the
equipment to the Operating Company through March 2010, with an option to renew
or purchase the equipment for fair value. The electricity generated by the plant
is sold to PG&E under an SO#4 contract expiring in 2014, at predetermined prices
until 2000. PG&E has asserted that the fixed rates under this contract will
terminate mid-1999; however, the Company disputes this assertion. The price for
the remainder of the contract is PG&E's avoided cost. Payments for capacity are
fixed throughout the life of the contract. Approximately 21% of the fuel for the
plant is purchased pursuant to long-term contracts terminating in 2000, under
which prices increase in accordance with prescribed schedules or market-based
indexes. The remaining fuel is purchased by the Operating Company on the spot
market.

    The Operating Company has conditions in its nonrecourse lease agreement that
require the funding of a "power reserve" in years prior to 2000, based on
projections of operating cash flow shortfalls in 2000 and thereafter. The power
reserve represents funds available to make lease payments in the event that
revenues are not sufficient after the plant converts to avoided cost rates in
March 2000. This funding requirement will significantly limit future profit
distributions the Operating Company may make to the Company. Accordingly,
beginning in the first quarter of fiscal 1997, the Company has expensed the
funding of reserves required under Woodland's nonrecourse lease agreement to
cover projected shortfalls in lease payments beginning in 2000. Consequently,
the results of the Woodland plant were reduced to approximately breakeven in
fiscal 1998. During fiscal 1997 and 1996, the Woodland plant contributed $1.0
million and $5.1 million of operating income, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference into Item 7 hereof.

    Delano I. The Delano I facility is a 27-megawatt agricultural and urban wood
waste plant located on a 124-acre site in Delano, California. Southern
California Edison (SCE) purchases power under an SO#4 contract expiring in 2020,
under which energy prices are predetermined until September 2000, and then at
avoided cost for the remainder of the contract. Approximately 49% of the fuel
supply is purchased pursuant to long-term contracts with terms expiring at
various dates through 2004 under which prices increase in accordance with
prescribed schedules or market-based indexes. The remaining fuel is purchased by
the Operating Company on the spot market. The Company has guaranteed to the
Operating Company the price and availability of fuel that is not purchased
pursuant to the long-term contracts. The Delano I generating equipment was
originally owned by Westinghouse Credit Corporation and leased to the Company.
In December 1993, the Company purchased Delano I for $21.5 million in cash and
the assumption of $66.9 million original principal amount of nonrecourse,
long-term tax-exempt bonds issued by the California Pollution Control Finance
Authority (CPCFA). As of October 3, 1998, $35.6 million principal amount was
outstanding on these bonds. These bonds effectively bear interest at a rate of
8.3%, with principal and interest payable semi-annually until maturity in 2000.
The cash portion of the purchase price was funded by borrowings from Thermo
Electron.

    Delano II. In January 1994, the Delano Operating Company commenced operation
of phase II of the Delano project, a 22-megawatt agricultural and urban wood
waste plant located on the same site as Delano I. The facility is wholly owned
by the Delano Operating Company. Power generated by the Delano II facility is
also purchased by SCE under the Delano I contract described above, under which
prices are fixed until September 2000. Fuel is also purchased pursuant to the
same contracts as Delano I. The Delano II facility is owned by the Company and
is subject to $66 million principal amount of nonrecourse, long-term tax-exempt
bonds issued by CPCFA. As of October 3, 1998, $16.2 million principal amount was
outstanding on these bonds. These bonds effectively bear interest at a rate of
6%, with principal and interest payable semi-annually until maturity in 2000.



                                       6
<PAGE>

    Czech Republic. In January 1996, the Company, through a wholly owned
subsidiary, signed a joint development agreement with a Czech power-development
company, EMD Praha Spol s.r.o. The Company owns a 65% interest in this joint
venture. The initial focus is on expansion and environmental retrofit of
existing Czech energy centers. To support this effort, the Company has opened an
office in Prague. The development of projects through the joint venture will be
subject to a number of conditions including negotiation of definitive agreements
for power sale, fuel supply, construction, and other agreements with third
parties. In January 1998, the Company entered into a new joint venture
arrangement, superseding the original arrangement, and in connection therewith,
indirectly acquired a majority interest in two Czech energy centers near the
towns of Tabor and Pribram. The Tabor facility provides 12 megawatts of
electrical output and 165 tons per hour of thermal production. Plans for the
Tabor facility include the expansion and modernization of the energy center to
provide approximately 50 megawatts of electrical output to be sold to the local
power distribution company and an adjacent industrial customer. Construction to
expand the Tabor facility commenced in fiscal 1998. At the Pribram facility, the
joint venture has purchased five auxiliary boilers that provide thermal service
during peak hours. In addition, the Company is exploring other projects relating
to expanding and retrofitting existing Czech energy centers through the joint
venture.

Projects in Development

    United States

    The State of California's Public Utility Commission (CPUC) has mandated the
restructuring of California's electric utility industry. Under the terms of the
mandate, the competitive market for electric power generation commenced in March
1998, contemporaneously with the Company's acquisition of two power-generation
facilities and related sites in California for approximately $9.5 million in
cash and the assumption of certain liabilities. These natural gas-fired
facilities were built in the 1950's and have been designated "non must run" by
the California Independent System Operator, meaning they are not currently
essential for assuring the reliable operation of the California power grid.
During calendar 1997, the plants operated at less than five percent capacity.
These facilities pose an opportunity to repower a 126-megawatt San Bernadino
facility and a 154-megawatt Highgrove facility with new equipment and technology
with the capacity to generate, on a combined basis, 600 megawatts of electricity
at competitive rates, with fewer emissions. The Company is currently evaluating
its various options regarding its participation, through these facilities, in
the recently deregulated California electric-power market. If the Company
undertakes to repower these facilities, the Company expects a significant
financing would be involved including significant equity investments and bank
financings. No assurance can be given that the Company will undertake to repower
these facilities or that if it does, it will successfully complete such projects
on a timely basis or at all. In addition, to sell power from these facilities,
the Company must ensure that it will not be subject to regulation as a holding
company under PUHCA and that all necessary approvals from FERC and/or CPUC are
obtained. In fiscal 1998, the Company obtained Exempt Wholesale Generator status
with respect to these facilities.

    The Company is also pursuing a number of domestic electric power projects.
The project opportunities actively being pursued are located in Florida and
California and, like the San Bernadino and Highgrove facilities, involve the
repowering or reconfiguration of existing power stations. The projects are
subject to a number of conditions which may impact their economic viability and
as a result there is no assurance that the Company will be successful in
operating these facilities.

    Italy

    In September 1996, the Company, through a wholly owned subsidiary, formed a
joint venture (the Joint Venture) with Marcegaglia Group of Mantova, Italy, to
develop, own, and operate biomass-fueled electric-power facilities in that
country. The Joint Venture has focused its development efforts on four
facilities for which it has signed preliminary power-purchase contracts with
ENEL (the Italian electric utility), all of which have been approved by the
Italian government's price subsidy program for biomass-fueled plants. The Joint
Venture has established an office near Milan to coordinate the process of
securing site locations, permits, and fuel sources and arranging for the
construction and financing of these facilities. The development of the
facilities is subject to a number of conditions including negotiation of
definitive agreements for power sale, fuel supply, and other agreements with
third parties. No assurance can be given that conditions or agreements will be
satisfied on a timely basis.

                                       7
<PAGE>


    The Company had been exploring opportunities in India and the Dominican
Republic but, due to a variety of circumstances, has decided to no longer
actively pursue those business opportunities.

Clean Fuels

    KFx, Fuel Partners, L.P. In August 1995, the Company, through two wholly
owned subsidiaries, entered into a Limited Partnership Agreement with KFx
Wyoming, Inc., a subsidiary of KFx, Inc., to develop, construct, and operate a
subbituminous coal-beneficiation plant to be constructed near Gillette, Wyoming.
The K-Fuel Partnership has been granted, in exchange for certain future
contingent royalty payments, a nonexclusive right and license to use certain
patented clean coal technology to create a low-moisture, high-energy fuel with
reduced sulfur that will help coal-burning utilities meet the SO(2) emission
restrictions contained in the Clean Air Act through fuel switching or blending.

    The K-Fuel Partnership procured a 24-acre site for construction of the plant
and began construction in August 1995 under a third party, turnkey construction
contract. In return for a 95% equity interest in the K-Fuel Partnership, the
Company has provided approximately $63 million for the design, construction, and
operation of the plant with the capacity to produce up to 500,000 tons of K-Fuel
per year. A tax credit is available for facilities producing and selling
alternative fuels, such as K-Fuel. To be eligible, companies must have entered
into binding, written contracts for the construction of the facility by December
31, 1996 and facilities must be placed in service no later than June 30, 1998.
The credit is thereafter available with respect to qualified fuel sold through
December 31, 2007.

    The Company believes that the K-Fuel Facility was placed in service in April
1998. Although the facility has operated and produced commercially salable
product, the Company has encountered certain difficulties in optimizing its
performance to achieve optimal and sustained operation. The Company has
addressed and resolved certain problems previously encountered, including a fire
at the facility and certain construction problems, including issues relating to
the flow of materials within the facility and the design and operation of
certain pressure-release equipment. The Company continues to experience certain
operational problems relating to tar and fines residue build-up within the
system during production and other product-quality issues related to product
dusting. The Company is actively exploring solutions to these problems. Because
the technology being developed at the facility is new and untested, no assurance
can be given that other difficulties will not arise, or that the Company will be
able to correct these problems and achieve optimal and sustained performance. In
addition, there can be no assurance that the Company will be able to realize a
benefit from the tax credit. The economic returns of the K-Fuel Facility
primarily result from tax credits on the facility's production of K-Fuel. The
K-Fuel Facility reports operating losses for financial reporting purposes,
primarily as a result of recording depreciation charges over the expected life
of the tax credit.

    The Company owns 4,250,000 shares of KFx common stock, or an 18% equity
interest. The Company has warrants, exercisable from January 1, 2000, through
July 1, 2001, to purchase 7,750,000 shares at $3.65 per share. In addition, the
Company has the right to purchase further shares at that time for the then fair
market value so that when added to all other shares of KFx common stock owned by
the Company, would result in the Company owning up to a total 51% equity
interest in KFx on a diluted basis. If all warrants and options are exercised,
the Company will be able to consolidate the results of operations of KFx. See
Note 2 of Notes to Consolidated Financial Statements in the Registrant's Fiscal
1998 Annual Report to Shareholders incorporated by reference into Item 8 hereof.

    In January 1997, the Company entered into a two-year project-development
agreement with Brant Energy L.L.C. (Brant) to develop and/or acquire natural gas
infrastructure assets, including a certain salt dome storage development project
located in southeastern Mississippi. The agreement provides for Brant to work
exclusively with the Company to identify and secure project opportunities such
as natural gas pipelines, storage facilities, gathering systems, and processing
plants, and provides Brant with the opportunity to contribute up to 10% of the
equity investment.

                                       8
<PAGE>

Biopesticides

    In May 1996, the Company, through Thermo Trilogy, acquired the assets of the
biopesticide division of W.R. Grace & Co. that develops, manufactures, and
markets environmentally friendly products used for pest control, for
approximately $8.1 million in cash and the assumption of certain liabilities. In
addition, the Company will pay a royalty fee of seven percent on annual sales of
the acquired business in excess of $14 million through the year 2000. In January
1997, Thermo Trilogy acquired substantially all of the assets of biosys, inc., a
biopesticide company, for approximately $11.2 million in cash and the assumption
of certain liabilities. In November 1997, Thermo Trilogy acquired the sprayable
bacillus thuringiensis (Bt)-biopesticide business of Novartis AG and its
affiliates for approximately $19.1 million in cash and the assumption of certain
liabilities.

    Through these acquisitions, Thermo Trilogy has developed a broad range of
biopesticide products. Products produced by Thermo Trilogy include botanical
extracts from the seed of tropical neem trees, microbial-based pesticides
(fungal-based insecticides and fungicides, bacculovirus, beneficial nematodes,
and Bts), insect pheromone-based products such as traps and lures, and
disease-free sugarcane planting stock. As compared to conventional chemical
pesticides, most of Thermo Trilogy's products are derived from natural origins
with minimal or no toxicity, and are environmentally friendly as they have
minimal or no residue and do not harm beneficial insects. Thermo Trilogy's
products are used primarily by agricultural farmers, consumers, and pest-control
operators and are sold through various distribution channels worldwide.

    Market acceptance of the Company's biopesticide products depends in part on
educating customers on the benefits of the Company's products compared to
conventional chemical pesticides. Although response from customers to date has
been positive, there is no assurance that the Company will be able to obtain
satisfactory levels of market acceptance.

Regulatory Matters

    The Company is subject to energy and environmental laws and regulations at
the federal, state, local, and international levels in connection with the
development, ownership, and operation of its plants. Federal laws and
regulations govern power purchase and sale transactions with regulated utility
companies, the types of fuel that may be used by a plant, the ownership of a
plant, the plant's efficiency, and the type and use of combustion and
pollution-control technology at a plant. State utility regulatory commissions
must establish the rates and, in some instances, other terms and conditions
under which public utilities purchase electric power from nonutility generators.
Under certain circumstances where specific exemptions are otherwise unavailable,
state utility regulatory commissions may have broad jurisdiction over nonutility
electric power plants. Energy-producing projects also are subject to federal,
state, local, and international laws, as well as administrative regulations
governing the emissions and other substances produced by a plant, and
geographical location, zoning, and land use. Further, the Company's natural gas
business activities are subject to regulation at the federal and state level. In
addition, the Company is subject to environmental and other laws and regulations
at the federal, state, and international level regarding the manufacture, use,
and sale of its biopesticide products.

    Public Utility Regulatory Policies Act of 1978, as amended (PURPA). The U.S.
market for nonutility generators selling electricity at wholesale rates
developed after the passage of PURPA. Prior to the passage of PURPA, regulated
utilities were the primary producers of electric power. PURPA was passed in the
wake of the energy crises of the 1970s as a means to increase energy efficiency
and foster the development of alternative power-generation technologies. The
1978 enactment of PURPA and the adoption of regulations thereunder by the
Federal Energy Regulatory Commission (FERC) provided incentives for the
development of cogeneration and small power-production facilities.

    A domestic electricity-generating project must be a Qualifying Facility
(QF), in order to take advantage of certain rate and regulatory incentives
provided by PURPA. To qualify as a QF, a plant must be a cogeneration facility
or small power producer (less than 80 megawatts) that burns waste or alternative
fuels, must satisfy certain engineering standards, and an electric utility, an
electric utility holding company, or its subsidiary must not own more than 50%
of

                                       9
<PAGE>

the economic interest in the plant. PURPA exempts QFs from the Public Utility
Holding Company Act of 1935 (PUHCA), most provisions of the Federal Power Act
(the FPA) and, except under certain limited circumstances, state laws concerning
rates or financial regulation of electric utilities. The Company believes that
each of the domestic operating plants that the Company currently owns and/or
operates meets the requirements under PURPA necessary for QF status.

    PURPA provides two primary benefits to QFs. First, most QFs are relieved of
compliance with certain extensive federal, state, and local regulations that
control the development, financial structure, and operation of any
energy-producing plant and the prices and terms on which energy may be sold by
the plant. Second, FERC's regulations promulgated under PURPA require that
electric utilities purchase electricity generated by QFs at a price based on the
purchasing utility's full "avoided cost." This is defined as the incremental
cost to an electric utility of electric energy or capacity that the utility
would have to generate itself or purchase from another source if it did not have
power available from the QF. FERC regulations also permit QFs and utilities to
negotiate agreements for utility purchases of power at rates lower than the
utility's avoided costs. While all of the Company's existing domestic operating
projects have long-term power-sales agreements at rates equal to or greater than
the utilities' current avoided costs, the current practice is for most
power-sales agreements to be awarded at a rate below avoided cost, due to
increasing competition for utility contracts. Moreover, whereas in the 1980s
power-sales agreements were often entered into as a result of negotiations
between a nonutility generator and a utility, increasingly, these agreements are
the subject of competitive bidding, which tends to lower the price that a
nonutility generator may receive for power. Currently, the demand for the
construction of cogeneration plants has significantly diminished in the U.S.;
therefore, the Company does not anticipate entering into any new construction
projects of this type in the near future.

    The Company and its operating plants must continue to comply with certain
regulatory requirements in order to maintain QF status; therefore, the Company
endeavors to design its projects, monitor its compliance with applicable
regulations, and choose its customers in a manner that minimizes the risks of
losing QF status for its projects. If an Operating Company were unable to
qualify as a QF or lost its QF status, the facility could be subject to
regulation as a public utility under the FPA and state laws and the Company
could become a public utility holding company by owning or controlling 10% or
more of a facility that would no longer be exempt from PUHCA, unless the
Operating Company qualified as an EWG under the National Energy Policy Act of
1992 (see "National Energy Policy Act" below). A loss of QF status could result
in defaults under the Operating Company leases, power-sales agreements, and
other contracts, which could have a material adverse effect on the Company.

    PUHCA. Under the PUHCA, any corporation, partnership, or other legal entity
that directly or indirectly owns, or controls the power to vote, 10% or more of
the outstanding voting securities of a "public utility company," or a company
that is a "holding company" of a public utility company, is subject to
registration with the Securities and Exchange Commission and regulation under
PUHCA, unless eligible for an exemption. PURPA provides that companies that only
own QFs are not public utility holding companies under PUHCA. A holding company
of a public utility company that is subject to registration is required by PUHCA
to limit its utility operations to a single integrated utility system and to
such other businesses as are reasonably incidental or economically necessary or
appropriate to the operation of such integrated public utility system. Approval
by the Securities and Exchange Commission is required for nearly all important
financial and business dealings of a registered holding company.

    FPA. The FPA grants FERC exclusive rate-making jurisdiction over wholesale
sales of electricity in interstate commerce. FERC has jurisdiction to establish
rates, to amend, revoke, or modify previously approved rates, and has
jurisdiction over certain corporate-related transactions. These rates may be
based on a cost-of-service approach or may be determined through competitive
bidding or negotiation, or, lastly, may be based on other criteria as long as
FERC finds the rates are "just and reasonable" and in the public interest. While
QFs under PURPA are exempt from the rate-making and certain other provisions of
the FPA, projects not qualifying for QF status would be subject to the FPA and
to FERC rate-making jurisdiction which may limit their flexibility in
negotiations with power purchasers.

    National Energy Policy Act.  In 1992, Congress enacted comprehensive
new energy policy legislation in its passage of the National Energy Policy
Act.  This law is primarily designed to foster competition in energy
production and provide competitive access to the transmission grid.  To
achieve these goals, the National Energy Policy Act

                                       10
<PAGE>

amended PUHCA to create EWGs, a new class of generating facility that is exempt
from public utility regulation under PUHCA. An EWG is an entity determined by
FERC to be exclusively engaged, directly or indirectly, in the business of
owning and/or operating certain eligible facilities and selling energy
wholesale. EWGs may own generating facilities of any size, use any fuel source,
and may be owned by utilities or nonutilities. EWGs generally may not own
transmission facilities. Domestic EWGs may not make retail sales of electric
energy. The National Energy Policy Act also provides new authority to FERC to
mandate that owners of electric transmission lines provide wheeling access to
nonutility generators at just and reasonable rates. Previously limited, wheeling
rights enhance the ability of nonutility generators to negotiate transmission
access and encourage development of facilities whose most feasible siting lies
outside the purchasing utility's service area. In 1996, FERC enhanced this
transmission access by issuing its Order Nos. 888 and 889. Order No. 888
required utilities to provide third parties wholesale open access to
transmission facilities on terms comparable to those that apply when utilities
use their own systems. Order No. 889 required transmission-owning utilities to
adopt procedures for an open access, same time information system regarding
their services. The Company believes that the National Energy Policy Act could
benefit the Company by expanding its ability to own and operate facilities that
do not qualify for QF status. However, this legislation may also result in
increased competition by allowing utilities and others to develop such
facilities without being subject to the constraints of PUHCA.

    State Regulation. State public utility commissions (PUCs) have broad
authority to regulate the rates, expenses, financings, and power-sale
transactions of regulated electric utilities. Since a power-sales agreement will
become a part of a utility's expenses (and therefore will be reflected in its
rates), sale agreements with nonutility generators typically fall under the
regulatory purview of PUCs. Recognizing the competitive nature of the
acquisition process, most PUCs will permit utilities to "pass through" expenses
associated with an independent power contract to the utility's retail customers.

    Nonutility generators (including EWGs) that are not QFs under PURPA are
considered to be public utilities in many states, and are subject to broad
regulation by PUCs, ranging from the requirement of certificates of public
convenience and necessity to regulation of organizational, accounting,
financial, and other corporate matters. Although FERC generally has exclusive
jurisdiction over the rates charged by such a producer to its wholesale
customers, PUCs have the ability, in practice, to influence the establishment of
such rates by asserting jurisdiction over the purchasing utility's ability to
pass through the resulting cost of the purchased power to its retail customers.
In addition, states may assert jurisdiction over the siting and construction of
facilities, and over the issuance of securities and the sale or other transfer
of assets by these facilities.

    Certain states have adopted or are considering legislation that will remove
many of the restrictions that currently limit the ability of nonutility
generators to sell electrical power directly to industrial and commercial
customers. The Company believes that the removal of these restrictions will
result in greater competition and greater opportunities to negotiate power-sale
agreements with industrial and commercial customers and may result in state PUCs
attempting to reduce, or forcing the renegotiation of, fixed rates or contracts.
Although the Company believes that the trend in the power market is toward
deregulation, to date, only a few states have passed any such legislation, and
there can be no assurance that any further similar legislation will ultimately
be passed.

    Other Regulatory Matters. Different aspects of the Company's natural gas
business activities are subject to regulation at the federal and state level.
FERC has jurisdiction over, among other things, the construction and operation
of pipeline and related facilities used in the transportation and sale of
natural gas in interstate commerce, including the construction, extension,
expansion, or abandonment of such facilities. FERC also has jurisdiction over
the rates and charges for the transportation of natural gas in interstate
commerce and the sale by a natural gas company of natural gas in interstate
commerce for resale. FERC thus would regulate any interstate transportation
business in which the Company engages. The Company does not anticipate engaging
in interstate pipeline transportation subject to FERC jurisdiction. Natural gas
marketers and brokers generally are not subject to federal or state regulation.
Natural gas storage activities that are in interstate commerce also fall within
FERC's transportation jurisdiction. FERC must grant prior approval for the
construction or abandonment of interstate storage facilities, and also regulates
the

                                       11
<PAGE>


rates and charges of interstate storage services. If storage facilities are not
engaged in interstate commerce, FERC has no jurisdiction. Various states do,
however, regulate such intrastate storage activities. Furthermore, FERC
generally does not have jurisdiction over gas gathering activities, and the
Company will attempt to obtain, and maintain, FERC nonjurisdiction status for
any gas gathering activities. However, various states regulate the rates and
terms of service of gas gathering companies.

    EPA and Related-state Regulation. No pesticide may be manufactured, used, or
sold without federal and state approvals. Such approvals, called registrations,
must be obtained for each individual product formulation for use on specific
pests for specific crops. Adding new uses, new pests, new crops, or new
formulations requires submission of additional applications or data for
approval.

    The U.S. Environmental Protection Agency (EPA) regulates pesticides under
the Federal Insecticide, Fungicide, and Rodenticide Act and implementing EPA
regulations. To obtain a pesticide registration from the EPA, the applicant must
submit extensive field test data evidencing product effectiveness, nontargeted
organism testing, environmental impact studies, residue chemistry, and toxicity
studies on plants and animals. Initial product registrations can take many years
to obtain, and an applicant may incur considerable additional delay and expense
if the EPA requests further testing and data. To promote the development and use
of biopesticides, the EPA has established special guidelines for their
registration which are set out in subdivision M of the EPA's Pesticide
Assessment Guidelines which generally require less time and expense than that
required for synthetic pesticides.

    As a part of the pesticide registration process, the applicant must submit
labeling data describing the chemical composition of the pesticide,
concentrations, manufacturer directions for application, pest and crop use, and
cautionary and warning statements to be put on all packaging of the pesticides.
All pesticide packages must contain the approved label and no changes can be
made to the label without EPA approval.

    Pesticide registrations must also be obtained from each state where the
pesticide will be sold. Some states, such as California, which represents an
important market for the Company's products, have their own extensive testing
and pesticide registration procedures and may impose additional restrictions on
the use of the pesticide in such state beyond those imposed by the EPA
regulations. Other states simply follow the EPA registration and labeling
guidelines.

    Foreign countries may also require extensive testing and data submission
before pesticides can be manufactured or sold in such foreign country. The
relevant regulations vary from country to country and may be stricter and more
difficult and costly to comply with than EPA's regulations. A number of the
Company's products are registered for sale in foreign countries.

    The Company's activities may also be subject to regulation under other
state, federal, and foreign government laws and regulations governing employee
and public health and safety, environmental pollution, clean water, disposal of
hazardous wastes, manufacture of chemicals, product liability, food and
agriculture applications, and public disclosure of the use of chemicals.

    (ii)   New Products

    Not applicable.

    (iii)  Raw Materials

    Energy

    Fuel and operating supplies purchased by the Company's independent power
projects are either available from a number of different suppliers or from
alternative sources that could be developed without a material adverse effect on
the Company. To date, the Company has experienced no difficulties in obtaining
these materials.

                                       12
<PAGE>

    The K-Fuel Partnership is purchasing coal feed stock for the K-Fuel
Facility's needs from Dry Fork Coal Company on a spot-market basis. The Dry Fork
mine is located on property adjacent to the K-Fuel Facility.

    Biopesticides

    Thermo Trilogy relies on overseas producers of the raw materials for its
neem-based products and on third parties to manufacture some of its products. In
particular, Thermo Trilogy's sole supplier of neem products is P.J. Margo Pvt.
Ltd., a joint venture in India in which Thermo Trilogy holds a fifty percent
interest, pursuant to an exclusive supply contract that expires in 2001. To
date, Thermo Trilogy has experienced no difficulties in obtaining these raw
materials; however, there is no assurance that Thermo Trilogy will have an
uninterrupted supply of raw materials or that third-party manufacturers will
produce the products at competitive prices.

    (iv)   Patents, Licenses, and Trademarks

    Energy

    The K-Fuel Partnership, which is 95%-owned by the Company, has been granted,
in exchange for certain future contingent royalty payments, a nonexclusive right
and license to use certain patented clean coal technology owned by KFx.

    Biopesticides

    The Company has numerous U.S. patents and corresponding foreign patents in
various areas related to process development, fermentation, formulation, or
applications of current commercial products. Additionally, various patent
applications are pending in the U.S. and foreign countries. The Company also
relies on trade secrets and proprietary know-how which it seeks to protect
through confidentiality agreements with employees, collaborators, and
consultants.

    The Company's patent portfolio includes several patents related to Bt
technology. The Company has obtained licenses or sublicenses for a number of
patent families in areas related to Bt strain construction and formulation
development. The Company also relies on trade secret protection for its
extensive know-how in quality control.

    The Company also has additional patents that have been granted for neem oil
and azadirachtin technologies. The Company also has patent positions covering
nematode and fungi technologies.

    The Company has an exclusive license for the fungus PFR-97. Additionally,
the Company has a sublicense agreement for a unique strain of a bacculovirus
from Novartis.

    (v)    Seasonal Influences

     Energy

    The Energy segment earns a disproportionately high share of its income in
the months of May through October due to rate structures under the power-sale
agreements relating to its California plants, which provide strong incentives to
operate during this period of high demand. Conversely, the Energy segment
historically has operated at a marginal profit during its second fiscal quarter
due to the rate structure under these agreements.

    Biopesticides

    The Biopesticide segment currently markets its products predominantly for
use in the northern hemisphere, where the growing season generally runs from
March to October. Therefore, the seasonal nature of agriculture will cause the
Biopesticide segment's product sales to be concentrated during such period and
will result in substantial variations in quarter-to-quarter results.

    (vi)   Working Capital Requirements

    There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital.

                                       13
<PAGE>

    (vii)  Dependency on a Single Customer

     Energy

    The Company derived 10% or more of its revenues during the past three years
from its three most significant electric utility customers: PSNH, SCE, and PG&E.
Revenues from these three customers as a percentage of total revenues were
approximately 16%, 30%, and 30%, respectively, in fiscal 1998.

    (viii) Backlog

    Biopesticides

    The Company maintains minimal backlog. Most orders for its biopesticide
products are shipped out of inventory within a short period of time.

    (ix)   Government Contracts

    Not applicable.

    (x)    Competition

    Energy

    The worldwide independent power market now consists of numerous companies,
ranging from small startups to multinational industrial companies. In addition,
a number of regulated utilities have created subsidiaries that compete as
nonutility generators. Nonutility generators often specialize in market
"niches," such as a specific technology or fuel (i.e., gas-fired cogeneration,
refuse-to-energy, hydropower, geothermal, wind, solar, wood, or coal) or a
specific region of the country where they believe they have a market advantage.
However, many nonutility generators seek to develop projects powered by the best
fuel available. Many companies in this market have substantially greater
financial, technical, and operational resources than the Company. The Company
competes primarily on the basis of project experience, technical expertise,
capital resources, and power pricing.

    Biopesticides

     The Company currently has virtually no competition in the neem- and
azadirachtin-based product market in the U.S. In the microbial pesticides market
(Bts, viruses, fungi) the Company has a number of competitors, including major
chemical companies. The pheromone market is fragmented and is comprised of
dozens of small operating companies. The Company has a significant share of the
nematode market. The Company's products compete primarily based on performance,
quality, and price.

    (xi)   Research and Development

    Research and development expenses for the Company were $2,398,000,
$1,638,000, and $693,000 in fiscal 1998, 1997, and 1996, respectively.

    (xii)  Environmental Protection Regulation

    The construction and operation of power projects are subject to extensive
federal, state, and local laws and regulations adopted for the protection of
health, safety, and the environment, and to regulate land use. The laws and
regulations applicable to the Company primarily involve discharges and emissions
into the water and air, and the use of water, but can also include wetlands
preservation, endangered species, waste disposal, and noise regulation. These



                                       14
<PAGE>

laws and regulations in many cases require a lengthy and complex process of
obtaining licenses, permits, and approvals from federal, state, and local
agencies. If such laws and regulations are changed and the Company's facilities
are not grandfathered, extensive modifications to project technologies and
facilities could be required.

    The Company does not believe that it will be required to make material
capital expenditures to comply with existing environmental regulations.

    (xiii) Number of Employees

    As of October 3, 1998, the Company employed, directly and through its
Operating Companies and subsidiary, a total of 382 employees. None of the
employees of the Company or the Operating Companies is represented by a labor
union, and the Company considers its relations with its employees to be good.

(d) Financial Information about Exports by Domestic Operations and about
Foreign Operations

    Not applicable.


(e) Executive Officers of the Registrant

     Name                 Age  Present Title (Fiscal Year First
                               Became Executive Officer)
     -----------------------------------------------------------------

     Brian D. Holt        49   Chief Executive Officer and President
                                 (1994)
     John N. Hatsopoulos* 64   Chief Financial Officer and Senior
                                 Vice President (1989)
     Parimal S. Patel     55   Executive Vice President (1989)
     Brian P. Chatlosh    39   Vice President, Business Development
                                 (1996)
     Robert R. Fini       56   Vice President, Technical Services
                                 (1994)
     Floyd M. Gent        49   Vice President; President, Clean
                                 Fuels Division (1994)
     John T. Miller       52   Vice President; President, Clean
                                 Power Division (1998)
     Randall W. Miselis   45   Vice President, Accounting and
                                 Administration (1996)
     Paul F. Kelleher     56   Chief Accounting Officer (1989)

    * John N. Hatsopoulos and George N. Hatsopoulos, a director of the
      Company, are brothers.  John N. Hatsopoulos will retire as Chief
      Financial Officer and Senior Vice President effective December 31,
      1998.  Theo Melas-Kyriazi has been appointed to succeed Mr.
      Hatsopoulos as Chief Financial Officer.

    All of the Company's executive officers are elected annually by the Board of
Directors and serve until their successors are elected and qualified. All
executive officers, except Messrs. Holt, Chatlosh, Gent, Miller, and Miselis
have held comparable positions for at least five years either with the Company
or Thermo Electron. Mr. Holt has been President and Chief Executive Officer of
the Company since February 1994, and a Director since January 1995. For more
than five years prior to that time, he was President and Chief Executive Officer
of Pacific Generation Company, a financier, builder, owner, and operator of
independent power facilities. Mr. Chatlosh has been Vice President, Business
Development since January 1996 and has worked for the Company in various
managerial capacities in business development since 1993. Prior to joining the
Company, Mr. Chatlosh worked for Oxbow Power Corporation, an independent power
company, in various managerial capacities in project development from 1986 to
1992. Mr. Gent has been a Vice President of the Company since September 1994.
For more than five years prior to that time, Mr. Gent held various positions,
most recently as Executive Vice President, at KTI Environmental Group, a
developer, owner, and operator of waste-to-energy plants. Mr. Miller has been a
Vice President of the Company since March 1998. Prior to joining the Company, he
served as President and Chief Executive Officer of Pacific Generation Company
from 1994 to 1998, overseeing its expansion into international generation
projects. From 1990 to 1994, he served as Vice President of Business Development
of Pacific Generation Company, and from 1987 to 1990, he served

                                       15
<PAGE>

as its Vice President of Operations.  Mr. Miselis has been Vice President
of Accounting and Administration since January 1996 and has worked for the
Company in various accounting capacities since November 1988.  Messrs.
Hatsopoulos and Kelleher are full-time employees of Thermo Electron, but
devote such time to the affairs of the Company as the Company's needs
reasonably require.  Mr. Melas-Kyriazi joined Thermo Electron in 1986 as
Assistant Treasurer, and became Treasurer in 1988.  He was named President
and Chief Executive Officer of ThermoSpectra Corporation, a public
subsidiary of Thermo Instrument Systems Inc., in 1994.  In 1997, he became
Vice President of Corporate Strategy for Thermo Electron.  Mr.
Melas-Kyriazi will remain a full-time employee of Thermo Electron and,
when he succeeds Mr. Hatsopoulos as Chief Financial Officer, will also
devote such time to the affairs of the Company as the Company's needs
reasonably require.

Item 2.    Properties

    Energy

    The Company's corporate headquarters are located in Waltham, Massachusetts,
and consist of approximately 15,000 square feet that are occupied pursuant to a
lease expiring in 2003. The Company also leases office space in Prague, Czech
Republic; Milan, Italy; Roseville, California; Houston, Texas; and Dallas,
Texas. The Company's other properties consist of the power plants described
under "Operating Projects" and "Projects in Development." The Company owns all
of the land on which the plants are built. The K-Fuel Facility is located on
approximately 80 acres of land inside the rail loop in Fort Union Mine, in
Campbell County, Wyoming, approximately 5 miles northeast of Gillette, Wyoming.
The K-Fuel Facility is comprised of three buildings totaling approximately 7,100
square feet.

    The Company's California plants are located in areas where there is a risk
of potentially significant earthquake activity. Projects that the Company
develops in the future may also be located in areas where there is earthquake
risk. The Company's earthquake insurance is not sufficient to cover all
potential losses and there can be no assurance that such insurance will continue
to be available on reasonable terms.

    Biopesticides

    Thermo Trilogy's corporate headquarters are located in Columbia, Maryland,
where it leases 25,000 square feet of space for office, laboratory, and
warehouse use. Thermo Trilogy also leases a 26,000 square foot building, in
which it has built a fermentation/formulation facility, in Decatur, Illinois.
Thermo Trilogy owns an 80,000 square foot fermentation/formulation facility in
Wasco, California. Thermo Trilogy's wholly owned subsidiary in the U.K. leases a
20,000 square foot pheromone trap and lure manufacturing facility.

Item 3.    Legal Proceedings

    Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders

    Not applicable.


                                       16
<PAGE>

                                  PART II
Item 5.    Market for Registrant's Common Equity and Related Shareholder Matters

    Information concerning the market and market price for the Registrant's
Common Stock, $.10 par value, and dividend policy is included under the sections
labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's Fiscal 1998 Annual Report to Shareholders and is incorporated
herein by reference.

Item 6.    Selected Financial Data

    The information required under this item is included under the sections
labeled "Selected Financial Information" and "Dividend Policy" in the
Registrant's Fiscal 1998 Annual Report to Shareholders and is incorporated
herein by reference.

Item 7.    Management's Discussion and Analysis of Financial Condition and
Results of Operations

    The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's Fiscal 1998 Annual Report to Shareholders and is
incorporated herein by reference.

Item 7A.   Quantitative and Qualitative Disclosure About Market Risk

    The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's Fiscal 1998 Annual Report to Shareholders and is
incorporated herein by reference.

Item 8.    Financial Statements and Supplementary Data

    The Registrant's Consolidated Financial Statements and Supplementary Data
are included in Registrant's Fiscal 1998 Annual Report to Shareholders and are
incorporated herein by reference.

Item 9.    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

    Not applicable.

                                       17
<PAGE>

                                  PART III

Item 10.   Directors and Executive Officers of the Registrant

    The information concerning Directors required under this item is
incorporated herein by reference from the material contained under "Election of
Directors" in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later than
120 days after the close of the fiscal year. The information concerning
delinquent filers pursuant to Item 405 of Regulation S-K is incorporated herein
by reference from the material contained under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A, not later than 120 days after the close of the fiscal year.

Item 11.   Executive Compensation

    The information required under this item is incorporated herein by reference
from the material contained under the caption "Executive Compensation" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.

Item 12.   Security Ownership of Certain Beneficial Owners and Management

    The information required under this item is incorporated herein by reference
from the material contained under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.

Item 13.   Certain Relationships and Related Transactions

    The information required under this item is incorporated herein by reference
from the material contained under the caption "Relationship with Affiliates" in
the Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.


                                       18
<PAGE>

                                  PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

    (a, d) Financial Statements and Schedule

           (1) The consolidated financial statements set forth in the list below
           are filed as part of this Report.

           (2) The consolidated financial statement schedule set forth in the 
           list below is filed as part of this Report.

           (3) Exhibits filed herewith or incorporated herein by reference are 
           set forth in Item 14(c) below.

           List of Financial Statements and Schedule Referenced in this Item 14

           Information incorporated by reference from Exhibit 13 filed herewith:

                Consolidated Statement of Income
                Consolidated Balance Sheet
                Consolidated Statement of Cash Flows
                Consolidated Statement of Shareholders' Investment
                Notes to Consolidated Financial Statements
                Report of Independent Public Accountants

           Financial Statement Schedules filed herewith:

                Schedule I:  Condensed Financial Information of the Registrant

           All other schedules are omitted because they are not applicable or
       not required, or because the required information is shown either in the
       financial statements or in the notes thereto.

    (b)    Reports on Form 8-K

           None.

    (c)    Exhibits

           See Exhibit Index on the page immediately preceding exhibits.

                                       19
<PAGE>

                                 SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed by
the undersigned, thereunto duly authorized.

Date:  December 16, 1998                  THERMO ECOTEK CORPORATION

                                          By:/s/ Brian D. Holt
                                             -----------------------------
                                             Brian D. Holt
                                             President and Chief Executive
                                             Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of December 16, 1998.

Signature                                 Title

By: /s/ Brian D. Holt                     President, Chief Executive Officer,
    -------------------------------       and Director
    Brian D. Holt

By: /s/ John N. Hatsopoulos               Chief Financial Officer, 
    -------------------------------       Senior Vice President, and Director 
    John N. Hatsopoulos                          

By: /s/ Paul F. Kelleher                  Chief Accounting Officer
    -------------------------------       
    Paul F. Kelleher

By: /s/ Frank Jungers                     Chairman of the Board and Director
    -------------------------------       
    Frank Jungers

By: /s/ Jerry P. Davis                    Director
    -------------------------------      
    Jerry P. Davis

By: /s/ Dr. George N. Hatsopoulos         Director
    -------------------------------       
    Dr. George N. Hatsopoulos

By: /s/ William A. Rainville              Director
    -------------------------------       
    William A. Rainville

By: /s/ Susan F. Tierney                  Director
    -------------------------------       
    Susan F. Tierney

                                       20
<PAGE>

                  Report of Independent Public Accountants

To the Shareholders and Board of Directors of Thermo Ecotek Corporation:

    We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in Thermo Ecotek Corporation's
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated November 9, 1998 (except with respect to
the matter discussed in Note 17, as to which the date is November 24, 1998). Our
audits were made for the purpose of forming an opinion on those statements taken
as a whole. The schedule listed in Item 14 on page 19 is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
consolidated financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.



                                           Arthur Andersen LLP



Boston, Massachusetts
November 9, 1998

                                       21
<PAGE>

SCHEDULE I

                         THERMO ECOTEK CORPORATION
               Condensed Financial Information of Registrant
                        Unconsolidated Balance Sheet


(In thousands)                                                Oct. 3, Sept. 27,
                                                                 1998      1997
-------------------------------------------------------------------------------

ASSETS
Current Assets:
  Cash and cash equivalents                                   $22,732   $69,465
  Accounts and notes receivable from subsidiaries               1,910     3,789
  Prepaid income taxes and prepaid expenses                    11,548     4,351
  Current portion of note receivable and other
   current assets                                                 330        23
                                                             --------  --------

                                                               36,520    77,628
                                                             --------  --------

Investment in Subsidiaries (on the equity method)             319,279   233,513
                                                             --------  --------

Office Equipment, at Cost                                         322       237
Less:  Accumulated Depreciation                                   (96)     (184)
                                                             --------  --------

                                                                  226        53
                                                             --------  --------

Long-term Available-for-sale Investment, at Quoted              
  Market Value (amortized cost of $8,504)                       8,502    12,497
                                                             --------  --------
  
Deferred Debt Expense                                           1,090     1,432
                                                             --------  --------

Due from Parent Company                                             -    10,164
                                                             --------  --------

                                                             $365,617  $335,287
                                                             ========  ========

                                       22
<PAGE>

                         THERMO ECOTEK CORPORATION
               Condensed Financial Information of Registrant
                  Unconsolidated Balance Sheet (continued)


(In thousands)                                                Oct. 3, Sept. 27,
                                                                 1998   1997
-------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
  Accounts payable                                            $     -    $  162
  Accrued expenses                                              9,366     6,048
  Due to parent company                                         2,251     1,219
                                                             --------  --------

                                                               11,617     7,429
                                                             --------  --------

Long-term Obligations:
  Noninterest-bearing subordinated convertible                  2,450    12,148
   debentures
  4% Subordinated convertible debentures, due to                    -    68,500
   parent company
  4.875% Subordinated convertible debentures                   44,950    50,000
                                                             --------  --------

                                                               47,400   130,648
                                                             --------  --------

Deferred Income Taxes                                          56,968    49,934
                                                             --------  --------


Shareholders' Investment:
  Common stock                                                  3,782     2,598
  Capital in excess of par value                              175,673    95,573
  Retained earnings                                            98,802    67,593
  Treasury stock                                              (28,735)  (20,872)
  Cumulative translation adjustment                               112       (52)
  Net unrealized gain (loss) on available-for-sale                 (2)    2,436
   investment
                                                             --------  --------

                                                              249,632   147,276
                                                             --------  --------
                                                             $365,617  $335,287
                                                             ========  ========


                                       23
<PAGE>

                         THERMO ECOTEK CORPORATION

               Condensed Financial Information of Registrant
                     Statement of Unconsolidated Income



                                                              Year Ended
                                                      -------------------------
(In thousands)                                       Oct. 3, Sept. 27 Sept. 28,
                                                        1998     1997      1996
-------------------------------------------------------------------------------

Revenues                                             $ 1,962 $  8,200 $       -
Equity in Earnings of Subsidiaries                    50,401   39,817    34,148
                                                     ------- -------- ---------

                                                      52,363   48,017    34,148
                                                     ------- -------- ---------

General and Administrative Expenses                   10,379   10,219     9,404
                                                     ------- -------- ---------

Operating Income                                      41,984   37,798    24,744
Interest Income (Expense), Net                        (1,342)    (838)      307
Gain on Sale of Stock by Subsidiary                    6,269        -         -
                                                     ------- -------- ---------

Income Before Provision for Income Taxes              46,911   36,960    25,051
Provision for Income Taxes                            15,702   14,415     7,271
                                                     ------- -------- ---------

Net Income                                           $31,209 $ 22,545 $  17,780
                                                     ======= ======== =========

                                       24
<PAGE>

                         THERMO ECOTEK CORPORATION

               Condensed Financial Information of Registrant
                   Statement of Unconsolidated Cash Flows



                                                            Year Ended
                                                      -----------------------
(In thousands)                                        Oct. 3,Sept. 27 Sept. 28,
                                                        1998     1997      1996
-------------------------------------------------------------------------------

Operating Activities:
  Net income                                         $31,209 $ 22,545 $  17,780
  Adjustments to reconcile net income to net
   cash used in operating activities:
    Depreciation and amortization                        258      513       182
    Deferred revenue                                       -   (8,200)        -
    Deferred income tax expense                        7,315   10,715     3,086
    Equity in earnings of subsidiaries               (50,401) (39,817)  (34,148)
    Gain on sale of stock by subsidiary               (6,269)       -         -
    Changes in current accounts:
      Accounts and notes receivable from               2,139     (906)      282
       subsidiaries
      Other assets                                        94       55     1,520
      Accounts payable                                  (551)      48        18
      Accrued expenses                                   101       99      (804)
      Due (to) from parent company                       (98)   3,471     5,181
                                                     ------- -------- ---------

       Net cash used in operating activities         (16,203) (11,477)   (6,903)
                                                     ------- -------- ---------

Investing Activities:
  Acquisitions, net of cash acquired                 (19,100) (10,865)   (8,088)
  Purchase of available-for-sale investments               -   (2,500)   (3,004)
  Purchases of property, plant, and equipment           (219)     (15)       (8)
  Distribution from (investment in)                  (16,361)  13,315    (9,828)
subsidiaries
                                                     ------- -------- ---------

       Net cash used in investing activities         (35,680)     (65)  (20,928)
                                                     ------- -------- ---------

Financing Activities:
  Net proceeds from issuance of subordinated               -   48,470    35,942
   convertible debentures
  Purchases of Company common stock                  (10,248) (19,743)        -
  Net proceeds from issuance of Company and           15,458     (417)    5,026
   subsidiary common stock
                                                     ------- -------- ---------

       Net cash provided by financing activities       5,210   28,310    40,968
                                                     ------- -------- ---------


Exchange Rate Effect on Cash                             (60)     (31)        -
                                                     ------- -------- ---------

Increase (Decrease) in Cash and CashEquivalents      (46,733)  16,737    13,137
Cash and Cash Equivalents at Beginning of Year        69,465   52,728    39,591
                                                     ------- -------- ---------

Cash and Cash Equivalents at End of Year             $22,732 $ 69,465 $  52,728
                                                     ======= ======== =========


                                       25
<PAGE>

                               EXHIBIT INDEX
Exhibit
Number     Description of Exhibit

2.1        Asset Purchase Agreement among Thermo Trilogy Corporation, Thermo
           Ecotek International Holdings, Inc., and W.R. Grace & Co. - Conn.
           dated March 5, 1996 (filed as Exhibit 2 to the Registrant's Quarterly
           Report on Form 10-Q for the quarter ended March 30, 1996 [File No.
           1-13572] and incorporated herein by reference).

2.2        Asset Purchase Agreement among Thermo Trilogy Corporation, biosys, 
           inc., Crop Genetics International Corporation, and AgriDyne 
           Technologies, Inc. dated December 24, 1996 (filed as Exhibit 2 to 
           the Registrant's Current Report on Form 8-K filed January 31, 1997 
           [File No. 1-3572] and  incorporated herein by reference).

3.1        Certificate of Incorporation, as amended, of the Registrant
           (filed as Exhibit 3.1 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and incorporated
           herein by reference).

3.2        By-Laws of the Registrant (filed as Exhibit 3.2 to the Registrant's
           Transition Report on Form 10-K for the nine months ended September
           30, 1995 [File No. 1-13572] and incorporated
           herein by reference).

4.1        Fiscal Agency Agreement dated as of March 14, 1996, among the
           Registrant, Thermo Electron Corporation, and Chemical Bank as fiscal
           agent, relating to $37 million principal amount of
           noninterest-bearing subordinated convertible debentures due 2001
           (filed as Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q
           for the quarter ended March 30, 1996 [File No. 1-13572] and
           incorporated herein by reference).

4.2        Fiscal Agency Agreement dated as of April 15, 1997, among the
           Registrant,   Thermo  Electron  Corporation,  and  Bankers  Trust
           Company as fiscal agent, relating to $50 million principal amount
           of 4 7/8% Convertible  Subordinated Debentures due 2004 (filed as
           Exhibit 4 to the  Registrant's  Quarterly Report on Form 10-Q for
           the  quarter  ended  March  29,  1997  [File  No.   1-13572]  and
           incorporated herein by reference).


10.1       Asset Transfer Agreement between Thermo Electron Corporation and the
           Registrant dated  January 2, 1990  (filed as Exhibit  10.1 to the
           Registrant's  Registration  Statement on Form S-1 [Reg.  No.
           33-86682] and incorporated herein by reference).

10.2       Corporate Services Agreement dated January 3, 1993, between Thermo
           Electron Corporation and the Registrant (filed as Exhibit 10.2 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.3       Thermo Electron Corporate Charter as amended and restated effective
           January 3, 1993 (filed as Exhibit 10.3 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.4       Amended and Restated Tax Allocation Agreement dated as of December 4,
           1996, between Thermo Electron and the Registrant (filed as Exhibit
           10.4 to the Registrant's Report on Form 10-K for the fiscal year
           ended September 28, 1996 [File No. 1-13572] and incorporated herein
           by reference).

10.5       Master Repurchase Agreement dated as of January 1, 1994, between the
           Registrant and Thermo Electron Corporation (filed as Exhibit 10.1 to
           the Registrant's Quarterly Report on Form 10-Q for the quarter ended
           January 3, 1998 [File No. 1-13572] and incorporated herein by
           reference).

                                       26
<PAGE>


Exhibit
Number     Description of Exhibit

10.6       Amended and Restated Master Reimbursement and Loan Agreement dated as
           of December 19, 1997, between Thermo Electron and the Registrant
           (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form
           10-Q for the quarter ended January 3, 1998 [File No. 1-13572] and
           incorporated herein by reference).

10.7       Lease Agreement dated as of December 2, 1991, between Thermo Electron
           and the Registrant (filed as Exhibit 10.7 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.8       Purchase and sale of $38,500,000 principal amount 4% subordinated
           convertible note due 2001 (filed as Exhibit 10.8 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.9       Purchase and sale of $30,000,000 principal amount 4% subordinated
           convertible note due 2001 (filed as Exhibit 10.9 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.10      Power Purchase Agreement between Mendota Biomass Power, Ltd. and
           Pacific Gas and Electric Company dated May 7, 1984 (filed as Exhibit
           10.10 to the Registrant's Registration Statement on Form S-1 [Reg.
           No. 33-86682] and incorporated herein by reference).

10.11      Project Lease between Chrysler Capital Corporation and Mendota
           Biomass Power, Ltd. dated October 30, 1989 (filed as Exhibit 10.11 to
           the Registrant's Registration Statement on Form S-1 [Reg. No.
           33-86682] and incorporated herein by reference).

10.12      First Amendment to Project Lease between Chrysler Capital Corporation
           and Mendota Biomass Power, Ltd., dated June 30, 1995 (filed as
           Exhibit 1 to the Registrant's Current Report on Form 8-K dated June
           30, 1995 and incorporated herein by reference).

10.13      Mendota Biomass Power, Ltd. Limited Partnership Agreement dated
           December 10, 1986 (filed as Exhibit 10.12 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.14      Rate Order and Interconnection Agreement between Whitefield Power and
           Light Company and Public Service Company of New Hampshire dated
           September 4, 1986 (filed as Exhibit 10.13 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.15      Wood Supply Contract between North County Procurement, Inc. and
           Whitefield Power and Light Company dated June 4, 1993 (filed as
           Exhibit 10.14 to the Registrant's Registration Statement on Form S-1
           [Reg. No. 33-86682] and incorporated herein by reference).

10.16      Leasing Agreement between BankBoston Leasing Services Inc. and
           Gorbell Thermo Electron Power Company dated December 24, 1987
           (filed as Exhibit 10.15 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and incorporated
           herein by reference).

10.17      Amended and Restated Wood Supply Contract between Linkletter and Sons
           and Gorbell Thermo Electron Power Company dated January 15, 1993
           (filed as Exhibit 10.16 to the Registrant's Registration Statement on
           Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).


                                       27
<PAGE>

Exhibit
Number     Description of Exhibit

10.18      Power Purchase Agreement between Gorbell Thermo Electron Power
           Company and Central Maine Power Company dated February 3, 1984, as
           amended (filed as Exhibit 10.17 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.19      Reduced Power Operation Agreement between Gorbell Thermo Electron
           Power Company and Central Maine Power Company dated January 14, 1994
           (filed as Exhibit 10.18 to the Registrant's Registration Statement on
           Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.20      Joint Venture Agreement establishing Gorbell Thermo Electron Power
           Company dated September 13, 1985 (filed as Exhibit 10.19 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.21      Leasing Agreement between BankBoston Leasing Services, Inc. and
           Hemphill Power and Light Company dated December 23, 1987 (filed as
           Exhibit 10.20 to the Registrant's Registration Statement on Form S-1
           [Reg. No. 33-86682] and incorporated herein by reference).

10.22      Rate Order Support Agreement between Hemphill Power and Light 
           Company and Thermo Electron dated December 23, 1987 (filed as 
           Exhibit 10.21 to the Registrant's Registration Statement on Form 
           S-1 [Reg. No. 33-86682] and incorporated herein by reference).

10.23      Wood Supply Contract between Durgin & Crowell Lumber Company, Inc.
           and Hemphill Power and Light Company dated June 4, 1985 (filed as
           Exhibit 10.22 to the Registrant's Registration Statement on Form S-1
           [Reg. No. 33-86682] and incorporated
           herein by reference).

10.24      Fuel Supply Contract between Springfield Management Company and
           Hemphill Power and Light Company dated June 4, 1985, as amended
           (filed as Exhibit 10.23 to the Registrant's Registration Statement on
           Form S-1 [Reg. No. 33-86682] and incorporated
           herein by reference).

10.25      Rate Order and Interconnection Agreement between Hemphill Power and
           Light Company and Public Service Company of New Hampshire dated June
           26, 1986 (filed as Exhibit 10.24 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.26      Joint Venture Agreement establishing Hemphill Power and Light Company
           dated June 4, 1985 (filed as Exhibit 10.25 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.27      Letter Agreement dated July 15, 1988, among the partners of Hemphill
           Power and Light Company amending various agreements (filed as Exhibit
           10.26 to the Registrant's Registration Statement on Form S-1 [Reg.
           No. 33-86682] and incorporated
           herein by reference).

10.28      Letter Agreement dated January 1, 1990, between the partners of
           Hemphill Power and Light Company (filed as Exhibit 10.27 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.29      Assignment and Assumption Agreement of Delano II plant by Delano
           Energy Company, Inc. dated December 1, 1993 (filed as Exhibit 10.28
           to the Registrant's Registration Statement on Form S-1 [Reg. No.
           33-86682] and incorporated herein by reference).

                                       28
<PAGE>

Exhibit
Number     Description of Exhibit

10.30      Loan Agreement between California Pollution Control Financing
           Authority ("CPCFA") and Delano Energy Company, Inc. dated August 1,
           1989, as supplemented on May 1, 1990 (Delano I; filed as Exhibit
           10.29 to the Registrant's Registration Statement on Form S-1 [Reg.
           No. 33-86682] and incorporated herein by reference).

10.31      Indenture of Trust between CPCFA and Bankers Trust Company dated
           August 1, 1990, as supplemented on May 1, 1990 (Delano I; filed as
           Exhibit 10.30 to the Registrant's Registration Statement on Form S-1
           [Reg. No. 33-86682] and incorporated
           herein by reference).

10.32      Indenture of Trust between CPCFA and Bankers Trust Company dated
           October, 1991 (Delano II; filed as Exhibit 10.31 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.33      Loan Agreement between CPCFA and Delano Energy Company, Inc. dated
           October 1, 1991 (filed as Exhibit 10.32 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.34      Power Purchase Contract between Southern California Edison Co.
           and Signal Delano Energy Company, Inc. dated July 31, 1987
           (filed as Exhibit 10.33 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and incorporated herein by
           reference).

10.35      Amended Restated Reimbursement Agreement among Chemical Trust
           Company of California ("CTCC"), Delano Energy Company, Inc. and
           ABN AMRO Bank N.V. and other banks dated December 31, 1993
           (filed as Exhibit 10.34 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and incorporated
           herein by reference).

10.36      Amended and Restated Lease Agreement between CTCC and Delano Energy
           Company, Inc. dated December 31, 1993 (filed as Exhibit 10.35 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.37      Biomass Fuel Supply Contract between the Registrant and Delano Energy
           Company, Inc. dated December 31, 1993 (filed as Exhibit 10.36 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.38      Agreement between Consolidated Edison Company of New York, Inc. and
           Staten Island Cogeneration Corporation (filed as Exhibit 10.37 to the
           Registrant's Registration Statement on Form S-1 [Reg. No. 33-86682]
           and incorporated herein by reference).

10.39      Power Purchase Agreement between Woodland Biomass Power, Ltd. and
           Pacific Gas & Electric Company dated May 7, 1987 (filed as Exhibit
           10.38 to the Registrant's Registration Statement on Form S-1 [Reg.
           No. 33-86682] and incorporated herein by reference).

10.40      Stock Purchase Agreement dated as of August 18, 1995, between the
           Registrant and KFx, Inc. (filed as Exhibit 10.40 to the Registrant's
           Transition Report on Form 10-K for the nine months ended September
           30, 1995 [File No. 1-13572] and incorporated herein by reference).
           Pursuant to Item 601(b)(2) of Regulation S-K, schedules to this
           Agreement  have been omitted.  The Company hereby undertakes to 
           furnish supplementally a copy of such schedules to the commission 
           upon request.

                                       29
<PAGE>


Exhibit
Number     Description of Exhibit

10.41      Stock Purchase Warrant issued by KFx, Inc. to the Company dated
           August 18, 1995 (filed as Exhibit 10.41 to the Registrant's
           Transition Report on Form 10-K for the nine months ended September
           30, 1995 [File No. 1-13572] and incorporated herein
           by reference).

10.42      Stock Purchase Warrant issued by KFx, Inc. to the Company dated
           August 18, 1995 (filed as Exhibit 10.42 to the Registrant's
           Transition Report on Form 10-K for the nine months ended September
           30, 1995 [File No. 1-13572] and incorporated herein
           by reference).

10.43      Limited Partnership Agreement of KFx Fuel Partners, L.P. dated as of
           August 18, 1995 (filed as Exhibit 10.43 to the Registrant's
           Transition Report on Form 10-K for the nine months ended September
           30, 1995 [File No. 1-13572] and incorporated herein by reference).
           (Certain portions of this Exhibit have been omitted subject to an
           application for confidential treatment filed with the Commission
           pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.)

10.44      Turnkey Design and Construction Agreement dated as of August 18,
           1995, between KFx Fuel Partners, L.P. and Walsh Construction Company,
           a Division of Guy F. Atkinson Company (filed as Exhibit 10.44 to the
           Registrant's Transition Report on Form 10-K for the nine months ended
           September 30, 1995 [File No. 1-13572] and incorporated herein by
           reference). (Certain portions of this Exhibit have been omitted
           subject to an application for confidential treatment filed with the
           Commission pursuant to Rule 24b-2 under the Securities Exchange Act
           of 1934.)

10.45      Lease Agreement between Manufacturers Hanover Trust Company of
           California and Woodland Biomass Power, Ltd. dated December 29,
           1989 (filed as Exhibit 10.39 to the Registrant's Registration
           Statement on Form S-1 [Reg. No. 33-86682] and incorporated
           herein by reference).

10.46      First Amendment to Power Purchase Agreement dated November 6, 1997, 
           between Woodland Biomass Power, Ltd. and Pacific Gas and Electric
           Company  (filed as  Exhibit  10.3 to the  Registrant's  Quarterly
           Report on Form 10-Q for the quarter  ended  January 3, 1998 [File
           No.  1-13572] and  incorporated  herein by  reference).  (Certain
           portions  of  this  Exhibit  have  been  omitted  subject  to  an
           application for confidential  treatment filed with the Commission
           pursuant  to Rule  24b-2  under the  Securities  Exchange  Act of
           1934.)

10.47      Second Amendment to Power Purchase Agreement dated November 6, 1997,
           between Mendota Biomass Power, Ltd. and Pacific Gas and Electric
           Company (filed as Exhibit 10.4 to the Registrant's Quarterly Report
           on Form 10-Q for the quarter ended January 3, 1998 [File No. 1-13572]
           and incorporated herein by reference). (Certain portions of this
           Exhibit have been omitted subject to an application for confidential
           treatment filed with the Commission pursuant to Rule 24b-2 under the
           Securities Exchange Act of 1934.)

10.48      Incentive Stock Option Plan of the Registrant (filed as Exhibit 10.44
           to the Registrant's Registration Statement on Form S-1 [Reg. No
           33-86682] and incorporated herein by reference). (Maximum number of
           shares issuable in the aggregate under this plan and the Registrant's
           Nonqualified Stock Option Plan is 1,350,000 shares, after adjustment
           to reflect share increase approved in December 1993 and 3-for-2 stock
           split effected in October 1996.)

                                       30
<PAGE>

Exhibit
Number     Description of Exhibit

10.49      Nonqualified Stock Option Plan of the Registrant (filed as Exhibit
           10.45 to the Registrant's Registration Statement on Form S-1 [Reg.
           No. 33-86682] and incorporated herein by reference). (Maximum number
           of shares issuable in the aggregate under this plan and the
           Registrant's Incentive Stock Option Plan is 1,350,000 shares, after
           giving effect to share increase approved in December 1993 and 3-for-2
           stock split effected in October 1996.)

10.50      Equity Incentive Plan of the Registrant (filed as Exhibit 10.40
           to the Registrant's Registration Statement on Form S-1 (Reg.
           No. 33-86682) and incorporated herein by reference).

10.51      Deferred Compensation Plan for Directors of the Registrant (filed as
           Exhibit 10.41 to the Registrant's Registration Statement on Form S-1
           [Reg. No. 33-86682] and incorporated
           herein by reference).

10.52      Amended and Restated Directors Stock Option Plan of the
           Registrant (filed as Exhibit 10.42 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.53      Thermo Ecotek Corporation - Thermo Trilogy Corporation Nonqualified
           Stock Option Plan (filed as Exhibit 10.51 to the Registrant's Report
           on Form 10-K for the fiscal year ended September 28, 1996 [File No.
           1-13572] and incorporated herein
           by reference).

10.54      Thermo Trilogy Corporation Equity Incentive Plan (filed as Exhibit 
           10.52 to the Registrant's Report on Form 10-K for the fiscal year 
           ended September 28, 1996 [File No. 1-13572] and incorporated
           herein by reference).

           In addition to the stock-based compensation plans of the Registrant,
           the executive officers of the Registrant may be granted awards under
           stock-based compensation plans of Thermo Electron Corporation, for
           services rendered to the Registrant. The terms of such plans are
           substantially the same as those of the Registrant's Equity Incentive
           Plan.
 .
10.55      Form of Indemnification Agreement between the Registrant and its
           officers and directors (filed as Exhibit 10.43 to the Registrant's
           Registration Statement on Form S-1 [Reg. No. 33-86682] and
           incorporated herein by reference).

10.56      Restated Stock Holding Assistance Plan and Form of Promissory Note
           (filed as Exhibit 10.54 to the Registrant's Annual Report on Form
           10-K for the fiscal year ended September 27, 1997 [File No. 1-13572]
           and incorporated herein by reference).

13         Annual Report to Shareholders for the fiscal year ended October 3,
           1998 (only those portions incorporated herein by reference).

21         Subsidiaries of the Registrant.

23         Consent of Arthur Andersen LLP.

27         Financial Data Schedule.