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 September 27, 1997.

  [   ] 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
  incorporation or organization)                            Identification No.)

  245 Winter Street
  Waltham, Massachusetts                                             02154-9046
  (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:

         Title of each class           Name of exchange on 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 31, 1997, was approximately $40,534,000.

  As of October 31, 1997, the Registrant had 24,502,685 shares of Common Stock
  outstanding.
                       DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Registrant's Annual Report to Shareholders for the fiscal
  year ended September 27, 1997, 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, 1998, are incorporated by
  reference into Part III.
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                                     PART I

    Item 1. Business

    (a) General Development of Business

        Thermo Ecotek Corporation (the Company or the Registrant) is an
    environmental company providing a range of environmentally responsible
    technologies and products, including nonutility electric power generation
    using clean combustion processes and engineered clean fuels, as well as
    environmentally friendly pest-control products, through its biopesticides
    subsidiary, Thermo Trilogy Corporation (Thermo Trilogy).

        The Company operated as a division of Thermo Electron Corporation's
    (Thermo Electron's) Energy Systems Division (the Division) from 1979
    until its incorporation as Thermo Energy Systems Corporation in November
    1989. On January 2, 1990, Thermo Electron transferred certain of the
    assets and businesses of the Division to the Company in exchange for
    15,750,000 shares of common stock and the assumption by the Company of
    certain liabilities of the Division. On January 2, 1990, Thermo Electron
    and the Company signed an Agreement and Plan of Reorganization to
    recapitalize $10 million of loans made to the Company by Thermo Electron
    into 1,111,111 shares of redeemable convertible preferred stock. These
    shares were issued in May 1990 and were converted into 2,500,000 shares
    of common stock during 1993 at a conversion price of $4.00 per share. In
    December 1994, the Company changed its name to Thermo Ecotek Corporation.
    The Company completed an initial public offering in February 1995. In
    March 1996, the Company issued and sold at par $37 million principal
    amount of noninterest-bearing subordinated convertible debentures due
    2001. The debentures are convertible into shares of the Company's common
    stock at a conversion price of $13.56 per share and are guaranteed on a
    subordinated basis by Thermo Electron. In April 1997, the Company issued
    and sold at par $50 million principal amount of 4.875% subordinated
    convertible debentures due 2004. The debentures are convertible into
    shares of the Company's common stock at a conversion price of $16.50 per
    share and are guaranteed on a subordinated basis by Thermo Electron.

        Initially, the Division 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 Division 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 with a total
    electric generating capacity of 140 megawatts. The Company develops and
    operates its facilities through joint ventures or limited partnerships in
    which the Company has a majority interest, or through wholly owned
    subsidiaries (the Operating Companies).

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        In September 1996, the Company, through a wholly owned subsidiary,
    formed a joint venture with Marcegaglia Group of Mantova, Italy, to
    develop, own, and operate biomass-fueled electric power facilities in
    that country.

        In January 1996, the Company, through a wholly owned subsidiary,
    signed a joint development agreement with a Czech/American power
    development company, EMD Praha Spol s.r.o. (EMD). The initial focus will
    be on expansion and environmental retrofits of existing Czech energy
    centers.

        The Company is expanding beyond biomass power generation into other
    products and processes that protect the environment. In May 1996, two of
    the Company's wholly owned subsidiaries 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. Renamed Thermo Trilogy, the
    subsidiary develops, manufactures, and markets environmentally friendly
    products used for pest control. Derived from seeds of the tropical "neem"
    tree and pesticidal microbials isolated from nature, these biopesticides
    safely and effectively control insects, diseases, and mites on numerous
    crops. The state of California recently approved Trilogy(TM) 90EC, a neem
    oil-based miticide and fungicide, for use by California growers of fruits
    and vegetables. Thermo Trilogy's neem-based products, Neemix(R) and
    Trilogy(TM) 90EC, are both approved for use on certified organic
    products. In January 1997, Thermo Trilogy acquired substantially all of
    the assets of biosys, inc. 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 affiliate for approximately $19.1 million in cash and the assumption
    of certain liabilities.

        The Company has also entered into the field of engineered "clean"
    fuels through a partnership agreement with KFx, Inc. (KFx). In August
    1995, the Company, through two wholly owned subsidiaries, entered into a
    Limited Partnership Agreement with KFx Wyoming, Inc., a subsidiary of
    KFx. Through September 27, 1997, the Company has provided $50 million,
    and is committed to provide up to an additional $5 million, for the
    design, construction, and operation of the first full-scale coal
    production facility to use the patented K-Fuels "clean coal" technology.
    The Company will have a 95% equity interest in the plant. Once completed,
    the Gillette, Wyoming, facility will transform high-moisture, low-energy
    coal into 500,000 tons per year of low-moisture, high-energy, solid fuel,
    using the Koppelman "C" process. KFx holds certain rights to this
    process, which produces coal known as K-Fuels for utility and industrial
    use. Construction began in August 1995, with commercial operation
    expected to commence during the first half of fiscal 1998.

        In fiscal 1995, the Company purchased 1,500,000 shares of KFx common
    stock for $3 million, representing an approximate 7% equity interest in
    KFx. In fiscal 1996, the Company purchased an additional 1,500,000 shares
    of KFx common stock for $3.0 million, representing an additional 7%

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    equity interest in KFx. In fiscal 1997, the Company purchased an
    additional 1,250,000 shares of KFx common stock for $2.5 million,
    bringing its total equity interest in KFx to approximately 18%. 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 may purchase further shares at that time for 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 fully diluted basis.

        At September 27, 1997, Thermo Electron owned approximately 87% 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
    environmental monitoring and analysis instruments, biomedical products
    such as heart-assist devices and mammography systems, papermaking and
    paper-recycling equipment, biomass electric power generation, and other
    specialized products and technologies. Thermo Electron also provides a
    range of services related to environmental quality. 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 will 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 1997,* Thermo Electron
    purchased 898,159 shares of the Company's common stock on the open market
    for a total price of $12,717,000. The Company has sold $68.5 million of
    subordinated convertible debentures to Thermo Electron that could be
    converted to maintain at least 80% ownership by Thermo Electron. See
    Notes 5 and 11 to Consolidated Financial Statements in the Company's
    Fiscal 1997 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 1997 Annual Report to
    Shareholders, which statements are incorporated herein by reference.


    * In June 1995, the Company changed its fiscal year end from the
      Saturday nearest December 31 to the Saturday nearest September 30.
      References to "fiscal 1997," "fiscal 1996," and "fiscal 1995" herein
      are for the years ended September 27, 1997, and September 28, 1996,
      and the nine months ended September 30, 1995, respectively.

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    (b) Financial Information About Industry Segments

        The Company conducts business in one industry segment: the design,
    development, and operation of independent (nonutility) electric power
    generation facilities using a range of environmentally responsible
    combustion technologies. In addition, the Company's Thermo Trilogy
    subsidiary is engaged in the development, manufacture, and marketing of
    biopesticides. This new business segment was not significant to the
    Company's operations in fiscal 1997.

    (c) Description of Business

        (i) Principal Products and Services

    Independent Power Production

    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.

                                                 Ownership
                                         Plant       of        In-
                            Combustion   Size    Operating   service   Lease/
    Project     Location    Technology (net mw)   Company      Date     Own
    -------------------------------------------------------------------------
                   New        Stoker                         December
    Hemphill    Hampshire     Fired       13.6       67%       1987     Lease

                              Stoker                         December
    Gorbell       Maine       Fired       13.6       80%       1987     Lease

                   New        Stoker                           July
    Whitefield  Hampshire     Fired       13.6      100%       1988     Own

                            Circulating
                             Fluidized                         May
    Mendota    California       Bed       25        100%       1990     Lease

                            Circulating
                             Fluidized                         May
    Woodland   California       Bed       25        100%       1990     Lease

                             Bubbling
                             Fluidized                       January
    Delano I   California       Bed       27        100%       1991     Own

                             Bubbling
                             Fluidized                       January
    Delano II  California       Bed       22        100%       1994     Own

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        Hemphill. The Hemphill facility, a 13.6-megawatt, wood-waste plant,
    was completed in late 1987. It is 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 Hemphill facility is owned by
    BankBoston Leasing Services Inc., which leases the facility to the
    Operating Company through March 2003. 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 prescribed prices through December
    1997 and at market prices thereafter. 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 and that the state will support PSNH in such efforts. PSNH has
    commenced discussions with these two Operating Companies and other small
    power producers through which it is seeking to renegotiate the rate
    orders applicable to the Companies and other facilities. The state,
    acting through NHPUC, has indicated that it supports such efforts. Any
    resolution is subject to the approval of NHPUC. 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 whether PSNH's claim could then be heard by
    the court. In April 1997, the court ruled that it could now hear the case
    and ordered that the restraining order would 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. 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, a 13.6-megawatt wood-waste plant, was
    completed in late 1987. It is 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
    an 80% interest, which decreases to 60% in 1998. The Gorbell facility is
    owned by BankBoston Leasing Services Inc., which leases the facility to

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    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 that has been in operation since 1988. It is 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 sale agreement that
    expires in 2005. This plant is also subject to PSNH's attempt to
    renegotiate rate orders. See "Hemphill" above. Fuel is purchased pursuant
    to an agreement expiring in 1998 under which the price escalates based
    upon a prescribed index. 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 that has been in operation since 1990. It is 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 facility
    is owned by Chrysler Capital Corp., which leases the facility 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. See "Management's Discussion
    and Analysis of Financial Condition and Results of Operations"
    incorporated by reference into Item 7 hereof. 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. PG&E has asserted that the
    fixed rates under this contract will terminate mid-1999, however, the
    Company disputes this assertion. Approximately 48% 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.

        The power sale agreements between the Mendota and Woodland (discussed
    below) Operating Companies and PG&E allow 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 exercises its curtailment
    rights during periods when cheaper hydroelectric power is available,
    which generally occurs 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. The Company experienced approximately 860, 930, and
    950 hours of utility-imposed curtailments at each of the two plants
    during fiscal 1997, 1996, and 1995, respectively.

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        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 in which the Company owns all
    of the equity. The facility is owned by BankBoston Leasing Services Inc.,
    which leases the facility to the Operating Company through March 2010,
    with an option to renew or purchase the facility 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.
    Approximately 17% 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 greatly diminished during 1997, and the
    Company expects that such results will be reduced to approximately
    break-even in 1998 and thereafter. 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 66% of the fuel supply is purchased pursuant to
    long-term contracts with terms expiring from 1997 to 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 facility 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 of nonrecourse, long-term, tax-exempt bonds
    issued by the California Pollution Control Finance Authority (CPCFA).
    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. 
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        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. These bonds effectively bear interest at a rate of 6%,
    with principal and interest payable semi-annually until maturity in 2000.

    Projects in Development

        Domestic - U.S.

        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.
        The Company is also pursuing a number of domestic electric power
    projects. The project opportunities are located in New England, Florida
    and California and 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.

        In November 1997, the Company entered into an agreement to acquire
    two power generation facilities and related sites in California during
    the first six months of 1998 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
    Independent System Operator, meaning they are not essential for supplying
    electricity to the California power grid. During calendar 1997, the
    plants operated at less than five percent capacity. The Company is
    currently evaluating its options with respect to the operation of these
    plants in the future.

        Czech Republic

        In January 1996, the Company, through a wholly owned subsidiary,
    signed a joint development agreement with a Czech/American power
    development company, EMD. 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 projects are
    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

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    satisfied on a timely basis, or at all. The Company does not believe that
    any of the projects will be operational before mid-1998.

        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 begun development
    of six facilities for which it has signed preliminary power purchase
    contracts with ENEL (the Italian electric utility), and all of which have
    been approved by the Italian government's price subsidy program for
    biomass-fueled plants. In addition, European Union grants which would
    cover a portion of the capital costs are being pursued for several of the
    projects. 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 facilities are 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.
    The Company does not expect that any of the projects will be operational
    before 2000.

        India

        The Company is in the initial stages of developing the IPS Power
    project, a 105-megawatt combined cycle, gas turbine electricity
    generation plant to be located near Mysore in the state of Karnataka,
    India. The Bangalore project is one of eight projects that received a
    state order allowing development of 500 additional megawatts of
    generating capacity. To support this project, the Company has opened an
    office in Bangalore. The total financing of the project is expected to be
    approximately $110 million, which is expected to involve significant
    equity investments and bank borrowings.

        The Company is in the process of negotiating a power sale agreement
    with the Karnataka State Electricity Board and will be seeking a payment
    guarantee from the state government. The project 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 these conditions or agreements will be satisfied on a
    timely basis, or at all.

    Engineered 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. (the Partnership) a subsidiary of KFx, Inc., to
    develop, construct, and operate a subbituminous coal beneficiation plant
    to be constructed near Gillette, Wyoming. The Partnership has been
    granted, in exchange for certain future contingent royalty payments, a
    nonexclusive right and license to use certain patented clean coal
    technology (K-Fuel) to create a low-moisture, high-energy fuel with

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    reduced sulfur that will help coal-burning utilities meet the SO2
    emission restrictions contained in the Clean Air Act. See "Regulatory
    Matters -- Domestic Energy Regulation." The Partnership procured a
    24-acre site for construction of the plant and began construction in
    August 1995 under a third party, turnkey construction contract. The plant
    is expected to begin operations during the first half of fiscal 1998. In
    return for a 95% equity interest in the plant, the Company has provided
    $50 million, and is committed to provide up to an additional $5 million,
    for the design, construction, and operation of the plant. During 1996,
    the U.S. government enacted legislation granting an 18-month extension of
    the Oil Barrel Equivalent tax credit for facilities producing alternative
    fuels, such as K-fuel. To be eligible, companies must enter 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. In light of the new legislation, the Company has adjusted its
    construction schedule in consideration of these deadlines. During the
    first quarter of fiscal 1997, a fire occurred at the Company's facility.
    Damage from the fire was restricted to an oil heater and auxiliary oil
    storage tank and is unrelated to the plant's four coal processors.
    Substantially all repair costs are expected to be covered by insurance
    proceeds. The fire has caused certain delays with respect to the
    commencement of commercial operations of the facility. In addition, the
    Company is currently experiencing certain construction problems including
    issues relating to the flow of material within the facility and design
    and operation of certain pressure-release equipment which will further
    delay the commencement of the facility's commercial operations. The
    Company expects to complete repairs and resolve these construction
    problems in time to begin commercial operation of the facility during the
    first half of fiscal 1998. However, because the technology being
    developed 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 construction problems and commence commercial operations prior to
    the end of the first half of fiscal 1998, or at all.

        In fiscal 1995, the Company purchased 1,500,000 shares of KFx Inc.
    common stock for $3.0 million, representing an approximate 7% equity
    interest in the Company. In fiscal 1996, the Company purchased an
    additional 1,500,000 shares of KFx common stock for $3,000,000,
    representing an additional 7% equity interest in KFx. In 1997, the
    Company purchased an additional 1,250,000 shares of KFx common stock for
    $2,500,000, bringing its total equity interest in KFx to approximately
    18%. 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 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 fully diluted basis. See
    Note 2 of Notes to Consolidated Financial Statements in the Registrant's
    Fiscal 1997 Annual Report to Shareholders incorporated by reference into
    Item 8 hereof.

                                       11PAGE
<PAGE>
    Biopesticides

        In May 1996, the Company, through two of its wholly owned
    subsidiaries, acquired the assets of the biopesticide division of W.R.
    Grace & Co. (renamed Thermo Trilogy) 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. through bankruptcy
    liquidation for approximately $11.2 million and the assumption of certain
    liabilities. In November 1997, Thermo Trilogy acquired the sprayable
    bacillus thuringiensis (Bt)- biopesticide business of Novartis AG and its
    affiliate for approximately $19.1 million in cash and the assumption of
    certain liabilities.

        Thermo Trilogy is a leading biopesticide company with 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 the 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
    growers to date has been positive, there is no assurance that the Company
    will be able to obtain satisfactory levels of market acceptance.
    Additionally, until its acquisition of the biopesticide division of W.R.
    Grace, the Company had no experience in product marketing and
    merchandising. There is no assurance that the Company will be successful
    selling its biopesticide products to the agricultural market.

    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

                                       12PAGE
<PAGE>
    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.

        Public Utility Regulatory Policies Act of 1978, as amended (PURPA).
    The U.S. market for nonutility generators 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, and an electric utility or its
    subsidiary must not own more than 50% of 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 rate or
    financial regulation. Each of the 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, QFs are relieved
    of compliance with 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 public utilities are not explicitly required by PURPA to
    enter into long-term contracts, PURPA helped to create a regulatory
    environment in which it has become common for long-term contracts to be
    negotiated. While all of the Company's existing projects have long-term
    power sale agreements at rates equal to or greater than the utilities'
    current avoided-costs, the current practice is for most power sale
    agreements to be awarded at a rate below avoided-cost, due to increasing
    competition for utility contracts. Moreover, whereas in the 1980s power
    sale 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

                                       13PAGE
<PAGE>
    entering into any new construction projects of this type in the near
    future.

        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. However, if one
    of the Company's plants should lose its status as a QF, the Operating
    Company would no longer be entitled to the exemptions from PUHCA unless
    the Operating Company qualified as an Exempt Wholesale Generator (EWG)
    under the National Energy Policy Act of 1992. See "National Energy Policy
    Act" below. If the Operating Company was unable to qualify as a QF, the
    facility could be subject to regulation as a public utility under the FPA
    and could result in the Company inadvertently becoming a public utility
    holding company by owning or controlling more than 10% of a facility that
    would no longer be exempt from PUHCA. A loss of QF status could result in
    defaults under the Operating Company leases, power sale 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 owns or controls 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 divest any other operations not functionally
    related to the operation of that utility system. Approval by the
    Securities and Exchange Commission is required for nearly all important
    financial and business dealings of the holding company.

        FPA. The FPA grants FERC exclusive rate-making jurisdiction over
    wholesale sales of electricity in interstate commerce, including ongoing
    as well as initial rate jurisdiction, which enables FERC to revoke or
    modify previously approved rates. 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 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 nonutility generators with competitive
    access to the transmission grid. To achieve these goals, the National
    Energy Policy Act amended PUHCA to create Exempt Wholesale Generators
    (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

                                       14PAGE
<PAGE>
    and/or operating certain eligible facilities and selling energy
    wholesale. EWGs may own facilities of any size, use any fuel source, and
    may be owned by utilities or nonutilities. EWGs may not own transmission
    facilities or otherwise exert market control. The National Energy Policy
    Act also provides new authority to FERC to mandate that owners of
    electric transmission lines provide wheeling access to non-utility
    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. 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 sale
    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 PUC's 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.

                                       15PAGE
<PAGE>
        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. Some of the Company's products are registered for sale in
    Belgium, Spain, Morocco, Mexico, India, Taiwan, Thailand, Malaysia,
    Japan, and Israel.

        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.

                                       16PAGE
<PAGE>
        (ii) New Products

        Not applicable.

        (iii) Raw Materials

        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.

        (iv) Patents, Licenses, and Trademarks

        Not applicable.

        (v) Seasonal Influences

        The Company 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
    Company historically has operated at a loss or at a marginal profit
    during its second fiscal quarter due to the rate structure under these
    agreements.

        (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.

        (vii) Dependency on a Single Customer

        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 18%, 31%, and 32%, respectively, in
    fiscal 1997.

        (viii) Backlog

        Not applicable.

        (ix) Government Contracts

        Not applicable.

        (x) Competition

        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

                                       17PAGE
<PAGE>
    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. The market in which the
    Company's biopesticide business competes is highly competitive and
    subject to rapid technological change. Many of the Company's competitors
    are large chemical and pharmaceutical companies with greater financial,
    marketing, and technological resources than the Company. The Company's
    biopesticide business competes primarily based on performance and
    effectiveness, and also on price, ease of application, and environmental
    impact of use.

        (xi) Research and Development

        During fiscal 1997 and 1996, the Company expended approximately
    $1,597,000 and $693,000, respectively, on internally sponsored research
    and development programs. No amounts were expended on research and
    development programs during fiscal 1995.

        (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
    the discharge of 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 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.

        In November 1990, comprehensive amendments to the Clean Air Act were
    enacted. The first major revisions to the Clean Air Act since 1977, the
    1990 Amendments expand the scope of federal regulations and enforcement
    in several significant respects. In particular, provisions relating to
    nonattainment, air toxins, permitting, enforcement, and acid deposition
    may affect many power projects. Although the majority of these new
    provisions were implemented by 1993, the full scope of the new
    requirements remains uncertain pending implementation of new regulations
    by the United States Environmental Protection Agency. The Clean Air Act
    and the 1990 Amendments contain provisions that regulate the amount of
    sulfur dioxide and nitrous oxide that may be emitted by both new and
    existing projects. None of the Company's projects are expected to be
    affected by the acid rain provisions of the 1990 Amendments. However,
    many power generating facilities may have to take various repowering
    steps to comply with the 1990 Amendments.

                                       18PAGE
<PAGE>
        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 September 27, 1997, the Company employed, directly and through
    its Operating Companies and subsidiary, a total of 275 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

                                   Present Title (Year First Became
    Name                    Age    Executive Officer)
    -----------------------------------------------------------------------
    Brian D. Holt           48     President and Chief Executive
                                     Officer (1994)
    John N. Hatsopoulos*    63     Chief Financial Officer and 
                                     Vice President (1989)
    Parimal S. Patel        54     Executive Vice President, Project
                                     Finance (1989)
    Brian P. Chatlosh       38     Vice President, Business Development      
                                       (1996)
    Robert R. Fini          55     Vice President, Technical
                                     Services (1994)
    Floyd M. Gent           48     Vice President, Asset
                                     Management (1994)
    Randall W. Miselis      44     Vice President, Accounting and
                                     Administration (1996)
    Robert P. Nordstrom     55     Vice President, Business Development,
                                     Asia (1996)
    Paul F. Kelleher        55     Chief Accounting Officer (1989)

    * John N. Hatsopoulos and George N. Hatsopoulos, a director of the
      Company, are brothers.

        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,
    Miselis, and Nordstrom 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

                                       19PAGE
<PAGE>
    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 Vice President, Asset Management 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. 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. Mr.
    Nordstrom has been Vice President of Business Development, Asia, since
    January 1996 and has worked for the Company in various managerial
    capacities within marketing, project development, and operations since
    1984. 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.

    Item 2. Properties

        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 Calcutta, India; Bangalore, India; Prague, Czech
    Republic; and Roseville, California. The Company's other properties
    consist of the power plants described under "Operating Projects." The
    Company owns all of the land on which the plants are built.

        Thermo Trilogy's corporate headquarters are located in Columbia,
    Maryland, where it leases 17,000 square feet of space for office,
    laboratory, warehouse, and fermentation pilot plant use. Thermo Trilogy
    also leases a 26,000 square foot building, in which it has built a
    formation/formulation facility in Decatur, Illinois. Thermo Trilogy owns
    an 80,000 square foot formentation/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.

        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, including
    India, 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.

    Item 3. Legal Proceedings

        Not applicable.

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

        Not applicable.

                                       20PAGE
<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 1997 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 1997 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 1997 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 1997 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.

                                       21PAGE
<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.

                                       22PAGE
<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

           The Company filed a Current Report on Form 8-K dated August 26,
           1997, pertaining to the acquisition of the assets of biosys, inc.

       (c) Exhibits

             See Exhibit Index on the page immediately preceding exhibits.

                                       23PAGE
<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 8, 1997            THERMO ECOTEK CORPORATION

                                    By: 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 8, 1997.

  Signature                          Title
  ---------                          -----

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

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

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

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

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

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

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

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

                                       24PAGE
<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 3, 1997 (except with respect to the matters discussed in Note
    15, as to which the date is November 26, 1997). 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 23 is the responsibility of the
    Company's management and is presented for the 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 3, 1997

                                       25PAGE
<PAGE>
    SCHEDULE I

                            THERMO ECOTEK CORPORATION
                  Condensed Financial Information of Registrant
                          Unconsolidated Balance Sheet


                                                September 27,  September 28,
    (In thousands)                                       1997           1996
    ------------------------------------------------------------------------
    ASSETS
    Current Assets:
      Cash and cash equivalents                      $ 69,465       $ 52,728
      Accounts and notes receivable from
        subsidiaries                                    3,789          2,883
      Prepaid income taxes and prepaid expenses         4,351          2,082
      Current portion of note receivable and other
        current assets                                     23            965
                                                     --------       --------
                                                       77,628         58,658
                                                     --------       --------
    Investment in Subsidiaries (on the equity
      method)                                         233,513        196,135
                                                     --------       --------
    Office Equipment, at Cost                             237            340
    Less: Accumulated Depreciation                       (184)          (251)
                                                     --------       --------
                                                           53             89
                                                     --------       --------
    Long-term Available-for-sale Investments, at
      Quoted Market Value (amortized cost of $8,504
      and $6,004)                                      12,497         20,254
                                                     --------       --------
    Deferred Debt Expense                               1,432            807
                                                     --------       --------
    Due from Parent Company                            10,164         12,116
                                                     --------       --------
                                                     $335,287       $288,059
                                                     ========       ========

                                       26PAGE
<PAGE>
    SCHEDULE I

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


                                                September 27,  September 28,
    (In thousands)                                       1997           1996
    ------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' INVESTMENT
    Current Liabilities:
      Accounts payable                               $    162       $    114
      Accrued expenses                                  6,048          5,750
      Due to parent company                             1,219          1,448
                                                     --------       --------
                                                        7,429          7,312
                                                     --------       --------
    Long-term Obligations:
      Noninterest-bearing subordinated
        convertible debentures                         12,148         31,727
      4% Subordinated convertible debentures, due
        to parent company                              68,500         68,500
      4.875% Subordinated convertible debentures       50,000              -
                                                     --------       --------
                                                      130,648        100,227
                                                     --------       --------
    Deferred Income Taxes                              49,934         42,633
                                                     --------       --------
    Other Deferred Items                                    -          8,200
                                                     --------       --------
    Shareholders' Investment:
      Common stock                                      2,598          1,617
      Capital in excess of par value                   95,573         74,740
      Retained earnings                                67,593         45,048
      Treasury stock                                  (20,872)          (481)
      Cumulative translation adjustment                   (52)             -
      Net unrealized gain on available-for-sale
        investments                                     2,436          8,763
                                                     --------       --------
                                                      147,276        129,687
                                                     --------       --------
                                                     $335,287       $288,059
                                                     ========       ========

                                       27PAGE
<PAGE>
SCHEDULE I

                            THERMO ECOTEK CORPORATION
                  Condensed Financial Information of Registrant
                       Statement of Unconsolidated Income

                                                                       Nine
                                   Year Ended      Year Ended     Months Ended
                                  September 27,   September 28,    September 30,
(In thousands)                        1997            1996             1995
------------------------------------------------------------------------------
Revenues                            $ 8,200          $     -         $     -
Equity in Earnings of Subsidiaries   39,817           34,148          23,329
                                    -------          -------         -------
                                     48,017           34,148          23,329
                                    -------          -------         -------
General and Administrative Expenses  10,219            9,404           6,686
                                    -------          -------         -------
Operating Income                     37,798           24,744          16,643
Interest Income (Expense), Net         (838)             307            (352)
                                    -------          -------         -------
Income Before Provision for
  Income Taxes                       36,960           25,051          16,291
Provision for Income Taxes           14,415            7,271           6,027
                                    -------          -------         -------
Net Income                          $22,545          $17,780         $10,264
                                    =======          =======         =======

                                       28PAGE
<PAGE>
SCHEDULE I

                            THERMO ECOTEK CORPORATION
                  Condensed Financial Information of Registrant
                     Statement of Unconsolidated Cash Flows

                                                                       Nine
                                   Year Ended      Year Ended     Months Ended
                                  September 27,   September 28,    September 30,
(In thousands)                        1997            1996             1995
-------------------------------------------------------------------------------
Operating Activities:
  Net income                        $ 22,545        $ 17,780        $ 10,264
  Adjustments to reconcile net
    income to net cash used in
    operating activities:
      Depreciation and amortization      513             182              54
      Deferred revenue                (8,200)              -               -
      Deferred income tax expense     10,715           3,086           3,987
      Equity in earnings of
        subsidiaries                 (39,817)        (34,148)        (23,329)
      Changes in current accounts:
        Accounts and notes
          receivable from
          subsidiaries                  (906)            282          (1,823)
        Other assets                      55           1,520           5,526
        Accounts payable                  48              18            (470)
        Accrued expenses                  99            (804)          3,633
        Due (to) from parent
          company                      3,471           5,181             (91)
                                    --------        --------        --------
Net cash used in operating
  activities                         (11,477)         (6,903)         (2,249)
                                    --------        --------        --------
Investing Activities:
  Acquisitions, net of cash
    acquired                         (10,865)         (8,088)               -
  Purchase of available-for-sale
    investments                       (2,500)         (3,004)         (2,030)
  Purchases of property, plant,
    and equipment                        (15)             (8)            (26)
  Distribution from (investment
    in) subsidiaries                  13,315          (9,828)          7,843
                                    --------        --------        --------
Net cash provided by (used in)
  investing activities              $    (65)       $(20,928)       $  5,787
                                    --------        --------        --------

                                       29PAGE
<PAGE>
SCHEDULE I

                            THERMO ECOTEK CORPORATION
                  Condensed Financial Information of Registrant
               Statement of Unconsolidated Cash Flows (continued)


                                                                       Nine
                                   Year Ended      Year Ended     Months Ended
                                  September 27,   September 28,    September 30,
(In thousands)                        1997            1996             1995
-------------------------------------------------------------------------------
Financing Activities:
  Net proceeds from issuance of
    subordinated convertible
    debentures                      $ 48,470        $ 35,942        $      -
  Repurchases of Company common
    stock                            (19,743)              -               -
  Net proceeds from issuance of
    Company common stock                (417)          5,026          27,575
                                    --------        --------        --------
Net cash provided by financing
  activities                          28,310          40,968          27,575
                                    --------        --------        --------
Exchange Rate Effect on Cash             (31)              -               -
                                    --------        --------        --------
Increase in Cash and Cash
  Equivalents                         16,737          13,137          31,113
Cash and Cash Equivalents at
  Beginning of Period                 52,728          39,591           8,478
                                    --------        --------        --------
Cash and Cash Equivalents at
  End of Period                     $ 69,465        $ 52,728        $ 39,591
                                    ========        ========        ========

                                       30PAGE
<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).

                                       31PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     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.

     10.6       Master Reimbursement and Loan Agreement dated as of
                January 1, 1994, between Thermo Electron and the
                Registrant (filed as Exhibit 10.6 to the Registrant's
                Registration Statement on Form S-1 [Reg. No. 33-86682]
                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).

                                       32PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     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).

                                       33PAGE
<PAGE>
                                  EXHIBIT INDEX

    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).

                                       34PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     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).

     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).

                                       35PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     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.

                                       36PAGE
<PAGE>
                                  EXHIBIT INDEX


    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      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).

                                       37PAGE
<PAGE>
                                  EXHIBIT INDEX
    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     10.47      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 affect to share increase approved
                in December 1993 and 3-for-2 stock split effected in
                October 1996).

     10.48      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).

     10.49      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).

     10.50      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).

     10.51      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).

     10.52      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.

     10.53      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).

                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 or such affiliated corporations. Such
                plans were filed as Exhibits 10.21 through 10.45 to the
                Annual Report on Form 10-K of Thermo Electron
                Corporation for the fiscal year ended December 28, 1996
                [File No. 1-8002] and are incorporated herein by
                reference.
                                       38PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number      Description of Exhibit
    ------------------------------------------------------------------------
     10.54      Restated Stock Holding Assistance Plan and Form of
                Promissory Note.

     11         Statement re: Computation of Earnings per Share.

     13         Annual Report to Shareholders for the fiscal year ended
                September 27, 1997 (only those portions incorporated
                herein by reference).

     21         Subsidiaries of the Registrant.

     23         Consent of Arthur Andersen LLP.

     27         Financial Data Schedule.