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Renewable Energy and On-Site Utilities Part of Slow Sea Change in Energy Industry

Friday, 24 October 2014 09:35 AM

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Whitefish, MT / October 24, 2014 / Technology poses many questions and delivers answers slowly over time. Consider how cable television and streaming, Internet-based programming are currently co-existing, but also raising the question as to which will be the dominant means to deliver content in the future. The same thing could be said about a trend shift away from traditional phone lines to cell phone plans as many residences have cut the cord. Point being, while there are certainly bursts, the changes aren't overnight; they're slow and steady over time. The power industry is going through a shift, with different technologies being utilized that are more efficient and Earth friendly than traditional power generation and delivery methodologies.

Prodding the change along, alternative energy companies are getting an assist from the government through subsidies to support adoption of clean technologies. In the same vein, organizations like public benefit corporation New York State Energy Research and Development Authority (NYSERDA) are promoting use of clean products, providing expertise and funding "to help New Yorkers increase energy efficiency, save money, use renewable energy, and reduce reliance on fossil fuels." Now, that doesn't imply that any idea of a decentralized system is around the corner, but it does leave several sectors open for growth going forward, including renewable energy plays like SolarCity Corp. (NASDAQ: SCTY), wind expert Broadwind Energy, Inc. (NASDAQ: BWEN) or on-site cogeneration company American DG Energy Inc. (NYSE MKT: ADGE).

SolarCity, who just launched the U.S.'s first registered public offering of solar bonds, continues to expand its leading footprint as solar products become more cost competitive. According to GTM Research, SolarCity is currently providing more than one-third of new solar power systems in the U.S. On October 16, the company said it is working with Direct Energy to provide solar electricity and solar energy storage systems at two BJ's Wholesale Clubs in Massachusetts. The BJ's Clubs, in Framingham and Dedham, are the first to install solar energy coupled with storage and will be the first two sites on the East Coast to utilize SolarCity's DemandLogic platform. SolarCity created DemandLogic as a solution to demand charges that commercial facilities endure. The BJ's locations will have solar energy systems operating in conjunction with a 200 kilowatt lithium-ion battery storage system that reduces energy costs by drawing upon stored electricity to lower peak demand. As aforementioned, funding from government agencies has helped SolarCity expand. New York State plans to invest a total of $750 million in infrastructure and equipment purchases for the company's GigaFactory facility in Buffalo. Once complete, the solar panel factory will be the largest of its kind in the Western Hemisphere, with more than 1 gigawatt of annual solar capacity when it reaches full production.

Broadwind Energy provides a wide array of solutions to customers in the energy and infrastructure markets, ranging from gears and gearing systems to wind turbine towers to in-field services. Broadwind recently announced that it won an $11 million order for wind turbine towers for an unidentified client. Broadwind will manufacture the towers at its Manitowoc, Wisconsin facility for delivery in 2015. It was a strong way to start the fourth quarter after saying it ended the third quarter with $14 million in orders for new towers. At that time (September 10), Broadwind said that nearly three-quarters of its tower production capacity for 2015 was already sold with expectations that the remaining capacity will be sold by the end of the year. Investors will be looking ahead to October 30, when the company will release Q3 results. In Q2, Broadwind posted net income from continuing operations of $1.9 million, or $0.12 per share, versus $400,000, or $0.03 per share in the year prior quarter. The company booked $23.6 million in net new orders in Q2.

American DG Energy is an On-Site Utility provider specializing in Combined Heat and Power (CHP, cogeneration), systems. The company’s CHP units runs at up to 90 percent efficient, compared to roughly 33 percent efficiency for traditional electricity generation, while also reducing emissions. This is accomplished by creating two types of energy from one source. American DG Energy uses natural gas as the source fuel to power engines to create electricity, while simultaneously capturing any heat created and repurposing it for things such as space heat, hot water or even for chiller systems. 

In the same vein as SolarCity or Broadwind, American DG Energy is aiming to grow its footprint and a partnership announced late in September could play a big role in that initiative. ADGE said it is teaming up with CommunityWorks, a division of Morrison Senior Living. Hospitality and healthcare facilities are attractive client targets because of high hot water demand, which allows for optimization of systems to reduce the need for electricity from the grid, while meeting 100-percent of hot water requirements. Under the terms of the agreement, CommunityWorks and ADGE will work to promote and then deploy CHP, Chillers, Heat Pumps and other ADGE energy solutions to over 450 senior living facilities across 41 states, in the Morrison Senior Living network, including some of the largest and most prominent senior living communities in the United States. American DG Energy recently reported 121 operating energy systems (with an additional 25 systems in backlog). An inroad to 450 senior living facilities could provide a valuable boost in installed and managed systems that ADGE typically locks-up through long-term utility contracts.

This agreement dovetails with an agreement from July 31 in which ADGE disclosed an agreement with Green Hill Retirement Community in West Orange, New Jersey. In that deal, which was facilitated through a more limited partnership with CommunityWorks, American DG Energy is installing a 75 kW CHP system that is projected to generate $1.8 million in revenue to ADGE across the 15-year contract. Learn more about Combined Heat & Power and access American DG Energy’s social media accounts here: http://www.tdmfinancial.com/emailassets/adge/adge_landing.php

In addition to providing technologies that cut emissions and stress on the electric grid, these companies have another thing in common: they’re all at or near their low for 2014. As major energy firms help bend the curve by utilizing renewable or alternative technologies and smaller firms gain more traction, the slow sea change towards a different energy dynamic is going to happen, putting companies like these on the radar to execute their business models and build value.

Legal Disclaimer:

Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC may from time to time have a position in the securities mentioned herein and may increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice. Emerging Growth LLC may be compensated for its services in the form of cash-based compensation or equity securities in the companies it writes about, or a combination of the two. For full disclosure please visit: http://secfilings.com/Disclaimer.aspx


SOURCE: Emerging Growth LLC 

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