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Cogeneration an Area Where Republicans and Democrats Actually Agree?

Monday, 24 November 2014 09:45 AM

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WHITEFISH, MT / ACCESSWIRE / November 24, 2014 / Republicans taking control of both parts of Congress in mid-term elections earlier this month has Wall Street players speculating on what industries and companies will benefit, and which will be hurt, by the Grand Old Party logging more votes. For example, TransCanada's (NYSE: TRP) controversial Keystone XL pipeline may face softer political headwinds with a Republican-led Senate, which could provide a boon to the company in the future. Energy plays, like Halliburton (NYSE: HAL), which have taken their lumps due to falling oil prices lately, are expected to benefit as the GOP is historically friendlier to the industry than Democrats. Possible tax policy modifications could make business easier on some, but harder on others. Efforts to enact changes in the Affordable Care Act, better known as Obamacare, are expected to be a point of emphasis by Republicans, which could hamstring some HMO firms that benefited from the ACA, while lowering the medical device tax would be a positive for a company like Medtronic (NASDAQ: MDT). 

In the utility space, Mike Pompeo (R-KS) and 54 other House of Representative members recently penned a letter to Speaker John Boehner (R-OH) and House Majority Leader Kevin McCarthy (R-CA) calling for an end to the Wind Production Tax Credit, a subsidy supported by President Barack Obama, which raises some questions on wind energy projects. Tax credits and electricity are going to remain topical in Washington for the next couple years, especially considering the federal investment tax credit for solar is slated to drop from 30% to 10% in 2016, a reduction that is already spurring debate

Utilities and electric costs were arrows drawn from quivers in the gubernatorial race in Massachusetts where Republican Charlie Baker edged out Democrat Martha Coakley. The two took shots at each other regarding National Grid Plc. (NYSE: NGG) planning to raise electricity rates by 37% this winter, citing rising natural gas costs and the closing of a nuclear power plant in Vermont and a coal plant in Massachusetts. National Grid has also filed to raise natural gas prices, but a customer will actually see a mild reduction (1-3%) from a credit related to lower delivery charges that National Grid is passing on to its customers. 

The higher electricity costs and slightly lower gas costs work well in the equation for clients of On-Site Utility company American DG Energy (NYSE MKT: ADGE). The company offers natural-gas-fired Combined Heat and Power (CHP, cogeneration) systems to its customers with no money up front, as ADGE retains ownership of the equipment and the customer only pays for energy used. CHP is a process that simultaneously produces useful electricity and heat from one fuel source, effectively reducing greenhouse gas emissions and greatly improving efficiency over electricity from the grid. American DG Energy passes the savings resulting from the higher efficiency to its customers, guaranteeing a lower cost of energy than the local utility charges.

SNNLive recently spoke with Barry Sanders, President and COO of American DG Energy, at the Aegis Capital Corp. Healthcare and Technology Conference 2014. Mr. Sanders was able to reiterate on benefits to clients, including capital avoidance, and touched on a recent partnership with Morrison Senior Living that currently manages over 450 senior living facilities in the Unites States. 

Headquartered in Massachusetts, American DG Energy is now operating 120 energy systems (with 26 more in backlog), primarily in the Northeast U.S. Year-to-date through September 2014 sales rose to $6.5 million from $5.6 million, a 16% increase from the year prior period. Revenue for the company's upstart subsidiary in the UK, EuroSite Power (OTCQB: EUSP), increased by 152% to $1.2 million in the year-to-date period as of September 30, 2014 from the year earlier period with 19 systems under contract and 13 more in backlog.

View a typical cost of ownership case study and sign up for American DG Energy (ADGE) email alerts here: http://www.tdmfinancial.com/emailassets/adge/adge_landing.php

With all the talk about what type of influence the Republicans will have to effect changes across many industries and sectors, little mention has been made to President Obama's executive order two years ago to increase the number of cogeneration plants in the U.S. by 50 percent by 2020 or subsidies for CHP installations. In fact, there could be new subsidies on the horizon as the Power, Efficiency and Resiliency (POWER) Act was introduced to Congress in June. If enacted, the POWER Act would incentivize investment and increase the tax credit from 10% to 30% for industrial facilities that install energy-efficient technologies such as CHP and WHP (waste heat to power). According to bill co-sponsor Rep. Allyson Schwartz (D-PA), the POWER Act has bipartisan support, as one of its goals is to ensure that critical facilities maintain power even during a grid outage. To that point, instead of playing the guessing game as to what may happen on Capitol Hill come January when Republicans take over the Senate, it may make more sense for Wall Street to look where it seems like the two parties actually seem to agree.

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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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