WHITEFISH, MT / ACCESSWIRE / December 18, 2014 / Low oil prices can sometimes make the world apathetic towards greener energy technologies. However, with government mandates and the momentum that has been built in alternative energy sectors, sinking crude this time around, even if it stabilizes at low prices, should have a diminishing impact. Improved solar cell efficiency, declining product costs, tax credits and innovative funding for consumers by companies like SunPower (NASDAQ: SPWR) and SolarCity (NASDAQ: SCTY) have led to increasing widespread adoption of solar systems across the U.S. According to a report by Environment America, U.S. solar photovoltaic capacity increased at a rate of 77% annually from 2010 to 2013. The report showed that even if the pace of growth slows to around 22% annually, there will be enough solar energy to generate 10% of the nation's electricity by 2030.
That bodes well for many in the solar space as they elbow for room tapping the growing residential markets with loan and lease plans that deliver solar systems to homeowners with little or no money down as with SolarCity's MyPower program. Those that follow insider's moves will note regulatory filings for SCTY that show some options being exercised recently, but also that CFO Brad Buss just indirectly bought (by trust) 6,000 shares at $55.32.
SunPower, originally an exclusive solar panel maker that evolved into a project developer as well, has been in the residential leasing business for three years, now with about 20,000 households enrolled. Early on in 2014, the company announced a program in collaboration with Bank of America Merrill Lynch (NYSE: BAC) that provides financing to support approximately $220 million of residential solar lease projects in a bid to further bolster its leasing portfolio.
RGS Energy (NASDAQ: RGSE) is focusing on this market, ditching its efforts in large-scale commercial projects to try and grab more residential customers. In March, RGS Energy, formerly Real Goods Solar, teamed with Mosaic, the first company to offer investments online in solar projects, to launch the Mosaic Home Solar Loan. Through an online process, potential solar energy system owners can get quick results on financing ownership of a rooftop system.
Combined Heat and Power, often called CHP or cogeneration, is another industry providing energy solutions outside of the traditional electricity grid. Using a variety of fuel sources, CHP delivers two forms of energy from a single source, greatly increasing efficiency, minimizing carbon footprint and reducing costs. There are a variety of options for CHP systems, including the potential to completely disconnect from the grid while ensuring reliable power.
That's the plan being used by global healthcare giant Merck (NYSE: MRK), who late in November commissioned a 3-megawatt cogeneration plant at its facility in Goa, India as part of its corporate climate protection program. The $3.7 million system will mostly use shells of cashews and coconuts, two crops that are farmed in the region, as biomass fuel to generate electricity and steam for its pharmaceutical and chemical production operations in Goa. It's estimated that the CHP system will reduce carbon dioxide emissions by approximately 11,500 metric tons, which is roughly 85% of total current CO2 output. This isn't Merck's first time around with CHP; in August Energy AG completed and transferred a 3.12 MW natural gas-driven CHP system to Merck at its production and research plant in Darmstadt, Germany.
Not every company is Merck, so the upfront capital expenditures can be limiting to multi-unit residential, commercial and light industrial companies looking to incorporate CHP into their business. These industries include schools, healthcare facilities, gyms and more that are prime targets for CHP systems because of a high demand for hot water, which can be created inexpensively through heat generated in the process of making electricity. In the same fold as solar companies crafting ways to provide cleaner energy to customers, American DG Energy (NYSE MKT: ADGE) offers long-term power purchase agreements (PPA) for its CHP systems.
The plan is simple; American DG Energy designs a system based upon the customer's needs (albeit hot water, space heat, chillers, etc.), delivers and installs its natural gas-powered CHP systems and retains ownership and maintenance responsibility of the units. The customer only pays for energy produced by the CHP system, which is guaranteed to be priced at a discount to the current utility provider. This is possible through CHP's high efficiency. Natural gas is used to power an engine to generate electricity with the subsequent "waste" heat captured and used for a different energy need, essentially delivering one form of energy for free. The aggregate costs are averaged out, allowing the cost savings to be passed on to the customer throughout the life of what is typically a 15-year PPA. For American DG Energy, the costs are weighted to the front end, but once the initial costs associated with placing the unit are covered, the margins increase exponentially on the back-end of the contract.
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
A glimpse at SEC filings for ADGE shows a series of recent Form 4s, a document for insider purchases, as the stock has precipitously fallen. Notably, director John Rowe, the former CEO of Exelon (NYSE: EXC), has purchased shares, along with Co-CEO Benjamin Locke, President Barry Sanders, CFO Gabriel Parmese and Board Members Charles Maxwell, Deanna Petersen, Francis Mlynarczyk, and Christine Klaskin.
Point here is that the energy sector is in focus in the wake of the latest OPEC meeting and the absence of a move by the cartel to support oil prices and alleviate a supply glut. That is putting a spotlight on alternative energies against a backdrop of already favorable initiatives for greater implementation of earth-friendly energy technologies. OPEC may be able to keep their thumb on crude, but with the momentum building behind greener energy and innovative methods to get it to the masses, they're not going to have quite as much success taking the shine off things like solar and CHP just because oil is cheap.
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