The cost of electricity may be falling thanks to lower natural gas prices, but energy efficiency gains could lower prices even further for many consumers. According to the Environmental and Energy Study Institute http://www.eesi.org/generation_distribution ("EESI"), the existing power grid operates at roughly 33% energy efficiency, meaning that it discharges to the environment roughly twice as much heat as the amount of electrical energy that it delivers to consumers.
While solar and wind companies are working to ensure that the power grid is supplied from sustainable sources, American DG Energy Inc. (NYSE MKT: ADGE) is working on the other side of the "green" equation by maximizing energy efficiency. The company owns and operates on-site energy systems that produce electricity, heat and hot water at up to 90% efficiency by capturing waste heat and repurposing it to serve other needs.
In this way, the company has positioned itself as a next generation utility that provides a strong value proposition to its customers – a zero capital cost solution with guaranteed lower energy prices over the course of a long-term contract.
Innovative Technology Improves Efficiency
American DG Energy owns and operates a fleet of efficient energy generation systems that utilize leading emissions technology to reduce environmental impact. Utilizing the same internal combustion engine technology one would find under the hood of a car, the company's deployed systems run on natural gas and capture the heat from the engine oil, jacket and exhaust to use in space heating, water heating, or heating for pools or spas.
This combined heat and power ("CHP") solution provides end users with significantly less expensive energy by operating at up to 90% efficiency. American DG Energy installs and operates this technology, providing its customers with energy at a discount to their local utility rates. This is reflected as an immediate savings on the customer's electric bill with no upfront cost or responsibility.
View ("CHP") system here: http://www.tdmfinancial.com/emailassets/adge/chp.jpg
Attractive Economics Tackling the Right Problem
American DG Energy's model of tackling power generation through energy efficiency makes it an attractive investment relative to other utilities which use significantly more fuel for the same end result. While utilities with larger-scale, remotely located energy assets rely on expensive coal or nuclear power, American DG Energy's on-site systems operate on cheap and clean burning natural gas. The result is a business model that offers compelling economics to both the company and its customers. These attractive economics and ease-of-use, from a technological standpoint, translate to an attractive business model for American DG Energy. The company is able to offer customers a guaranteed discount on their energy bill and still generate high margin recurring revenues under contracts that average approximately 15 years. The company utilizes top of the line technologies from leading manufacturers, giving a fleet with high efficiencies and reliability.
Potential Investment Opportunity
The company's unique access to these technologies, and the strength of its underlying business model make American DG Energy an attractive investment opportunity. Currently, the company has contracts with an aggregate value approaching $300 million over the life of the contracts. In order to expand its market opportunities, the company also deploys and operates chillers, boilers, and the latest heat pump technologies, rounding out the service offerings it provides as a clean distributed energy utility.
Investors in green energy companies, like Ameresco Inc. (NYSE: AMRC) or Ormat Technologies Inc. (NYSE: ORA), may want to take a closer look at American DG Energy as it continues to add new customers with its strong value proposition. With its unique business model the company is quickly approaching a breakeven point where it can begin generating real value for shareholders.
Learn more and sign up to receive email updates on American DG Energy here: http://www.tdmfinancial.com/emailassets/adge/adge_landing.php
Disclosure
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