Energy Reformation in Mexico Creates Opportunity for Cogeneration Companies


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NASDAQ:TGEN / NYSE:GE / NYSE:SRE
08/13/2014 [ACCESSWIRE]

WHITEFISH, MT / August 13, 2014 / Energy reform is starting to sweep across Mexico with key bills recently passed aiming to reshape the landscape of the industry and taking the monopolies from state utility CFE and oil behemoth Pemex.  This should reinvigorate investment in energy of all shapes in Mexico, including cogeneration, a process of making two types of energy simultaneously from one source.  CFE said late in July that it will offer $2.8 billion in natural gas and electricity project contracts by the end of 2014 in a bid to bolster the Mexican economy.  Part of the plans include two natural gas pipelines along the U.S./Mexico border and two combined-cycle power plants as Mexico looks to leverage robust U.S. natural gas assets to lower electricity rates.  Major energy plays like General Electric (NYSE: GE) and Sempra Energy (NYSE: SRE) have an opportunity to play a role in the reformation through direct efforts and subsidiaries, as well as do smaller players like Tecogen (NASDAQ: TGEN). 

GE has a relationship with Pemex on many levels, including holding a minority stake (40%) in the 300MW Nuevo Pemex Cogeneration Power Plant in the southeastern state of Tabasco, Mexico.  The plant, started in April 2013, is the largest CHP plant in Mexico and the first ever power procurement from the private sector.

Sempra is reported to be vying for some of the contracts being offered by CFE through IEnova, Sempra's Mexican unit.  Taken public in March 2013, shares of IEnova, Mexico's only publicly traded energy company, have risen more than 100 percent as the company is believed to be a winner in broad changes to energy legislation.  The company is partnered with Pemex on building a part of the Los Ramones pipeline that will carry natural gas 750 miles from Agua Dulce, Texas deep into central Mexico.

Tecogen, which went public in May, is a manufacturer of CHP systems, including natural gas engine-driven cogeneration, air conditioning systems, and high-efficiency water heaters.  The Massachusetts-based company is growing its footprint in Mexico at an opportune time as more large-scale projects meant to stabilize energy prices and reduce electric grid load create awareness and demand amongst the commercial and industrial sectors, which is where Tecogen specializes. 

Some may say that emission standards have been lax in Latin America, but the winds are changing.   Energy reform in Mexico, whose global rank is number 11 for both size of population and carbon emissions, caught government support in 2012 with new laws mandating reduction of carbon dioxide emissions by 30 percent below "business as usual" levels by 2020 and 50 percent  from 2000 levels by 2050.  Last November, Mexico's stock exchanged launched MEXICO2, the country's first platform to trade carbon credits in a bid to cut emissions.  This came only weeks after Costa Rica's BANCO2 market hit the public in a bid to have investors help fund initiatives to slash greenhouse gases.

The moniker "combined heat and power" often lends to the misconception that CHP only produces electricity, with the "waste" thermal energy created in the process repurposed as a clean heating source.  While certainly true, CHP has wider applications also, such as the Tecochill product lines that offer water-cooled engine-driven chillers, ranging from 150 to 400 tons of cooling capacity.  With the units, a natural gas engine drives a variable-speed single-screw rotary compressor, connected to a standard vapor compression refrigeration system utilizing environmentally-friendly HFC-134a refrigerant, delivering a highly-efficient cooling system, while capturing the waste heat for additional uses, such as hot water.

On Tuesday August 5th, Tecogen disclosed that its sales rep Calfrost de Mexico has sold two of its Tecochill CH-400x DTx Series chillers for use at an existing plant in Tamaulipas, Mexico of an unnamed "major" US-headquartered manufacturer of home fixtures.  The DTx series is the larger line of Tecogen chillers, using two engines for up to 400 tons of cooling capacity.  The units will be put to use as part of a large expansion of the facility in an effort to contain costs, lower emissions and hedge higher electricity rates.

Interested parties are encouraged to read the complete press release: http://www.tecogen.com/9a76e153-e47c-4969-94bd-c6d846f5565e/about-us-news-and-events-press-releases-detail.htm

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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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