Whitefish, MT / October 8, 2014 / Through the first three quarters of 2014, the Dow Jones US Utilities Index ($DJUSUT) delivered gains of 9.8 percent, making it the third best performer in the Dow's 10 broad-market indices behind Health Care and Technology and nearly doubling the return of its next closest peer, Basic Materials. While the utilities industry has long served as a safe haven because of its propensity to pay solid dividends, it also is attractive for the innovation that is playing a growing role in utilities with respect to alternative sources of energy and meeting government mandates to reduce emissions. This is exemplified by electric utility providers like Southern Company (NYSE: SO) that not only generate electricity through fossil fuels, but also own and manage renewable energy assets. Proposed regulatory changes to further lower the bar for greenhouse gas and criteria pollutant emissions by utilities could further support the tech side of things and more widespread adoption of environmentally friendly technologies, such as those of solar and wind companies and the cogeneration offerings of Tecogen, Inc. (NASDAQ: TGEN).
The Environmental Protection Agency (EPA) defining carbon dioxide as a pollutant puts pressure on existing power stations - and states - to mitigate pollution, which could provide a boon to a growing acceptance of cogeneration, or combined heat and power "CHP" as its often called. It also highlights utilization of on-site renewable energies, albeit biogas, solar, CHP, etc., to reduce stress on the electricity grid and put pollutants under wraps that have been a bane in the side of companies and governments for decades.
Tecogen is currently expanding its footprint as a provider of ultra-efficient products including cogeneration modules that provide electricity and heat, and chillers, which provide air-conditioning and optional free hot water. Tecogen's products supply electrical power or mechanical power for cooling, as well as free engine heat that gets recovered and purposefully used at customer facilities.
Tecogen has already installed more than 2,000 units and the number is growing. Within the past two weeks, Tecogen reported the sale of a 225 kW cogeneration system to a 181-bed medical and surgical hospital in northern California. The facility purchased three Tecogen 75 kW CHP modules equipped with Tecogen's patented Ultra low emissions system. Earlier this year, Tecogen sold seven similar modules to a sister facility in this Medical Group's Northern California area. That was followed by a $1.45-million contract with a prominent hotel chain to provide a tri-generation energy system for a 400-room hotel complex in Jersey City, New Jersey. Tecogen will install the system, comprised of a group of Tecogen InVerde 100 kW cogeneration modules, including absorption chillers, to provide electricity as well as hot water for heating and chilled water for cooling (tri-generation). Tecogen estimates that the tri-generation energy system will save the hotel upwards of $250,000 in energy costs annually.
Only days later, Tecogen said it shipped six TECOCHILL(r) natural gas air-cooled chillers to the New York Container Terminal (NYCT) facility in Staten Island, New York for refrigeration requirements for a 66,400 sq. ft. climate controlled warehouse for temperature sensitive cargo. The TECOCHILL units are expected to cut electric demand for the facility by as much as 300kW. This shipment was follow soon after by a repeat order, this time on the west coast, of an InVerde 100kW CHP unit that will replace a dated Tecogen product in San Francisco, CA. The dated Tecogen went operational in 1994 and provided the 92-unit luxury co-op over $1 million cumulative energy savings to date.
The investment community may still be a bit myopic in recognizing the expansion potential of new energy-producing technologies that can make a difference to meet goals and mandates, but forward-thinking agencies and companies have not. For example, according to leading industry publication Cogeneration & On-Site Power Production, "Apple, IBM, SC Johnson, Volkswagen Chattanooga operation and Adobe systems all use their own on-site renewable plants to generate a significant proportion of the electricity needs," citing the EPA. Moreover, Massachusetts Governor Deval Patrick recently announced a $7 million grant as part of the state's clean energy initiatives that will include $2.8 million allocated for a CHP system for Baystate hospital and $700,000 for a CHP plant for the South Essex Sewerage District. Hopefully the trend will continue to inspire investment in the industry for its litany of benefits.
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SOURCE: Emerging Growth LLC