Advanced Tecogen InVerde e+ Systems Chosen to Power Large Urban Housing Complex

Throughout its 35 year history developing cooling, heating and electrical power generation products, Tecogen (NASDAQ: TGEN – $3.50 & Fra: 2T1 – €3.02) has continued to deliver technological improvements to its entire line of cogeneration products, using clean natural gas fuel for Combined Heat and Power (CHP) systems.

The ability of this power generation technology to recover waste heat from combustion and use it as an energy source providing hot water and heating capability enhances the overall efficiency of these systems while providing cost benefits to end users. As a market leader for these innovative products, Tecogen is well positioned to capture sales growth and expand its presence within the most important market centers. This week the Company announced it had secured the sale of a large microgrid system for a housing complex operator in the New York City area.

Significant Sales Breakthrough Demonstrates Cost Savings on Large Scale

The sale involves a total of 12 InVerde e+ units that will be installed to power a multi-unit housing project comprising six buildings in Manhattan. Each building will have two units operating to provide electricity and heating, along with standby power for lighting, elevators, water pumps and back-up electrical systems in a grid-down event. These CHP systems will also include the advanced Ultera emissions control technology that reduces pollution output to near-zero levels.

One of the biggest ordesr in Tecogen’s history for 12 InVerde e+ units will be installed in 6 buildings that are part of a large low income housing complex in Manhattan.

With the combined power generating capacity of 1.5 MW, this deal represents one of the largest contracts in the history of Tecogen and a milestone in the overall advancement of CHP technology serving residential complexes within urban centers. The complete microgrid system will be installed and phased in throughout 2019. A five year maintenance agreement is also part of the contract.

In addition to the high value of this sales contract, the transaction is also notable in that Tecogen worked closely with the project managers for a long period of time to design an effective system that addressed all of the operating requirements for this large complex, while also delivering cost savings and long term reliability. A prominent engineer involved in the process determined that technical superiority of the Tecogen InVerde e+ system provided the best solution compared to alternative product options that were considered.

The system will qualify for financial rebates offered under the NYSERDA program operated by New York State, implemented to encourage the installation of CHP systems for high value projects as a means to offset conventional electrical demand on the grid. The combination of financial incentives and cost benefits WILL ultimately amount to more than the capital investment to purchase and install the units, so in effect these systems pay for themselves.

Expanded Presence Within Important Regional Sales Center of New York City

A number of these larger, high value transactions have now been completed by the Company in the New York City area, with similar characteristics to the sale reported this week. In September of this year, Tecogen announced that it had sold six InVerde e+ co-generation units to be installed at a group of four separate housing projects. The combined power generation from this equipment sale amounted to 800kW.

In September of 2017, another large order for ten InVerde e+ units was reported, to supply power to a large residential complex in Brooklyn. This installation provided an impressive combined capacity for 1 MW of power output. And prior to that, in December of 2016, a package of five InVerde e+ systems was designed for a central plant providing electricity, space heating and domestic hot water for a complex of over 1000 residential housing units.

Large, multi-building housing projects are quite common in the New York City area. The InVerde e+ CHP system is ideally suited to match the needs of property managers to ensure reliable power, climate control and hot water for the residential units while delivering savings in overall operating costs. When a system is designed for multiple buildings in a residential complex served by a central plant, the ‘microgrid’ application is even more cost effective.

Another factor making the choice for the InVerde line more attractive is the access to factory-trained technicians serving the New York City area, with three Tecogen service centers and 25 trained technicians on stand-by for repairs and maintenance. Since the sales and installation agreements come with the commitment to provide factory maintenance for many years, the presence of a large team available to respond quickly for any service requests adds to the assurance that property managers may expect reliable long term operations for their CHP systems.

Ongoing Sales Growth Reported Serving Indoor Cultivation Industry

In another important news release this week, Tecogen reported the sales of its modular Tecochill units to three separate companies involved in the indoor cultivation industry. The three orders from operators based in Florida and Massachusetts included sales of four 150/200 ton STx Tecochill systems, plus two 400-ton DTx Tecochill systems. All of the units involved in these deals are expected to be installed and operating early in 2019.

Because the operation of indoor cultivation facilities requires the maintenance of optimum climate control to sustain healthy plants and provide enhanced yields, the energy demands for a larger operator can be substantial. The advanced line of Tecochill systems allows operators greater flexibility to manage their electrical energy consumption and reduce demand.

The Tecochill units provide reliable, consistent climate control with a level of efficiency that delivers cost savings for its clients. For example, operation of a larger 400-ton DTx Tecochill unit replaces 250 kWh of installed electrical capacity. This significant reduction in the demand for electrical power from local utilities, contributes to much lower energy costs, while the Tecochill units also provide the advantage of continued operation in the event of a grid-down power outage.

Conclusion

It should be emphasized that each of the significant sales reported this week were related to cost savings anticipated by the purchasers of these units. In the past, clients were interested in the operating advantages of the product line to meet their specific circumstances, and often were content to pay higher operating costs as a necessity to ensure the benefit of securing on-site generation capacity.

The increased efficiency afforded by the latest technology advances has now enabled a much lower operating cost regime for these units, and therefore a larger market of potential end-users is considering Tecogen to meet their CHP requirements. This is a very important trend that suggests that the sales growth reported earlier by the Company can be sustained.

Tecogen now has more than 250 separate microgrid enabled CHP systems online in the US. This amounts to a combined power output of 25MW. Just within the New York City area, several housing complexes already depend on large-scale CHP services provided by Tecogen equipment, and the potential for further expansion is at hand as many other projects are scheduled for refurbishment and renovations in the years ahead. The established benefits and reliability of the InVerde systems will factor into additional sales growth in this city and across the US.

The major contract announcements this week also validated the advanced technology of the product line that created specific advantages for each client. The Tecogen systems provide operational flexibility, in addition to reliability and lower pollution emissions. All these factors contributed to the choice for each new client to upgrade to Tecogen products, instead of other options that were considered.

With these high value contracts in hand, the Company is lining up a strong start to its 2019 project sales and installation base. In addition, these important transactions highlight the advantages of the product line and improve the potential for additional sales in a rapidly growing overall market. Recommendation: BUY.

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