Major Agreement for Tecogen at New Ice Skating Complex
Tecogen Inc (US: TGEN – $2.95 & GER: 2T1 – €2.54) announced the sale of no less than five 200-ton Tecochill units to a brand new, state-of-the-art large ice skating complex in the eastern US. The Tecochill units will handle both ice making and building air conditioning, with heat utilized for dehumidification, space-heating, ice melt/resurface, and subsoil heating.
The cooling and “waste heat” process of the Tecochill is a natural fit for an ice rink and as a result it is projected to reduce the facility’s electrical load by almost three quarters of a megawatt. This isn’t the first project of its kind undertaken by Tecogen. For example, in 2017, we highlighted the sale of a Tecochill system to a skating rink in Massachusetts.
Stephen Lafaille, Director of Business Development at Tecogen, described exactly why the Tecochill is such a valuable system for ice rink operators, “The energy savings of gas cooling over electric chillers is the primary economic driver for most rink operators, but ice rinks also typically require heating systems for ice maintenance and climate control. The Tecochill system provides free heat to be utilized for these requirements, resulting in increased savings for rink owners.”
Every year skating rinks become more popular, and increasingly they are being set up as a crowd-puller for all kinds of events. An ideal situation for Tecogen.
Tecogen Proves That A Variety Of Building Owners Will Want Company Products
Tecogen is showing yet again that its products can touch a diverse range of industries within the building management space. Skating rinks are added to a long list of facilities including apartments, nursing homes, cannabis cultivation facilities and data centers that have become Tecogen clients just within the past several months in 2019. Not only can the Company sell to building owners in a variety of industries, it does so with a defined product that doesn’t need to drastically change in order to meet the needs of the many industries it serves. The Tecochill is a naturally versatile and self-sustaining system that provides efficient cooling and heating solutions that are often eligible for green energy rebates or tax credits and utility incentives for reducing pressures on the grid.
Benjamin Locke, Tecogen CEO, stated, “Our CHP systems are sold almost entirely on the economic benefits of onsite energy generation. However, the GHG benefits of Tecochill also allow owners to benefit from substantial utility incentives and federal tax credits. As electric rates continue to rise, the savings and GHG benefits of our Tecochill and Tecofrost products become increasingly compelling.”
The increasing population density and continued urbanization of the northeastern United States is a gold mine for Tecogen. Building owners will have tremendous incentive to reduce operating costs through a cleaner power footprint by any means necessary. Governments and utilities will want to reduce the strain on the power grid. The demographic factors that make the Company’s Tecochill and microgrid systems must-have products will only get more favorable. An aging population needs reliable and secure power to their nursing home or medical facility. Data centers will need to be built and kept cool. Cannabis cultivators will continue to grow a newly legal product. And families will want to have well-run sports facilities within their vicinity.
Tecogen Investors Can Look Forward To 2020
Tecogen management has laid the groundwork for a very successful 2020. Backlog is at record highs and every few weeks the Company announces a new contract that is set to deploy in late 2019 or 2020. These contracts often come with multi-year maintenance agreements and the skating rink deal is no exception. Tecogen has done everything it can to prove that it is a worthy investment but in these volatile times, many small cap stocks of its size are struggling.
There are two silver linings for investors though. First, this drop that has occurred since the start of summer has been on very low volume. Few people are running to the exits because they don’t like the investment opportunity in TGEN. We believe it is more likely a result of certain small investors looking for liquidity wherever they can find it. Second, the drop represents a tremendous buying opportunity for anyone with the patience to hold on to the stock long enough to see how it performs over the next six quarters between now and the end of 2020. We remain confident that TGEN will recover in price and have maintained our target price despite the drop based on improving fundamentals made possible by all of the deals being signed recently. This presents a higher upside for anyone willing and able to buy and hold TGEN at these low prices. Smallcaps Recommendation: BUY.
| Smallcaps.us Advice: Buy | Price Target: $9.41 | Latest Company Report (pdf) |
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