New Tecogen JV Offers Widest CHP Range Available in United States

After Tecogen (TGEN – $4.58) formed the joint venture Ultratek to test, verify and develop the Company’s near-zero emissions technology for vehicular applications early this year, it now has formed a 50/50 joint venture corporation with the Czech company Tedom, one of Europe’s largest combined heat and power (CHP) manufacturers.

The new company, called TTcogen LLC offers a complete package of 27 different CHP modules, making it the premier packaged CHP provider with the widest range available in the United States. TTcogen offers a full product portfolio ranging in size from 35 kW up to 4 MW.

This is an exceptionally important event for Tecogen, as the Company often gets inquiries from potential clients who end up not buying a CHP unit from Tecogen because its existing equipment is not an appropriate size for the customer’s facility. The building’s required load is either too big or too small for Tecogen’s equipment. Now, thanks to the much expanded offering, TTcogen is able to service those potential customers, quadrupling Tecogen’s addressable market for CHP.

Speaking about the joint venture, Tecogen Co-Chief Executive Officer Benjamin Locke added, “TTcogen really will be the thought leader in the North American CHP space. Backed by the oldest and most established names in the packaged cogeneration industry from both Tedom in Europe and Tecogen in the United States, the new company will be well positioned to deliver a full suite of clean power solutions, vastly expanding the potential market for our technology.”

TTcogen will initially operate out of Tecogen’s Waltham, MA headquarters. A few TEDOM experts will relocate from the Czech Republic to the United States. They will be supplemented by several TEDOM dedicated sales and engineering specialists. Further personnel is expected to be added as the business expands. The machines will be installed and serviced by Tecogen’s network of nine existing service centers across the United States.

Hugh Market Potential

In 2012, the White House issued an executive order committing to add 40 GW in new cogeneration capacity in the United States by 2020. This joint venture creates a strong product offering in the North American CHP space that provides a complete range of efficient and cost effective clean energy solutions to meet the demands of customers in almost every category.

Most notably, Tedom’s specialized line of cogeneration equipment has the power to operate on biofuel, a renewable energy source with a rapidly growing market. This is an important feature as the United States is expected to implement new regulations in the coming years which require that all food waste gets recycled.

New York City, for example, sends four million tons of waste to landfills every year. Almost a third of that is food waste. The city is now taking its first steps to segregate food waste to get it processed in a facility where it is turned into biofuel. Those facilities would be ideal for TTcogen equipment.

The biofuel CHP units could potentially also open up the market for agricultural installations that are starting to use their agricultural waste as a fuel source. Eventually, it may even open up the wastewater and landfill markets, similar to recent development seen in Europe.

Conclusion

Tecogen has formed a JV with one of the major European producers of CHP units. To date, TEDOM has produced more than 3,500 CHP units in a power range from 7 kilowatts up to 10 megawatts that are capable of running on natural gas, LPG, biogas, sewage gas, landfill gas, and coal mine gas. These diverse capabilities truly bring TTcogen to the cutting edge of the CHP market in the United States.

The joint venture will bring Tedom’s smaller Micro T35 35kW CHP unit to the U.S. market as well as Tedom’s line of larger Cento and Quanto units. This will greatly expand Tecogen’s market reach, which is currently limited to pipeline natural gas and propane and to installations in multiples of its 75 kW and 100 kW CHP modules.

After Tecogen launched its revolutionary InVerde e+ CHP unit late January of this year, it only took a couple of weeks before the first sales of the machine were booked. We’re convinced this JV too will soon start to bear fruit.

The joint venture partners will host a conference call to discuss the deal and the business plan on Tuesday, May 24, 2016 at 11:30 a.m. eastern time. More details are available in the press release.

Smallcaps.us Advice: Buy	Price Target: $9.41	Latest Company Report (pdf)
For important disclosures, please read our disclaimer.