Tecogen Partners With Gas Company – First of Potentially Many Similar Deals

Tecogen (TGEN – $5.87) has partnered with a gas company in the United States, which has obtained the exclusive right to market and sell Tecogen’s gas engine-driven heating and cooling systems in its area of operation. This is a big plus for Tecogen, as gas companies are already recognized and trusted suppliers.

In return, the gas company will receive a commission on each machine sale that it makes. In addition, by installing these long-life Tecogen units at their customers’ site, they’re able to ensure a steady off-take for their gas.

This is the first agreement for Tecogen with a gas company. And it’s the intention to close many similar deals in the future. What’s particularly interesting is that in the territory where the gas company is active, Tecogen had only sold a handful of systems so far. Suggesting the Company is clearly expanding its geographic footprint.

As Mr. Locke, Tecogen’s co-CEO, explained in a recent interview with Smallcaps Investment Research, one of management’s key focus points in the following quarters is to achieve more growth in new geographies. This for sure is a great start to reach that goal.

Focus on Chillers and Heat Pumps

Initially, the gas company will focus on selling Ilios water heaters and TECOCHILL chillers. Selling Combined Heat and Power (CHP) systems will be added at a later stage.

The reason for taking this approach is that it’s easier to find local skilled technicians that can service water heaters and chillers, while servicing a CHP unit really requires a trained technician. Consequently, only when there’s a critical mass of installed water heaters and chillers in a certain area, is a dedicated Tecogen service rep is added to the region. At that moment, it makes sense for CHPs to be sold in that territory.

The gas company will initially target industrial and commercial customers because they’re larger users and the Tecogen equipment is more appropriate for them.

Speaking about the partnership, Mr. Locke commented, “We have been vocal about our growth initiatives and this partnership is the first of what we hope will be many similarly structured gas company selling agreements for other territories. Gas companies are natural partners for Tecogen as our equipment offers significant value to gas company customers while ensuring a steady demand of gas for the gas partner.”

TECOCHILL natural gas engine-driven chillers provide building owners with a reliable, proven, efficient, and cost-effective alternative to conventional electric motor-powered chillers. It’s the only natural-gas engine driven chiller on the North American market.

A TECOCHILL’s benefits are significant. It cuts a building’s cooling costs in half, by eliminating most of the electrical demand (kW) associated with providing cooling. In addition, it offers optional “waste” heat that is always available at the same time. This high-quality heat source (up to 230°F hot water) literally comes for free, whenever the chiller is running.

The Ilios high-efficiency water heater, uses a heat pump, which captures warmth from outdoor air even if it is moderately cool outside. It operates like an electric heat pump but uses a natural gas engine instead of an electric motor to power the system. The gas engine’s waste heat is recovered and used in the process, unlike its electric counterpart, which runs on power that has already lost its waste heat.

The net effect is that the efficiency of an Ilios’ heat pump far surpasses that of conventional boilers for water heating. This translates directly to lower fuel consumption and, for heavy use customers, significantly lower operating costs. Gas engine heat pumps can deliver efficiencies in excess of 200%.


The cooperation between Tecogen and the gas company is really a perfect fit and potentially the start of a fruitful cooperation. So far, the Company has realized very limited sales in the gas company’s region. So it can only improve with the help of an already trusted partner.

The gas company benefits as it receives a commission on the sale of each machine. In addition, every time a customer switches from, for example, an electric chiller to a gas chiller, the gas demand increases.

This is Tecogen’s first agreement with a gas company, and it’s the intention to close many more similar deals in the future.

Since our initial recommendation, less than four months ago, Tecogen’s stock price has risen by 60%. Although that’s a very nice result, we feel that Tecogen is only scratching the surface of its potential growth.

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