Whitefish, MT / ACCESSWIRE / December 22, 2014 / Energy independence has always been a policy concern for much of Europe. With oil and gas production that is both insufficient and trending downward, the European Union imported more than half of its gross inland energy consumption in 2012, according to the European Commission. A third of those imports came from Russia, which has had a historically tenuous relationship with the region.
Since the 1980s, the European Union's reliance on foreign energy imports has increased from less than 40% to 53.4% in 2012. The highest dependency rates in 2012 were recorded for crude oil (88.2%) and natural gas (65.8%), which are two critical elements for maintaining economic growth. As a result, there has been a push by regulators to pursue energy independence.
Combined Heat & Power
Combined Heat and Power (CHP) systems have grown in popularity across Europe and the United Kingdom. By simultaneously generating electricity and useful heat, CHP systems have the capability of reaching an efficiency of greater than 90% while reducing carbon emissions by up to 30% and saving end users about 20% on energy bills – since more energy can be generated with less fuel usage.
In the 2004, the European Commission established a CHP Directive designed to promote high-efficiency cogeneration given the potential benefits with regard to saving primary energy, avoiding network losses, and reducing emissions. The Directive supports the installation of CHP where there is significant demand for heat by establishing a single methodology and a guarantee of origin for electricity.
CHP systems use fossil fuels to power an engine that generates electricity, while the waste heat from the engine is captured and reused for other applications, including water heating, space heating, or even cooling systems. The most significant cost savings come from organizations that require hot water heating, such as hotels, healthcare facilities, leisure centres, and similar end markets, since CHP systems can supply nearly all of their hot water needs and simultaneously cover a considerable portion of the facility's electrical demand.
While CHP systems have been used in pulp and paper mills for years – since the heat recovered is used to process steam or drying duties, the technology has yet to reach critical mass across all industries. The United Kingdom reported over 2,000 installations in 2013, according to UK government report, which represents significant growth over last year, but still leaves room for future growth.
EuroSite's Growing Footprint
EuroSite Power Inc. (OTC: EUSP) provides Combined Heat and Power (CHP) systems that are helping the region become more energy independent. With a growing number of CHP systems operational around the world, the company generates steady recurring revenue for shareholders through its long-term customer contracts that have built-in profit margins based on the price of energy.
Customers benefit from an On-Site Utility that involves no upfront costs, no ongoing maintenance costs, and a guaranteed discount on their energy bills. With these enormous benefits in place, the company has a compelling value proposition that should help grow its presence in the market over time.
Last quarter, the company reported revenue that increased 108.5% to $350,561 year over year, driven by an increase in operational CHP systems. Management has also been building a steady pipeline of new projects set to become operational over the coming quarters, with a backlog of 13 systems totaling $38.6 million in value, according to comments in its third quarter earnings press release.
The company's upcoming projects include an agreement with FJB Hotels for 100kW systems at two locations, while its existing operations include Crow Wood Leisure's 200kW CHP system that became operational in 2014. For these customers, the company generated about 3.4 million kWh during the third quarter of 2014, which should increase as more client sites become operational over time.
CHP systems offer a compelling alternative to solar or wind energy given that it uses existing fossil fuels but makes them more efficient. Investors in traditional alternative energy companies, such as First Solar Inc. (NASDAQ: FSLR) or Broadwind Energy Inc. (NASDAQ: BWEN), may want to take a closer look at EuroSite Power given its operating environment and unique approach to the market.
With its modest market capitalization of under $35 million, the company has significant room to grow as it signs new long-term contracts with its customers to provide energy. Meanwhile, the region's desire to increase energy independence should help propel the entire industry forward and provide a key long-term catalyst for the stock over the coming years.
To learn more about On-Site Utilities and sign up for EuroSite Power email updates click here: http://www.tdmfinancial.com/emailassets/eusp/eusp_landing.php
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SOURCE: Emerging Growth LLC