By KRYSTLE CHOW
Published in the Ottawa Business Journal newspaper and website.
Sept. 3, 2007 (Sept. 5 on OttawaBusinessJournal.com)

Click here to view this article on OttawaBusinessJournal.com.

‘Thermal Energy CEO
Tim Angus.
Photo by DARREN BROWN for the Ottawa Business Journal

Thermal Energy’s green power machines heating up interest in the industrial sector

It’s no secret that many companies are looking for that magical machine which will help them save money and reduce greenhouse gas emissions, especially in this age of rising energy costs and environmental concerns.

Nonetheless, most firms are reluctant to make big investments on new technology for fear that their spending will be for naught when the machines don’t perform to their expectations.

This is where local custom energy and emissions reductions solutions maker Thermal Energy International Inc. comes in: the company markets air pollution control technology and several innovative machines which recycle wasted energy and resources to give clients access to relatively clean power at a fraction of the cost of using other energy sources.

On top of that, the company recently launched an attractive alternative to buying its machines outright, a creative financing program which is piquing the interest of some major industrial players in its main markets of North America and China.

The company’s Alternate Utility Delivery (AUD) program allows clients to buy only the energy produced by Thermal’s machines, which are owned, operated and maintained by its subsidiary ForEverGreen. The customer gets to try the technology risk-free before it decides whether it wants to buy the machine, without having to make a large up-front investment, in exchange for the use of its waste materials which it would normally produce anyway.

The upside for Thermal is that it gets to fine-tune its own machines to guarantee maximum output for its client, helping to more easily secure a positive testimonial for its technology which it can then take to other customers.

“Our customers are always afraid of the unknown and they’re not as familiar with our machines, and who’s better suited to operate and manage them than us?” says Thermal’s chief executive Tim Angus. “That was one of the reasons for developing our THERMAL-AUD program – we throw our faith behind the machine so they don’t have to … and we’re extremely confident in the performance of our equipment.”

The program’s already attracted its first contract, a six-year deal with Fraser Papers Inc.’s pulp mill in Thurso, Que. Fraser Papers will try out Thermal’s FLU-ACE system, which converts waste heat from the facility’s boilers into usable energy and helps reduce the mill’s total fossil fuel use by up to 10 per cent. This could lead to approximately $500,000-worth of energy savings annually, Thermal says.

There could also be an opportunity for a client such as Fraser Papers to combine FLU-ACE with Thermal’s DRY-REX system, Mr. Angus adds. DRY-REX uses the low-temperature waste heat energy produced by FLU-ACE to dry the bark and pulp sludge which is usually just thrown out in the paper-making process. The dried product becomes excellent biomass fuel, which is normally too wet to be of good quality.

Add the opportunities for these two products to those of Thermal’s greenhouse gas-reducing THERMALONOx product and the GEM steam trap technology it markets for its U.K.-based partner Gardner Energy Management, and things could get very busy for the company in the near future.

“The market is very accepting as there’s not very much competition for these kinds of products,” says industrial investment analyst Youssef Abboud of Clarus Securities. “Montreal’s Sofame Technologies Inc. has a similar product (to Thermal’s FLU-ACE), but industry experts I’ve talked to have said that Thermal’s product is superior, and the leasing program is very creative.”

He notes that the average contract for Thermal is worth between $2 million and $5 million.

Mr. Abboud says he can’t provide exact figures on market opportunities for the company’s technologies, but he estimates that the North American market could be worth more than hundreds of millions of dollars, while the Chinese market “should be huge.”

The fact that energy efficiency technology is the cheapest way to power industrial processes makes Thermal’s products even more interesting, especially with the rising costs of other sources of energy, says Roger Peters of the Pembina Institute.

“Over the last 20 years, there’s been about a two-per-cent improvement in energy efficiencies, or energy used per unit of production, and heat recovery technologies are part of that energy efficiency category,” he says. “The predictions are that it could be increased to four per cent per year with increased government initiatives.”

Meanwhile, Thermal’s THERMALONOx technology is poised to take over an even larger market, since its system for removing nitrogen oxides (a greenhouse gas) can be used to clean up the 300 coal-fired plants planned for Chinese industry over the next five years. Mr. Angus estimates this market to be “in excess of $50 billion,” since China is adding new coal-powered factories at the rate of one per week.

He says THERMALONOx, which uses a chemical-based process to produce ozone to clean up nitrogen oxides, is 98 per cent effective and is much more environmentally friendly than its more well-known alternative.

The competing technology is selective catalytic reduction, which is the most commonplace solution in the world but only removes an average of about 60 per cent to 70 per cent of nitrogen oxides.

“That technology is problematic at best; it’s very expensive to install and maintain, and at some point in its life cycle, it’s an environmental hazard for disposal, since the catalyst used in the process becomes spent and needs to be changed,” Mr. Angus explains. “There is a recognition in the scientific community that using ozone is one of the most promising areas for nitrogen oxides removal, although it’s not an area with a lot of research and development.”

Between the opportunities for its air pollution control and energy efficiencies technologies, Thermal’s expecting a lot of good business for the next few decades, at least.

“There’s over 200 years of coal in the ground in North America, and it’s the most abundant fossil fuel energy source in the world and the cheapest, but people recognize coal is bad fuel, environmentally speaking. People need to find a clean way to use this abundant source,” he says.