Thermal Energy International Inc (TMG)

[BoomTime]

Energy is going up in smoke

http://www.thestar.com/Business/article/447421


Jun 23, 2008 04:30 AM
Tyler Hamilton

Tim Angus says he can't help but smirk every time the price of a barrel of oil shoots up a few dollars.

"It's funny to work at a company where people are rubbing their palms when they ask, `Hey, did you hear what oil is at today?' "

It's not that Angus likes paying more to fill up his car, or likes seeing the economy suffer under the grip of inflation, caused by the rapid rise in fossil fuel prices. It's that Angus, president and chief executive officer of Ottawa-based Thermal Energy International Inc., is in the business of helping companies use their fuel more efficiently.

Fact is, for every $1,000 in fuel that's purchased for an industrial boiler, the typical plant lets more than $200 go out exhaust stacks. With oil at $135 a barrel (U.S.), letting 20 per cent to 30 per cent of your energy simply escape into the atmosphere begins to hurt the bottom line.

"It's just crazy," says Angus. "It's amazing how content we've been to throw away energy."

Tom Casten, founder and chairman of Recycled Energy Development of Westmont, Ill. – and one of the most outspoken critics of industry's wasteful ways – told environmental news site Grist last year that we have to prioritize our investments if we're serious about battling climate change.

"Dollars will always be scarce," said Casten. "What we need to do is get the maximum bang for the buck. A dollar spent on recycling energy produces about 70 times as much CO{-2} reduction as a dollar on solar, and about 15 times as much reduction as a dollar spent on a wind turbine." So while it's all well and good that we deploy solar and wind, often the less sexy solution is cheapest and most effective.

Thermal Energy has a product called Flu-Ace, which can extract up to 80 per cent of the heat that goes out a flue gas stack. That recovered heat is then redirected back into industrial processes. This could include pre-heating water before it enters a boiler to create steam, or supplementing heat in an industrial dryer, such as those used to dry biomass and distilled grains in ethanol plants.

It's not, in principle, much different than "grey water" heat recovery systems used in households. They basically capture the heat from hot water that goes down the drain and use that heat to pre-heat cold water before it enters your hot-water tank. The end effect is that you use less natural gas or electricity to get hot water in your home.

So far, Thermal Energy is targeting specific industries, including pulp and paper, food and beverage, petrochemical and biofuels. Another option is to use the heat to produce electricity, using special "recovered energy generators" from companies such as Ormat Technologies of Reno, Nev.

Angus figures medium and heavy industry in Ontario spends roughly $3 billion a year on fossil fuels that are used in boilers, steam plants and drying facilities. Of that, he says anywhere from $750 million to a $1 billion is lost as unrecovered waste heat.

Needless to say – and pardon the pun – business is starting to heat up for Thermal Energy. More companies are realizing that heat recovery systems come with a short payback, reduce fuel costs over the long term, improve competitiveness as a result, and will let them take advantage of future carbon-trading markets.

"The industry has reached an inflexion point," says Angus. "I would estimate we've seen maybe a (tripling) in demand for proposals over the past year from the Canadian marketplace, particularly in Ontario." And it's not for feel-good environmental reasons, although such benefits are surely welcome. "They're basically doing it for survival. It's do it, or just close the doors."

So why isn't heat recovery already a standard industrial practice? Angus says six or seven years ago, when we had $30 oil, talk of $100 barrels – let alone $200 – was considered lunacy. Companies didn't see the payback. Sure, there was energy waste, but with fossil fuels so cheap, it didn't really pay to put capital into efficiency improvements. Same goes for electricity: subsidized electricity in Ontario made it affordable to be wasteful.

Fast forward to today. We've seen a four-fold increase in the price of oil, and a three-fold increase in natural gas prices. "What that's done is put these projects in a financial position where there is less risk, more rapid payback, combined with the fact that larger investment funds have opened the door."

In other words, investors have become so attracted to the opportunity that companies such as Thermal Energy are able to get financially creative with their customers. If a big pulp and paper operator, for example, is skittish about spending $5 million for a heat-recovery installation, then Thermal Energy can more easily say: No problem, we'll install and own it, and you pay us back under a long-term contract through a portion of your energy savings.

This is effectively how the company's Thermal AUD program works. Last August, Thermal Energy signed a six-year, $3.75 million agreement with Fraser Papers Inc. to install Flu-Ace at its pulp and paper mill in Thurso, Que. Fraser basically pays Thermal Energy out of its energy savings. A major North American pulp and paper company signed a similar deal worth more than $20 million earlier this month.

"We have an excellent business model with anything over $50 a barrel (oil prices)," says Angus, who says about half his revenue pipeline is now coming through the Thermal AUD program. "Waste heat recovery is by far the greatest renewable energy opportunity available right now."

So even though energy inflation is putting the squeeze on Ontario industries, there are ways to cope, and become better off in the long run, without breaking the budget.

Tyler Hamilton can be reached at

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