Tuesday, March 10, 2015

Wringing Energy from Water

Yet another developer is targeting waste water as an energy source.  For the past three years start-up Waste2Watergy based in Oregon has been working on a novel fuel cell reactor.  What is unique in the design is the anode.  Most of the fuel cell developers are working on finding just the right mix of exotic  -  and expensive  -  metals to get the most efficient transfer of electrons to the cathode.  The scientists are Waste2Watergy have gone organic, firing up electrochemically charged microbes on the anode to oxidize organic matter into carbon dioxide, electrons and protons. 

To put the fuel cell into commercial production Waste2Watergy just needs a source of water teaming with organic matter.  What better source that the waste water discharges from municipalities.  In the United States alone there are over 15,000 wastewater treatment facilities, most of which are owned by municipalities.  These plants process billions of gallons of dirty water each year. 

Importantly for developers like Waste2Watergy, local leaders are probably well disposed to work cooperatively on new designs  -  no matter how far-fetched they might seem.  The country’s wastewater and storm sewer systems are woefully in need of improvements.  The American Society of Civil Engineers (ASCE) estimated in a 2013 report that as much as $298 billion in capital improvements would be needed over the next twenty years to repair and expand these water systems.  Treatment represents approximately 20% of this budget. 

An opportunity to ‘monetize’ waste water by working with an energy developer may seem to some hard pressed local officials as a silver bullet to put to rest a looming crisis their waste water system.  Most likely the benefits of using waste water for energy development would come in the form of reduced cash outlays for electricity as municipalities become more self-sufficient.  This has already been observed in the systems for converting biogas to electricity.

The ASCE gave the U.S. waste water treatment sector a grade of D+.  Tax payers should find that disconcerting.  Perhaps the best thing for investors to hedge against the higher taxes we expect to deal with the water treatment system conundrum, is to invest in energy development involving waste water.  For now we are giving Waste2Watergy a passing grade as a company to watch for future development.  The company has been using grants from private and public sources, including the National Science Foundation and the state of Oregon.  The next logical step would be a round led by private equity or venture capital players.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.  Waste2Watergy is included in the Fuel Cell Group of the Mothers of Invention Index of companies developing new fuel cell technologies.


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