Investors looking for an interesting investing theme may want to consider companies that are working to reduce mercury emissions over the coming years. Because of new compliance, companies that are capable of providing these services will see substantial revenue growth as the large energy companies are forced to adhere. In particular, one company that stands out as a potential winner is Midwest Energy Emissions Corp. (MEEC.PK)
Midwest Energy Emissions Corp. delivers cost-effective mercury capture technologies to power plants and other large industrial coal-burning units in the United States and Canada. The company has developed a best-in-class, patented technology for the coal-fired electric utility industry to achieve and maintain compliance with highly restrictive new Environmental Protection Agency requirements on mercury smokestack emissions.
The company’s technology is known as SEA technology. It is a proprietary blend technology developed from the University of North Dakota’s Energy and Environmental Research Center. The technology has set a new standard, since it allows for greater than 90 percent mercury removal, which surpasses current regulations. It’s also extremely cost beneficial, as it typically costs 40 percent less than other mercury removal solutions. The other solutions include:
- Scrubber and SCR combo: Can cost upwards of $500 million. These systems can also have mixed results at higher mercury removal levels.
- Powdered activated carbon/brominated activated carbon: Most common technology currently being used. However, it is less effective at high reduction levels, becoming very cost intensive at 80 to 90 percent mercury removal levels.
Investors might be wondering why now is the time to invest. The answer is because in April 2015, the final piece of the Clean Air Act of 1990 — MATS (Mercury and Air Toxic Standard) — will become effective. The MATS rule requires all U.S.-based coal- and oil-fired electric power plants generating 25MW and higher to reduce mercury emissions by approximately 90 percent. The EPA estimates that mercury emissions reductions may constitute a $9.6 billion market.
Friday’s announcement that Midwest Energy Emissions has received firm commitments from a major U.S. power producer only scratches the surface of what could come in an industry that is so difficult to break into. The commitments are for a fleet of nine generating units. The company anticipates generating at least $30 million annually by 2016. This revenue stream is likely only the beginning. As companies begin to appreciate the removal effectiveness and the cost efficiency of MEEC’s SEA technology, there could be a lot more announcements like the one announced on Friday, which would generate significant revenue for the company.
Shares surged by more than 66 percent during Thursday’s trading session on heavier-than-average volume. Based on Thursday’s closing price of $2, Midwest Energy Emissions Corp. is valued at approximately $70 million. Based on Friday’s news, the company should be valued at a price to sales ratio of at least 3, which would mean a $90 million market capitalization and a $2.55 price target. That would be a 27.5 percent return based on Thursday’s closing price. Once the marketplace is fully aware of the announcement, shares should continue climbing.