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Msg  82990 of 83038  at  12/4/2018 11:06:15 PM  by

HAndyCap


Capstone on the cusp

It is my considered opinion that Capstone will prosper (finally) under carbon fee and dividend laws when they go into effect. I further believe that we are on the cusp of CF&D becoming a reality.

In the U.S. the bi-partisan Energy Innovation and Carbon Dividend Act was introduced in Congress on November 27. Of course, it won’t go anywhere, but it will be reintroduced in January in the new Congress. The House will easily approve (there are 45 Republicans in the Climate Solutions Caucus) and the Senate will be in play. Republicans there must decide if they will pander to Trump and the one-third that believes it a “hoax” or side with the two-thirds who believe it is real and must be addressed and soon. If still in office, Trump will veto. Then, a Congressional override will be on the table. Also on the table will likely by the Mueller report. Anything is possible but the momentum is with CF&D.

In Canada, their CF&D law will take effect in January. Tar sands are exempted but methane emissions are not. Each province/territory must write regulations to implement and a few are still fighting it. However, at some point they will have to agree or substitute something comparable. A shallow dive into the situation in Ontario province makes me think it is setting up nicely for Capstone. Eastern Canada is in Vergent’s territory. In January, it had a sale to a Toronto REIT through an ESCO (Whitby Hydro Services) owned by a small municipal utility company. One of over 70 such utilities in Ontario. In July, Vergent announced it had hired a former Whitby Services employee to handle sales and service there. Given the complexity of the energy systems in Ontario, a very smart move. In the announcement Vergent indicated they had “several dozen active projects in development” in Ontario (presumably mostly Toronto). This would amount to about four times the installed fleet there. I would suggest that the most likely catalyst for these projects moving to completion is the new CF&D law going into effect. I have been critical of Vergent in the past, but I give them high marks for cultivating this market and positioning themselves for a surge in business.

Andy


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