Which Company Is Pouncing On Wastewater (Heat) Recovery? Is This The Next Big Thing?

This third scenario is especially interesting. Steady, sustainable, long-lasting cash flow is highly valued in the market. Revenue from existing and planned installations can be tracked, analyzed & forecast. Further, unlike intermittent renewables, wastewater / sewage {heat} recovery is base-load energy savings, generated without fail, 24/7/365. Cash flow in the form of operational savings or royalty payments could be attractive to pension plans & insurance companies, Private Equity & Hedge Funds.

The List of Favorable Investment Attributes Continues… 

Other factors that I particularly like about IWS is the potential for sustainable long-term revenues, (20 years). As good as solar & wind projects are, there’s a risk that 10-15 years out, superior technology and lower cost solutions could disrupt cash flows that third-party investors are locking in today. I don’t see the same risk for the Company’s installed wastewater / sewage {heat} recovery systems, as they’re lower-cost specialized undertakings, with high switching costs. 

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In addition, wastewater / sewage {heat} recovery systems face less regulatory, compliance, permitting & environmental scrutiny. Therefore, in many cases, they can be designed, constructed & activated in months, not years. Less upfront capital from customers is also a selling point. Perhaps what really resonates most for me is that it’s not a question of wind or solar or wastewater / sewage {heat} recovery, IWS compliments other renewable paradigms, it does not compete with them. 

But wait, there’s more…. these systems work anywhere on the planet, they do not require pesky conditions like wind or sun. Think of hydro-electric energy; green, base-load, efficient… but only available where one can build a dam! 

For these reasons, I believe that IWS is poised to capture a lot of business. Valuations of well-established companies with steady cash flows can be high. For example, gold/silver streaming & royalty companies Franco-Nevada & Silver Wheaton trade at 12 & 20 times annual revenue. Admittedly, IWS is years from potentially becoming that well-established, but clear evidence of the wide-scale adoption of wastewater / sewage {heat} recovery would ensure that an important, or even leadership role would be played by International Wastewater SystemsCanadian Ticker: IWS.

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Disclosure: Peter Epstein, CFA, MBA, has no prior or existing relationship with International Wastewater Systems or any of its employees, ...

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