Primary Energy Recycling Corporation (TSE:PRI) uses waste heat from industrial processes to generate electricity, providing a way for industries to reduce their energy costs while complying with federal targets for energy efficiency, says John McIlveen, Senior Vice President for Research at Jacob Securities Inc.
“Primary Energy uses waste heat to make power. They’re essentially almost like a back-end power unit that’s taking all the heat from a steel plant for example and then turning that heat into electricity the same way a coal plant would, by burning the coal to make heat and that spins the turbine. Waste heat is found in industries like food, cement, steel or anything that creates a lot of heat — you can put these waste-to-power turbines in there,” McIlveen said.
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McIlveen says Primary Energy is sitting on enough cash plus borrowing ability to be able to expand without going to the equity market, which is one the qualities he likes about this Canadian high-yield stock. He adds that the cost-saving and compliance benefits are a positive for the company.
“There are actually federal targets to utilize waste heat because there’s so much of it. After all, the biggest line item cost for a steel plant here would be power. So that will be their biggest expense. If they can take their waste heat and utilize that power at less cost than what the grid will supply to them, then they are quite happy with that,” McIlveen said.