Cogenerating profits:
Startup seeks capital to help plants go green

By Paul Merrion
March 5, 2007

Westmont entrepreneur Thomas Casten has a simple mission: Make a profit while reducing greenhouse emissions.

Mr. Casten aims to raise $500 million from private investors through his startup, Recycled Energy Development LLC, which will install equipment in industrial plants that uses a plant's own waste heat to generate electricity and steam as well as to provide heating and cooling.

Mr. Casten's firm will split the plant's savings — estimated to be as much as 30% of energy costs — with its owner. Soaring electricity prices in Illinois this year and rising energy prices overall can only add to the savings, he says.

"Our focus is on the U.S., but we will tend to go where electricity prices are a shock," says Mr. Casten, who expects his seven-employee firm to create almost 200 jobs within two years.

For Mr. Casten to succeed, Illinois officials first need to establish ground rules for small and medium-sized generators to connect with the electrical grid. Utilities now allow such installations on a case-by-case basis, which critics say creates costs and delays that often stymie recycled-power projects. The Illinois Commerce Commission is studying new rules under a federal law that requires states to expedite the process.

The technology Mr. Casten will use isn't new. Dozens of factories, office buildings and institutions across Illinois have some kind of "cogeneration" facility, typically creating electricity and steam from a single generator or a source of waste heat.

What's unique is Mr. Casten's plan to raise a large pool of capital to invest in smaller factories. "The vast bulk of opportunities" are in the range of $3 million to $30 million, he says.

Mr. Casten is the former CEO of Americas Power Partners Inc. of Hinsdale; before that, he was CEO of New York-based Trigen Energy Corp., a public company that was sold to France's Suez in 2000. Past customers include McCormick Place and steelmakers in the Gary, Ind., area.

After more than 30 years of running publicly held and private firms in this field, the 64-year-old Mr. Casten says he is confident that "investors are willing to trust me." He's tapping potential investors among pension funds, insurance companies and wealthy individuals.

"Tom is certainly extremely competent, and he's made money for investors in all of his prior lives," says Michael Fisch, president of New York-based American Securities Capital Partners LLC. The private-equity firm backed Primary Energy Inc., Mr. Casten's last firm, which was sold last year to Toronto-based Epcor Power L.P. for $380 million.

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©2007 by Crain Communications Inc.

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