This is about a Charlotte company that beat the Chinese government and other global giants for a worldwide energy award. It’s about a firm whose technology makes it easier to buy American and keep dollars in this country. Its products lead to cleaner air, land and water.
The company is CoaLogix, Inc., across the Catawba River from Mount Holly. It makes coal more environmentally compatible for electricity generation while cutting the cost of burning it.
It does this through two subsidiaries, SCR-Tech LLC and MetalliFIX LLC. SCR-Tech regenerates catalyst that coal-fired electric plants must use to comply with environmental restrictions. MetalliFIX removes and fixates mercury—a toxin—from plant emissions and remediates the mercury, keeping it out of the food chain.
“At CoaLogix, we’re focused on coal-fired power plants,” says William McMahon, president and chief executive. “We are in the holistic application of technology. We focus on coal environmental impact reduction, on how to burn coal logically.”
“The basic premise is that coal is not going away,” McMahon adds. “If you look at the United States, 50 percent of our energy consumption is by coal.”
“Coal has to be a part of our future,” he continues. “Just to maintain our way of life, we’ve been growing at about 1.6 percent a year for gross national product. Our electricity use grows with GDP. That doesn’t sound like much, but it’s 8,000 megawatts a year. We think coal has to produce at least half of that going forward.”
CoaLogix helps coal-fired electric generating plants reduce their environmental footprint through technology. SCR-Tech reconditions catalysts (think filters). Over time, these catalysts get clogged with fly ash and other contaminants that render them ineffective at removing nitrous oxide from emissions. Nitrous oxide helps trigger formation of greenhouse gases.
Until SCR-Tech came along, electric companies sent clogged catalysts from their coal-fired plants to landfills. These catalysts typically are the size of a compact car and weigh about 3,000 pounds. McMahon shows a photo of spent catalyst from one typical-sized coal-fired plant. It fills a 25,000-square-foot CoaLogix warehouse and the units are stacked near the rafters of its high ceiling.
“In this catalyst are things like arsenic, vanadium, heavy metals,” McMahon explains. “Our process actually regenerates this catalyst and puts it back into service rather than going to a landfill.”
By restoring these catalysts to full performance, SCR-Tech can reduce a coal-fired plant’s landfill impact by 75 percent. Further, because it can regenerate a used catalyst for 60 percent of the cost of a new one, utilities save big money.
A new catalyst costs $6,000 to $7,000 per cubic meter, McMahon explains. A typical coal-fired electric generating unit will have $5 million to $6 million worth of catalyst.
“Our customers have about $1.2 billion of catalyst in their power plants,” he adds. “About one-third of that has to be replaced every year. There’s a replacement market of about $400 million per year, not counting the inspections, tuning and general SCR management we also perform.”
SCR-Tech also buys catalyst and regenerates it. In its west Charlotte warehouse, the firm has about 2,000 megawatts of catalyst, cleaned and ready to customize with the right mix of chemicals for an individual customer.
SCR-Tech performs so well that CoaLogix won the 2008 Platts Global Energy Award for Commercial Technology of the Year. Platts bestows a group of honors annually to recognize leadership and innovation and they are considered the Academy Awards of the energy industry. CoaLogix beat out hundreds of nominees and six finalists, including the China National Offshore Oil Corporation, Lennox Industries and Salt River Project.
Patriotic Element Is Big
But there’s a patriotic element even bigger than beating out a Chinese government entity, McMahon says. That’s because the vast majority of coal burned in the United States is domestic, while catalyst manufacturers are either overseas or owned by foreign parent companies.
“If you keep buying new catalyst, then landfilling it, you’re taking heavy metals and things that are produced in other countries and putting them in our landfills—and you’re sending profits outside the country,” McMahon says. “By regenerating with an American company, we’re not putting the catalyst in the landfill, we’re doing it for 60 percent of the cost of new and we’re hitting tighter environmental restrictions.”
More stringent environmental considerations play a major role in the growth of MetalliFIX, as well.
“The mercury removal market today, just with state regulations, is about $800 million to $1 billion,” McMahon says. “The federal government is looking at a flat 90 percent removal requirement. When that happens—and it’s a question of when and not if—it’s about a $3 billion-a-year market.”
McMahon calls MetalliFIX a “very simple system” that involves an injection into a plant’s flue gas desulphurization system. Recent tests of the MetalliFIX process by the Energy & Environmental Research Center, a nonprofit that does work for the U.S. Department of Energy, produced rave reviews.
“Their exact words were: ‘We’ve never seen anything like this,’” says McMahon.
Born in Manhattan and raised just north of New York City, McMahon earned a bachelor’s in nuclear engineering from Georgia Tech, an M.B.A. from Xavier University, and an advanced management degree from Duke University’s Fuqua School of Business.
Unique technology was a strong draw for McMahon when he took the reins of SCR-Tech in 2005. “The technology was just unbelievable,” he recalls. “I knew this was going to be a fun business.”
He and wife Barbara, a South Carolina native, moved to Charlotte from Boston after SCR-Tech’s German parent had sold it to Catalytica Energy Systems.
Phoenix-based Catalytica was looking for new management in Charlotte and McMahon, a nuclear engineer who has run multiple energy-related businesses, suspected Catalytica might not be committed to SCR-Tech for the long haul. The opportunity McMahon thought he sniffed materialized when Catalytica merged with another company and put SCR-Tech on the market.
McMahon found backers in Acorn Energy, Inc. of Montchanin, Del. (Nasdaq: ACFN), and EnerTech Capital, Inc. of Philadelphia, Pa. He engineered a sale in November 2007. McMahon says he and his management team own “a significant portion of the company in options.”
Immediately, McMahon and crew established CoaLogix as a holding company for SCR-Tech and soon after purchased worldwide exclusive rights to the technology that is the basis for MetalliFIX.
Management Team Sparks Growth
“The company has been growing very quickly,” McMahon says with understatement in his voice.
He praises his management team that includes Eric Dana, chief financial officer; Joe Cogdell, general counsel; Mike Mattes, executive vice president of operations; Frank Wenz, veteran vice president for plant; and Mike Cooper, vice president of process as well as research and development. Including McMahon, these leaders have logged a combined 160 years of experience.
The business backlog has swelled from $300,000 to almost $15 million. The work force has jumped from 20 employees to 50 and the company runs two 12-hour shifts, seven days a week. A project that had taken a month now is done in a week.
“A typical power plant is about 500 megawatts,” McMahon says. “Today, we have over 10,000 megawatts under contract, so that’s 20 plants. We probably have another 100 transactional-type customers.”
Utility clients include a roster of familiar names such as Dayton Power & Light and the Southern Company. For Charlotte-based Duke Energy, CoaLogix has performed projects at Belews Creek Steam Station and Gibson Station.
Along the way, CoaLogix has earned customer praise.
“The catalyst was regenerated with short notice, resulting in a fast turnaround situation,” says Frank Wszelaki, director of the Monroe Power Plant on the Detroit Edison System. “The hurdles CoaLogix was able to navigate were substantial, including long work hours, trucking issues and shop space.”
McMahon’s looking for new technologies to add to the CoaLogix playbook.
“We’re going to stay in reducing the environmental footprint of coal-fired boilers,” he says. “That’s not to say we won’t work with power plants that are powered by gas, as our technologies are applicable.”
He’s certain the company will expand. Right now, CoaLogix is on an 800-acre campus off Mount Holly Road, about one mile from a bridge across the Catawba River into Gaston County. With 125,000 square feet, the company is running some operations from mobile units. McMahon is looking to grow in the Charlotte area near term but, in five years, he foresees a number of international offices.
And CoaLogix might soon opt for an initial public stock offering, McMahon suggests.
Company Handles Two Big Hurdles
Helping utilities come to terms with using the services of SCR-Tech and MetalliFIX presents two big hurdles.
“Our utility customers, especially in this capital market, are faced with questions like how do I spend money, when do I spend money and how do I get the money to spend,” McMahon says.
He and his management team use computer programs to show customers and prospects how to proceed prudently.
There’s always the natural aversion to change, which the CoaLogix business represents big time. “Utilities are not great embracers of change,” McMahon smiles, but he adds that most power generation executives understand the role his services can play.
“This is my fourth start-up and, in every case prior to this, I had to convince people that the market was really there,” McMahon says. “In this case, I don’t have to convince anyone.”
As they scramble to mitigate emissions, “Our customers are having to place a chemical plant on the back of their mechanical plant,” he says. CoaLogix helps them operate with all systems working together, in what McMahon calls the holistic approach to optimizing emissions.
Although finding good people for CoaLogix is a challenge, developing them once they are in the fold is one of McMahon’s favorite pursuits.
“I’m 53,” he says. “What’s really great is bringing the younger people along—building the team here. That’s what I like. It’s what I’m good at.”
On the horizon, McMahon sees dramatic utility consolidation, fueled by ever-more-stringent environmental rules. CoaLogix will have fewer customers, but those it serves will be much bigger. And he thinks they’ll be more demanding.
Meanwhile, McMahon is pleasantly surprised by the positive reactions he finds in Charlotte when he explains the CoaLogix mission.
He tells people coal is a domestic resource and it’s 50 percent of the fuel the United States uses for energy production. Then he adds his patriotic pitch: “To maintain our lifestyle, we’ve got to produce more electricity and do it such that we’re not dependent on other countries. When people hear that, they’re very excited about what we do.”