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The Babcock & Wilcox Company – through its affiliate Babcock & Wilcox Power Generation Group Inc. – entered into an agreement with FutureGen Industrial Alliance to begin work on the U.S. Department of Energy’s FutureGen 2.0 carbon capture and storage (CCS) project. The agreement is for initial engineering and preparation for full front-end engineering and design work of the CCS project.

The whole project is valued at $1.65 billion and the estimated value of the engineering and design work is $130 million.

Per the deal, B&W will design the near-zero emissions plant’s oxy-coal combustion system, air quality control systems, boiler, steel and other control systems.

The deal authorizes B&W and FutureGen Industrial Alliance to start Phase II-A of the project for the 167 megawatt power plant in Meredosia, Ill.

The primary aim of the FutureGen 2.0 project is to improve an existing power plant located in Meredosia with B&W’s oxy-coal combustion process. This will separate and capture more than 90% of the carbon dioxide (CO2) generated during the combustion process.

Headquartered in Charlotte, N.C, Babcock & Wilcox is engaged in providing clean energy technology and services for the nuclear, fossil and renewable power markets worldwide. The company – which was spun off as a separate, independent and publicly traded entity from energy-focused engineering and construction firm McDermott International (MDR - Free Report) in Aug 2010 – operates in four business units: Power Generation, Nuclear Operations, Technical Services and Nuclear Energy.

B&W currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next 1 to 3 months.

In addition to B&W, there are other engineering firms in the energy sector like Altra Holdings Inc. (AIMC - Free Report) and EnPro Industries Inc. (NPO - Free Report) that offer value and are worth considering. Both these stocks sport a Zacks Rank #1 (Strong Buy).

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