Power generation is a dirty business no matter what you do. Oh, sure, solar and wind power are clean, but we're a long away from a point where they'll represent a substantial part of our day-to-day power needs. And given the sometimes-outsized paranoia about nuclear power, most of our energy comes, and will continue to come, from coal-burning plants.

While coal is cheap and plentiful, it can be dirty. Burning coal throws nasty things like sulfur dioxide, various nitrogen oxides (NOX), and carbon dioxide into the air. It also produces byproducts that can foul up the inner workings of the boilers. Consequently, companies like Eastman Chemical (NYSE:EMN), Engelhard (NYSE:EC), Siemens (NYSE:SI), and Foster Wheeler (NASDAQ:FWLT) make a fair bit of coin on systems, chemicals, and retrofits designed to reduce the creation and output of these nasty pollutants.

Now, a scrappy little small cap by the name of Fuel Tech (NASDAQ:FTEK) wants a piece of that action, too.

Fuel Tech has two primary product lines right now, one devoted to improving boiler efficiency by reducing slag formation and the other targeted at reducing NOX emissions. Both are showing solid growth. Overall sales more than doubled in the fourth quarter, with sales of air pollution-fighting products rising 138% and the fuel chemical business growing 79%. Unlike many gee-whiz energy tech ideas, Fuel Tech is actually profitable and cash flow-positive.

In some respects, this almost sounds too good to be true -- a little company with good technology in the right place at the right time. And the stock has been smoking hot, doubling in the past year.

Quite honestly, though, this is the kind of stock that scares me. It looks great, and it also looks like the kind of stock that might leave you kicking yourself in a couple of years. It seems a little expensive, too, but we all know that small-cap growth stocks can continue to climb considerably higher even after they've reached the "expensive" point. I definitely regret not buying this back in the $4 range when I first started researching it, but I bear the scars of many similar stories that didn't work out quite so well.

So, my fellow Fools, do some very careful due diligence here, and make sure you can accept the potential volatility that comes with this sort of investment. One way or another, it will likely be a wild ride.

For more Foolish thoughts on energy:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).