FuelCell Energy nearing commercialization

Betting on commercialization of its fuel cell power plants next year, FuelCell Energy Inc. broke ground Wednesday on a new manufacturing facility in Torrington, Conn. The company expects to begin taking commercial orders in 2001-2002.

Ann de Rouffignac
OGJ Online

Betting on commercialization of its fuel cell power plants next year, FuelCell Energy Inc. broke ground Wednesday on a new manufacturing facility in Torrington, Conn.

The company had been producing fuel cells used as stationary generating plants on a limited basis for field tests only. But the tests have been so successful the company decided to take the next big step towards commercialization. The new manufacturing facility will cover 65,000 sq ft. It includes about $16 million in new equipment and construction costs.

FuelCell is one of the few fuel cell companies that is close to commercialization. The manufacturing facility will have production capacity totaling 50 Mw/year starting in 2001 and increasing to 400 Mw by 2004.

�We anticipate taking commercial orders at the end of 2001 or beginning of 2002,� says William Baker, spokesperson for Danbury, Conn.-based FuelCell. �It�s getting less far out.�

Fuel cells directly take natural gas or methanol, convert that energy source into hydrogen, which is in turn used by the fuel cell to produce electricity. The units are small enough in scale to produce electricity for one business, a house, or a car.

In the case of cars and residential homes, the technology has not gone much further than a few field tests and prototypes. Fuel cells are still the stuff of science fiction.

But recent technological advances have moved the larger stationary type fuel cells closer to commercial reality.

FuelCell Energy "has the best shot at getting through to commercialization of the product,� says Paul Freemont, analyst with Jefferies & Co., New York. �Their market is commercial businesses and small industrials that are the most receptive to the fuel cell technology of 250 kw and higher.�

Since larger businesses view investments in self-generation over a longer term, they can tolerate the higher up-front capital costs. They also have more at stake than an individual residence, if the electricity grid goes down and power is lost, Freemont says.

Hot issue
Reliability has become a very hot issue given the huge demand for electricity, the still limited supply response, and problems with transmission. Electric reliability is sought after by more manufacturing industries than just high tech.

�There is a much wider market now for fuel cells,� says Brooke Glenn, research associate at Jefferies. �Basic manufacturing is computerized, just the same as high tech.�

When almost any manufacturing company loses power, not only is production lost but the outage can actually damage the line, she says.

Besides reliability, FuelCell Energy�s product can also supply steam to run the heating systems of these businesses. This increases the efficiency of the company�s version of fuel cells tremendously, says Glenn.

Technologically, the company is pursuing carbonate technology rather than the proton exchange membrane (PEM) fuel cells.

The PEM fuel cells have an external unit that �reforms� the fuel into hydrogen. The hydrogen then feeds the fuel cell that makes the electricity.

FuelCell�s technology bypasses the reform stage, making it a simpler process.

�It�s like a black box. Natural gas goes in and electricity goes out,� says Baker.

While fuel cells are extremely efficient in the amount of energy produced per unit of gas consumed, the capital costs of fuel cells are still very high.

They cost about $5,000-$6,000/kw today. The goal is to bring costs down to $1,500-$2,000/kw, says Baker. But today with the high natural gas prices, the technology appears more cost effective.

�The more expensive gas gets, the better we look,� he says.

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