January-February 2006

Recent News Supports Adoption of Distributed Fuel Cells

The passage of a comprehensive energy bill by Congress—and President Bush’s signing of the bill into a law—has stirred much discussion and debate over how the bill will actually affect US dependence on foreign sources of energy.

One thing that is certain, thanks to a number of tax incentives included in the energy bill passed by Congress and signed into law by President Bush, there is the potential to significantly increase the usage of distributed energy technologies, including fuel cells. Effective January 1, 2006, through December 31, 2007, the energy bill provides to business property owners a $1,000-per-kilowatt or 30% tax credit on the purchase and installation of a fuel cell with a minimum capacity of 0.5 kW. The bill also removes restrictions on the ability of telecommunications firms to take advantage of such tax incentives.

Hot on the heels of the Energy Bill passage, Citigroup Research has issued the report “Switch Signals: Fuel Cells in Distributed Telecom Backup,” for which researchers interviewed more than 50 telecommunications contacts. The results of the interviews show that the telecom industry identifies reliability as one of the main benefits of fuel cells, despite an inaccurate perception that fuel cells are more expensive than standard lead-acid battery backup power systems.

Technology Benefits Verified in Real-World Applications
In stationary and backup power applications, fuel cells have already racked up more than 1 billion hours of combined experience. In addition to being demonstrated in telecommunications power applications, the technology has been demonstrated in other niche early-adopter applications such as mail processing facilities, landfill and wastewater treatment plants, hospitals, and credit card processing centers. With more than 10 years of real-world installation experience, stationary and backup fuel cells have proven their benefits in the areas of efficiency, emissions reduction, reliability, and life-cycle costs, for many early-adopter applications.

Life-Cycle Costs
Based on Citigroup’s survey, the replacement costs of batteries at telecom sites run from $3,600 to $8,000, depending on the amount of power required and the length of the battery warranty. Battery replacement cycles can range from three to five years, depending on temperature fluctuations, considering that the useful life of a battery is based on an ambient temperature from 75°F to 78°F. The findings show that with energy tax credits, “fuel cells are 32% and 35% less expensive than battery backup power solutions based on a 10- and 15-year useful life and a five-year battery replacement cycle.” The report notes that even without the tax credits, fuel cell life-cycle costs are 12% and 18% less expensive on the same bases.

In the case of New York City’s Central Park Police Precinct, installation of a fuel cell was less expensive and less disruptive than it would have been to install new grid power. The cost of a new grid feed would have been $1.2 million and would also have entailed ripping up parts of Central Park to bury the lines. The cost of the fuel cell installation was about $800,000.

Recent announcements show fuel cells being purchased and/or installed by a wide variety of early-adopters: from the Florida Department of Environmental Protection to the Sierra Nevada Brewing Co. to Verizon and other telecom companies. And provisions in the new US energy bill will serve to increase the competitiveness of fuel cells as distributed generation technologies.

Reliability
Several fuel cells on the market have achieved Network Equipment Building Systems (NEBS) Level 3 compliance. Level 3 criteria are suited for equipment applications that demand minimal service interruptions over the equipment’s life. Possible applications for the Level 3 criteria include critical network equipment, such as digital switches and transport products. In response to growing interest, the 11th Annual NEBS Conference, held in September 2005, featured a panel on NEBS testing of hydrogen fuel cells.

In August 2003, the Central Park fuel cell system provided power to the Central Park Police Precinct throughout the infamous blackout. In Citigroup’s “Switch Signals” report, analysts note that during that same blackout, “many wireless providers bought batteries with backup times of six to eight hours” but that in reality “the backup strategy lasted less than six hours.” In contrast, as long as fuel is fed into a fuel cell system, it will continue to provide dependable power. In the case of the Central Park Police Precinct, natural gas was the fuel source.

Thanks to a 200-kW fuel cell, Orgenergogaz, an oil and gas pipeline engineering company in Russia, never lost power at one of its facilities during a 2005 blackout that caused major traffic disruptions and interrupted water supplies.

Efficiency
High-temperature fuel cells (>1,000æF) deliver upwards of 45% net electrical efficiency. Hybrids—systems that combine high-temperature fuel cells and drive a non-combustible turbine—operate at electrical efficiencies up to 70%. This is well above the most efficient combined-cycle turbine plants now available or projected.

In early 2005, the EPA’s Greenhouse Gas Technology Center completed verification of a UTC Fuel Cells PC25C power plant operating on anaerobic digester gas—or biogas—from a water pollution control plant (WPCP). The center’s report found that the potential combined heat and power (CHP) system of efficiency for the PC25C units—electrical power generation efficiency plus the potential thermal efficiency—was approximately 93.8%.

Low Emissions
In gas turbines and reciprocating engines, nitrogen oxide (NOx) is formed because high-temperature combustion takes place. Since there is not combustion in a fuel cell, and the process runs at much cooler temperatures than combustion devices, NOx production is essentially zero. Fuel cell sulfur oxide (SOx) emissions can also essentially be zero, since the fuel is often treated prior to entering the fuel cell.

The New York Power Authority reports the 200-kW fuel cell installed at the Yonkers Wastewater Treatment Plant generates about 1.6 million kWh of electricity per year while releasing only 72 pounds of emissions into the environment, compared to the average 41,000 pounds of emissions emitted into the environment by coal- and oil-fueled power plants generating the same amount of electricity.

According to the US Department of Energy (DOE), even using natural gas as the hydrogen supply, fuel cells could potentially reduce carbon dioxide emissions by 60% compared to a conventional coal plant, and by 25% as compared to modern natural gas plants. Sequestration technologies being developed with the support of the DOE also have the ability to capture the waste gases from fuel cells using hydrocarbon fuels, isolating the gases either for storage or for reuse in other applications.

Conclusion
Fuel cell technologies have the power to change the way we make and use energy. They provide a unique combination of features and benefits unmatched by other distributed generation technologies. The excitement surrounding fuel cells is being matched by the technologies’ demonstrated reductions in pollution, as well as tangible cost savings. Companies such as Verizon and Orgenergogaz are proving that fuel cells are no longer just the technology of the future, but a technology that is already delivering value by solving customer problems today.