Coming Into Their Own
A growing track record and lower natural gas prices are two of the factors that are increasing fuel cell applications and boosting the industry.
By Penelope B. Grenoble
One fallout from the devastation Hurricane Sandy, caused on the eastern seaboard in Fall 2012, was the realization of a need for better systems to keep power up-and-running during natural disasters. “There’s been a new focus on microgrids,” says Rich Shaw, General Manager of Domestic Sales at UTC Power in South Windsor, CT. “And in Connecticut, there’s been a move to make fuel cells a major contributor because they can provide clean power close to where it’s needed, and they have the flexibility to do load following, which is important when the grid goes down and loads fluctuate.”
“The fuel cell industry is transitioning from a number of years of evolution to a point of recognition of the quality and performance of the product and a market that will be driven by demand,” says Dr. Scott Samuelsen, Director of the National Fuel Cell Research Center at the University of California, Irvine. “Without exception, the largest systems are base load systems, the 400-kilowatt phosphoric acid fuel cell from UTC Power, the 200-kilowatt solid oxide from Bloom Energy, and the molten carbonate systems from FuelCell Energy. But because they’re able to island, they are also serving the role of backup. In the last 13 months, we’ve had some excellent examples of that island capability. In the August 2011 blackout in San Diego, the Albertson’s supermarket stayed in operation, providing food and supplies to the public and without losing any of its perishables. During Hurricane Sandy, 22 of 23 fuel cells operated by UTC power stayed in operation. The one that was down was having a hardware problem and was back into operation right afterward.
“One of the major reasons we’re at this tipping point is because we have a distribution of applications across many market segments, grocery stores, wastewater treatment plants, hotels, hospitals, universities, data processing centers, and this is giving the technology credibility among the potential customer of the future,” he says. “The other reason is the durability of these many years of operation—as each year goes by, there’s another year of durability that gives confidence to the market.”
“Solar for the most part is easy, and a lot of people are doing it,” says Shaw. “Wind projects are going in large wind farms. But on a kilowatt-to-kilowatt basis, when you compare fuel cells to solar or wind, I can almost say we’re actually providing more power than the other technologies, because we are baseload. For a 400-kilowatt system, we’ll provide power 95% of the time; whereas solar and wind, depending on where you are, is 15 to 20%, at best. Fuel cells are a baseload piece of equipment providing clean power 24/7, which means our deployment is somewhat different from solar and wind.”
As Samuelsen points out, South Korea has become a leader in fuel cell deployment. “They dramatically accelerated from a zero start to currently over 200 megawatts of fuel cell product, either installed or on order, and they have plans for what we call TIGER [Transmission Integrated Generation Energy Resource] stations, grid support stations of about 50 to 60 megawatts.”
“In South Korea, the goal is to reduce carbon emissions and pollutants and to make renewable power the driver of their economy,” says Kurt Goddard, vice president of investor relations at FuelCell Energy Inc., in Danbury, CT. “To accomplish this, they have developed a nationwide renewable portfolio standard that uses a mix of incentives and penalties to drive the adoption of renewable power. Besides fuel cells, they’re also looking at other types of clean power generating technology, including wind, solar, and geothermal.”
Last fall, FuelCell Energy announced an order from Seoul-based Posco Energy for 121.8 MW of fuel cell kits and services to be installed in a 58.8-MW fuel cell park, far and away the world’s largest.
“It’s a multi-year order,” says Goddard, “the largest order we’ve ever received, potentially the largest order for fuel cells worldwide. One interesting aspect of the project is the ownership structure, which includes the largest utility in Korea, a natural gas supplier, Posco Energy and a number of private investors.”
UTC Power is also in Asia. Twelve of its PureCell Model 400 systems have been installed for Samsung/GS Power in Anyang, South Korea, producing 4.8 MW of power for the electric grid and heat for district heating, and seven systems are in the works at the Korea South East Power Co., Ltd, facility in Gyeonggi province, which when installed will produce 3.08 MW for the local grid and thermal energy to district heating business.
“What we see in South Korea,” says Goddard, “is a growing scale of larger and larger installations, with the electric utilities very much involved. In light of this growing demand we have licensed the right for Posco Energy to manufacture our fuel cells in South Korea. The arrangement will cut down on lead time and give us better flexibility, including a single global supply train, which will help lower our costs and reduce the cost of our units to our customers.
“Right now we don’t have a federal mandate like South Korea in this country,” he adds. “There is a federal investment tax credit, which is scheduled to remain in place until December 31, 2016, but the movement has been more on the state level. California and Connecticut are in the lead, along with other regions that value clean and renewable power, have high-cost electricity, and have developed regulatory or legislative support. Installations that include combined heat and power or which use renewable biogas are typically receiving higher incentives.
“The goal of having the investment tax credit phase out in 2016 is that with increasing volume, we will start to see our costs come down,” continues Goddard. “The idea is this will reduce or eliminate the need for an investment tax credit.”
“In the early days, people were putting their toe in the water with our 200-kilowatt units, getting to know the technology,” details Shaw. “Now, with so many units out there that have met or exceeded their life, people are becoming more and more comfortable and deciding to reinvest. Saint Frances Hospital & Medical Center in Hartford has replaced their original 200-kilowatt unit with our 400-kilowatt unit, and is installing a 400-kilowatt unit in a satellite facility. The University of Connecticut has been pretty public about using fuel cell technology in a new microgrid program the state is looking at to provide backup power for the campus. The installation they have right now offsets grid power and is also providing heat.
|Photo: Inland Empire Utilities Agency
“Fuel cells are a baseload piece of equipment providing clean power 24/7, which means our deployment is somewhat different from solar and wind.”
|Photo: Inland Empire Utilities Agency
California has changed from a grant program to a hybrid program of grants and performance-based incentives.
“We’ve seen some changes in the structure of the incentives that states are providing,” he continues. “In the past, the Connecticut Clean Energy Finance and Investment Authority has provided grants to customers purchasing or installing fuel cells, but they have transferred over to a performance-based incentive where you’re paid on performance. In Connecticut, that’s a dollar per megawatt-hour. Customers like St. Frances Hospital and the University of Connecticut are comfortable with these new types of performance-based incentives because they’ve seen how well their fuel cells have operated.
“California has changed from a grant program to a hybrid program of grants and performance-based incentives,” says Shaw. “New York provides a portion of the incentive upfront in the form of a dollar grant, but in subsequent years, three years in New York and five years in California, you have to prove the unit is going to operate as you said it would to receive the remainder of the incentive.”
“The Self Generation Incentive Program [SGIP] in California has helped kick off the deployment of fuel cells and been a powerful tool to get us to the point we’re at today,” says Samuelsen.
“It hit the industry hard when it was suspended in December 2010, because it was at a time when it was starting to rapidly increase its mass production and reduce prices,” he adds. “The new SGIP program is just now taking hold. We’ve had to go back two steps in the last two years, but the industry is recovering, although it hasn’t come back completely yet. It shows the strength of incentives and the disturbance that it sent through the heart of the industry when California’s program was suspended.”
Asked about the fuel cell market in general, Goddard says, “We’re looking for large power users that need continuous base load power and have some use for the heat. That falls largely into two markets, onsite power and utility grid support. With onsite power, we’re providing customers with energy security and power reliability because they have that power generation right onsite, very quiet and vibration free. They’re generating power and heat in a very efficient manner with virtually no pollutants, with greater control over their power supply, and all in a very environmentally friendly manner. It’s becoming more and more difficult for utilities that want to add power and heat to develop a nuclear or coal-powered plant and to construct transmission lines. We can install fuel cell parks throughout a service area, which allow a utility to diversify and achieve some degree of energy security and frees them to use their existing transmission for distant power generation.”
As part of Microsoft’s commitment to become carbon neutral as of 2013, FuelCell Energy will supply a 300-kW Direct FuelCell to provide power for one of its data centers as part of Microsoft’s research project investigating the use of renewable biogas as a fuel. The plant will be located in Cheyenne, WY, and will be sited adjacent to a wastewater treatment plant.
“Typically, data centers go in states that have low-cost power,” says Goddard, “but Microsoft’s philosophy is that you can put these data centers anywhere.”
The plant will be installed at the Dry Creek Water Reclamation Facility and will provide baseload power to run the data center. Excess power will be provided to the water reclamation facility to offset its electric costs. The data center and fuel cell plant will be configured to operate independently to provide continuous power in the event of a grid outage.
“With the demand for renewable energy resources outstripping available power supplies today, Microsoft is researching new methods to help our operations become more efficient and environmentally sustainable,” says Gregg McKnight, general manager, Data Center Advanced Development at Microsoft. “We’re excited by the potential for using stationary fuel cells to capture and recycle natural byproducts like biogas. This project will study methods to provide an economical and reliable power supply for data centers that is also scalable and economical for use by other industries.”
A diverse coalition of entities has been involved in bringing the project to fruition, including the Cheyenne Board of Public Utilities, Cheyenne Light, Fuel and Power Company, Western Research Institute, the University of Wyoming, the Wyoming Business Council, and Cheyenne LEADS, the economic development organization for Cheyenne and Laramie County.
Biogas also fuels FuelCell Energy’s installation at the Inland Empire Utility Agency (IEUA), which is part of the agency’s Go Gridless initiative. The installation includes a 2.8-MW fuel cell plant powered by biogas from the utility’s wastewater treatment plant in Ontario, CA, and is the largest biogas-fueled fuel cell facility in the country.
“What’s unique about this installation,” says Goddard, “is that we’re taking the biogas they’re generating right onsite and converting it to both electricity and heat they use onsite. The electricity helps to power their operations, which run 24/7 and the heat gets routed to the digester. It’s a circular route of clean fuel.”
IEUA is a municipal water district with a mission to supply drinking water and recycled water, to collect and treat wastewater and provide other utility-related services to the 850,000 residents living within its service area.
Also in California, UTC Power will install a 400-kW fuel cell to power the headquarters building of the South Coast Air Quality Management District (AQMD) in Diamond Bar. The district is the air pollution control agency for Orange County and parts of Los Angeles, Riverside and San Bernardino counties.
“The AQMD is a repeat customer,” says Shaw. “In 1994, it installed our 200-kW fuel cell, which ran for more than 50,000 hours. It’s another example of people starting small, seeing what the technology can do and then opting to expand.”
“Stationary fuel cells are one of the cleanest and most efficient ways to produce electricity for building needs,” says Barry R. Wallerstein, AQMD’s Executive Officer. “This fuel cell system will provide about 22% of AQMD’s daily electrical needs and is part of our energy self-sufficiency effort.” UTC Power will provide energy from the fuel cell to AQMD under an Energy Supply and Services Agreement. The project is supported by SGIP funding and is expected to be operational in mid-2013.
|Photo: Inland Empire Utilities Agency
At IEUA, biogas generated onsite is used to power the facility’s fuel cells.
On the commercial side, CBS Studios will install six UTC fuel cells systems at two production locations in California. Three units will be installed at CBS Studio Center, a production facility with 18 sound stages and office space in Studio City, and three others at CBS Television City in Los Angeles, which houses eight sound stages and office space. The studios, which are used by CBS and other media outlets, produce, among others, Entertainment Tonight
, The Price is Right
, American Idol
, and Dancing with the Stars
. The UTC Power systems at Studio Center and Television City will produce a total of 2.4 MW of power, satisfying 40% and 60% of the studios’ electricity requirements, respectively. Thermal energy from the systems will be utilized to provide cooling for both studios and will also be used for space heating and domestic hot water at Television City. Additionally, four of the PureCell systems will be configured to operate independently of the electric grid. This important feature will provide energy security for the studios, serving as critical power backups during blackouts, natural disasters and man-made emergencies.
“Fuel cells are a great fit for our business and sustainability goals,” says Michael Klausman, president, CBS Studio Center & Senior VP Operations, CBS Television City. “With the installation of these PureCell systems, we will substantially increase our energy security by being able to continue operations in the event of a grid outage, and, equally important, the installation is projected to reduce our impact on the environment and provide significant energy cost savings for our business.”
An additional development for the fuel cell industry in this country is the increased availability of natural gas. “Natural gas is a bigger opportunity for us than biogas,” says Goddard at FuelCell Energy. “In South Korea, natural gas is the primary driver. Projects we’re looking at here on the East Coast are more oriented toward natural gas. California is kind of a mix, but in general we have more projects on natural gas. Fuel cells are high efficiency, and since natural gas is a finite supply, you want to use it efficiently.”
If we’re going to move away from coal or nuclear and we’re going to go to natural gas, there’s no cleaner way to do it than with fuel cells,” says Shaw. “You don’t have combustion and the pollutants. And as CO2 starts to pickup—California just instituted their carbon cap and trade system—the fact that we’re generating more efficiently, just makes us a better player in the power market.
“We’re finding a lot of power generation in the US transfer over to natural gas, and even more we’re starting to see governors and utilities exploring how to expand the natural gas market and natural gas distribution. Another thing that came out of the storms last year was the resiliency of the natural gas system. Not only do fuel cells operate on natural gas cleanly and efficiently, but in a consistent 24/7 baseload they provide anchor consumption in a place where there may not be any natural gas, giving the gas industry a reason to extend their delivery system. In that aspect we see ourselves as an enabler for expanding the natural gas system. Natural gas expansion is a huge opportunity for us.”
Shaw points out one common misconception relative to combined heat and power installations. “There’s a misconception about the concept of providing combined heat and power as part of a fuel cell installation. Our fuel cells are electric-generating equipment. That’s what we do. We generate electricity. But we have the opportunity to use our thermal off the unit to increase the efficiency. If a customer’s interested in electric only, we can also provide that as cleanly as we would provide it as in a combined heat and power mode. The combined heat and power just allows us to increase the efficiency of our installations, which is what we look for.”
Of the three major domestic fuel cell manufacturers, Samuelsen points out that Bloom Energy has elected not to go that direction, at least not yet, and provide a product that produces electricity only. “The other types, FuelCell Energy and UTC both really require that the heat be utilized in order to provide the overall efficiency and operating cost reduction they think is important with combined heat and power.
“So when a company is thinking about a fuel cell, they need to decide if they want to capture and utilize the waste heat, and, if so, Bloom is off the table. If, on the other hand, they want a relatively simple installation with just wires and not the added ducting that goes with waste heat recovery, then they would select Bloom, which is finding a pretty good market even though the overall efficiency is not as high as if they were recovering the heat as well.”
Other players in the fuel cell market include Clear Edge Power, which Samuelsen says is looking to develop a distributed generation market for homes and small commercial operations.
“They selected California as their initial market and deployed at some hotels and homes. Their installations are being operated baseload even though the PEM [proton exchange membrane] system can be turned on and off easily for pure backup.” Honda announced last fall that it would start to produce a home residential unit based on solid oxide technology.
“Our view is that fuel cell technology is versatile and can be a powerful part of meeting the various energy challenges we have in this country,” says James Warner, Director of Policy and External Affairs for the Fuel Cell and Hydrogen Energy Association. “Whether it’s reducing air pollution or our dependence on foreign oil, or getting the best out of our natural gas resources, it’s a matter of getting the public to understand what it takes to bring not only fuel cells, but any new technology into the marketplace.”
Author’s Bio: Penelope B. Grenoble writes on issues concerning waste operations, equipment, and technology.