A partnership of state and federal agencies uses fuel cells and microturbines to reduce energy and pollution at an aluminum-recycling plant.

By Ed Ritchie

Melting scrap aluminum for recycling requires heat—and lots of it. When Andrew Stein, chief executive officer of TST Inc., began looking for ways to cut his foundry’s soaring energy cost, his search lead him to a unique solution that included fuel cells, microturbines, an industry association, and an air-quality agency. A ribbon-cutting ceremony in October 2006 celebrated TST’s successful installation of leading-edge distributed energy technology, but it came after years of funding groundwork and many lessons in working with state and local agencies.

Located in Fontana, CA, TST produces aluminum ingot, billet, and other bulk aluminum forms from recycled scrap. Alliance Power provided a 500-kW fuel-cell cogeneration system to deliver electricity and thermal energy. In a separate but load-following configuration, the Southern California Air Quality Management District (SCAQMD) contributed four 60-kW Capstone C-60 microturbines to boost the maximum output of the cogeneration installation to 740 kW.

For a system of this magnitude, start by looking for programs from state and federal agencies that match your company’s goals, advises Stein. However, be prepared to demonstrate some patience. TST’s project was first considered as part of a proposal in the SCAQMD’s 2003 Advanced Air Pollution Research Plan. It was worth the wait, because cutting energy costs would help TST stay competitive in the demanding market of aluminum recycling. Moreover, cutting air pollution would fulfill Stein’s vision of corporate responsibility toward the environment. “Industrial customers in southern California are under mounting pressure to reduce emission of gases and particulates,” says Stein. “We’re based in an area that has been the focus of a number of emissions initiatives. This project gives us an opportunity to take control of our energy sources with a market-priced source of electricity that actually decreases the amount of airborne pollution.”

Many of the area’s emissions-reduction initiatives originate from the SCAQMD, an agency working to kick-start energy efficiency and air-pollution reductions in so-called dirty industries around southern California. The TST project qualified for a substantial financial grant because it generated clean energy, lowered natural-gas consumption, and provided an example to other industries to meet the agency’s goals for reducing harmful emissions.

California law defines “ultra-clean and low-emission distributed generation” as electric generation technologies that produce zero emissions during their operation or produce emissions equal to or less than amounts established by the California Air Resources Board (CARB). Financial support for TST’s fuel cells included up to $1.25 million from the California Public Utilities Commission’s Self-Generation Incentive Program (SGIP), which encourages electrical customers to install distributed generation operating on renewable fuel or contributing to system reliability. The SCAQMD added another $500,000 of funding accumulated from emissions penalties.

A bag-house burner warms up.

Cement is laid for a fuel-cell unit's foundation.

“The ultimate goal is to have near-zero emissions, and we’re also extremely interested in distributed generation because of the power crisis we suffered in California,” says Matt Miyasato, technical demonstrations manager for the SCAQMD. “If you put clean generation right at the point of use, you get rid of transmission bottlenecks and you have the opportunity for extremely high efficiency.” Miyasato notes that TST is located in an industrial area known for poor air quality, so the project had a high priority.

Moreover, Miyasato cites the significance of the project’s value to the SCAQMD as an example of sound business sense. The majority of grants from the agency have been research-and-development oriented. “One of the exciting aspects of this project is that all of the parties involved are making a sound business case that we can point to as a successful example.” Those parties include FuelCell Energy, Capstone Microturbine Corp., the California Cast Metals Association (CCMA), Alliance Power Inc., and The California Stationery FuelCell Collaborative.

Coordinating all of the various parties took years, but according to Steven P. Eschbach, chief financial officer of Fuel Cell Energy, the economics wouldn’t have been possible without everybody’s participation under the financial umbrella of an SCAQMD grant. “It has gone on a long time because TST was more interested in true cost savings rather than a research-and-development project,” says Eschbach. “They were focused on long-term savings for the factory, so we spent a lot of time on those concerns.”

Stein acknowledges that the project had to make good business sense for TST. Initially he wanted to buy the fuel cells, but such a purchase required performance testing, and there was a risk to TST if the units did not run as rated. Alliance Power Inc., a consultant in distributed generation facilities, offered a plan to eliminate the risk: The company would supply two 250-kW direct fuel-cell power plants as part of a five-year power purchase agreement, with the power costing less than current utility rates.

With TST incurring peak power demands as high as 1.5 MW, the fuel cells’ 500 kW of power make a substantial contribution to the plant’s savings, and the waste heat adds another appreciable contribution to the picture. The project was designed to capture the waste heat from both the fuel cells and the microturbines to supplement a burner that provides heat to a “bag house,” a large filter that catches particulate matter from furnace exhaust fumes. The bag house runs at a temperature range of 350°F–380°F.

With the addition of the four 60-kW microturbines, total distributed generation is roughly 50% of demand—but don’t calculate that as a 50% cost savings, warns Stein. “Prior to the installation, we were consuming about $125,000 at 870,000 kilowatt-hours,” notes Stein. “The distributed energy will generate about half of it, but that doesn’t mean you cut your cost in half, because half of that power saves about 10% in costs—so we’re saving about $6,000 a month just on the fuel cells. But the savings are greater with the microturbines.”

The SCAQMD provided the microturbines to TST at no charge, so their cost can’t be evaluated in a realistic return on investment scenario. However, Stein estimates that they will shave about $180,000 off the electricity bill, and the waste heat helps to keep the bag house running for free. Nonetheless, adds Stein, don’t forget the erratic price of the natural gas. The savings depend greatly on the price of gas, and the cost of the utility-supplied electricity that the microturbines offset. TST was buying gas on the spot market when the microturbines were installed, but the plant’s high gas demands make it a good candidate for hedging on gas futures. “We’ve been running on spot gas off the NGI index,” Stein explains, “but we can buy one- and two-year futures if we want, and we’re ready to lock in our prices for the whole facility, including the microturbines as well.” Typically, the facility uses about 440,000 therms at a low, and 450,000 therms per month is more of an average. In their first month of operation, the microturbines used about 20,000 therms.

According to Steve Gillette, vice president of marketing at Capstone in Chatsworth, CA, the units run 24 hours per day in a load-following configuration. “If the demand drops, the turbines will reduce their power output,” Gillette explains. “We provide about 240 kilowatts and the fuel cells provide 250 kilowatts each for a total of 500 kilowatts. The plant load hovers around 1.2 to 1.5 megawatts of demand, and the fuel cells can’t really alternate their power—but the microturbines can, so we’re floating with what the rest of plant needs.” One important benefit to TST is that the load-following configuration reduces the risk of putting power back onto the grid, a serious concern for southern California Edison.

Dealing with the utilities and grid issues was complicated, recalls Stein, and he advises other companies to assign the day-to-day management of such projects to a full-time project manager with experience. “It’s very important to have somebody that knows both the state and local utilities,” Stein says. “Also, a good relationship with electricians and craftsmen is needed. Alliance has a preferred contractor for electricity connection wiring and circuitry and it’s important because the regulations and restrictions required were critical.”

A group of FuelCell Energy's Direct FuelCells is ready for action.

Snowden Electric, based in Buena Park, CA, has handled electrical contractor duties on more than 10 projects for Alliance. Andy Woehrman, project manager for Snowden, describes the interface between electric and gas utilities as one of the most time-consuming and demanding aspects of an installation. He notes that a critical aspect of operations in regards to running safely in parallel to the grid involves the requirements of California’s Rule 21. “There’s a learning curve following the Rule 21 guidelines, and it takes experience,” says Woehrman. In simplified terms, Rule 21 stipulates that the distributed generation source cannot inadvertently send power to the utility grid.

According to Woehrman, the design of the fuel cells makes it easy to interface with the grid and meet the many complicated technical requirements of Rule 21. Also, when compared to reciprocating engines, Woehrman says fuel cells have an advantage. “There’s no maintenance, such as oil changes and spark plugs, and the fuel cells are unmanned,” says Woehrman. “As a contractor, I can install the project and know that it will run reliably.”

Such benefits were part of the reason that the CCMA actively participated in the government relations and coordination of the project. Representing the metal-casting industry in California since 1972, the association operates as a liaison between the end user and project participants. “Due to the nature of our process [melting metal], metalworking facilities are some of California’s largest electricity consumers,” says the CCMA’s Executive Director James Simonelli. “Ultra-clean onsite generation is very attractive to our members as a clean source for electricity on our sites. We expect this project to be the first of many future projects.”

Stein notes that being the first can make for a rougher road, so it’s important to have an association like the CCMA to lobby for legislation and to play a role in maintaining good relations with the utilities that also lobby. But in their case, it’s for compensation due to business lost as a result of distributed generation. For example, many stories have surfaced regarding the high standby and exit fees imposed when a company leaves a utility. “In California we have state senators and politicians that want distributed generation to happen, and the general trend is favorable toward exemptions from standby and exit fees,” says Stein. “In our case, it takes a lot of incentive money as well as having the utility not burden the project with additional charges. If we hadn’t received the exemptions, it would have made it a much more difficult project.”

Even with the exemptions, TST is still lobbying for a change in its status regarding the critical issue of rolling blackouts. Power shortages are still a threat in California, and TST can still be subjected to a blackout. It doesn’t make sense to Stein, because imposing a blackout on TST creates more problems than it solves, thanks to the fact that an affordable solution wasn’t available to allow cogeneration in a standby or backup mode at the time of installation. So the fuel cells and microturbines shut down in the event of a power loss from the grid. The savings realized from a blackout are compromised because TST must draw larger than normal amounts of power from the grid while the fuel cells take eight hours to reheat.

It’s a compromise, but Stein still sees fuel-cell cogeneration as a desirable technology for TST, especially in light of the low-emission status. “Companies are willing to pay a little bit more for power that doesn’t create global warming issues,” says Stein. “It’s not just a matter of saving money. There is an environmental wave in the country and companies want to be seen as reducing the negative footprint on the environment. Fuel cells are a way to do this.”

From the perspective of the SCAQMD, the project’s impact in promoting distributed energy is just as important as its reductions in harmful emissions. “We’re trying to advocate the commercialization of stationary fuel cells,” says Miyasato. “One way is to leverage the funding. The other way is to leverage policies and grease the skids for self-generation. We want to have high-volume sales and public awareness that can help in getting some more technology breakthroughs.”

DE - May/June 2007