Fuel Cells Spark Hope
Big stakes for new technology
by Christian Murray
Staff Writer
The race is on.
Environmentalists are seeking a miracle technology that will replace the gas-guzzling internal combustion engine before the world boils over. And industrialists are cranking up their efforts to find a cheap, "clean” alternative that will provide enormous profits.
Today, many environmentalists and capitalists who are often at odds are sprinting in the same direction. Both have a stake in the advancement of fuel-cell technology -- a complex, pollution-free process where hydrogen and oxygen are combined to create electricity.
"Electric power is a $250-billion business,” said Jerry Leitman, the chief executive of FuelCell Energy, a fuel-cell manufacturer in Danbury, Conn. Then there are the whopping revenues that can be attained if fuel-cell technology powers automobiles, analysts added.
Many fuel-cell developers focus on one segment of this potentially massive market. For example, some, like FuelCell Energy, are trying to develop the technology for use by hospitals, banks and other commercial users; some are trying to generate "clean” electricity for the residential marketplace; and others, for the transportation market.
But the biggest problem so far facing fuel-cell developers has been cost. While companies, often with the assistance of the U.S. Department of Energy, have already proven they can power cars and produce electricity with the technology, such units remain prohibitively expensive, and that's what kept fuel-cell use from becoming widespread.
Wall Street seems hopeful that many of the companies can bring down the costs, and that's already attracting the attention of investors. FuelCell Energy's share price has risen from the mid-$20s to the mid-$90s this year.
The appeal for environmentalists is that fuel cells create power through an electrochemical reaction, combining hydrogen with ambient air -- with the only emission being water pure enough to drink. In the next few years, the hydrogen needed is likely to be extracted from natural gas -- via what's called a reformer. However, pollution will still be minimal, industry experts say, because internal combustion does not take place. Furthermore, more power is generated from the gas through the chemical process than if combustion had taken place.
Industrial users -- including hospitals and businesses -- are likely to be offered this technology first, according to the U.S. Department of Energy officials. In such uses, the manufacturers are able to build large units, but because of high costs, fuel-cell companies are unable to produce units small enough to fit into vehicles.
A historic leader in the industrial market, International Fuel Cells, a South Windsor, Conn.-based subsidiary of United Technologies Corp., has already sold 200 fuel-cell units. To date, companies that have bought the units have been paying about $850,000 for a 200-kilowatt unit.
Among the buyers of the technology was the First National Bank of Omaha, a credit card processing company based in Omaha. "The bank just can't afford for its electricity to be down for a millisecond,” said Peter Dalpe, a spokesman for International Fuel Cells. And fuel-cell-generated electricity is more reliable than power from an aging grid, he added.
International Fuel Cells recommends its customers use the fuel-cell unit in conjunction with power from the electrical grid. However, in the event of a power grid blackout, a company is able to direct the fuel-cell-generated power to vital segments of its facility.
Environmentalists like these types of fuel-cell units because no power lines are required since the unit sits alongside the building. International Fuel Cells is working on developing a more cost-efficient type of fuel cell to reduce its price.
However, FuelCell Energy has developed such a fuel cell, called a molten carbonate cell. The company, which will produce units for the 250-kilowatt to the 3-megawatt range, aims to produce electricity at 5 to 61/2 cents per kilowatt hour by 2004. By comparison, electricity on Long Island costs from 11 cents to 13 cents per kilowatt hour.
Of course, potential buyers will have to purchase the unit. -- which, Leitman said, will fall in price as the company continues to increase its production.
For now, these units are huge -- a 3-megawatt generator is about the size of a tennis court and can power about 1,500 homes.
FuelCell Energy will begin to take orders in the second half of 2001. It plans initially to sell its product to clients, such as hospitals, which cannot afford to be without electricity for one moment. In following years, as the price of the unit drops, it aims to sell to companies that view its product as better than the grid.
Plug Power, a Latham, N.Y.-based company, is trying to come out with a product for the residential market but has had difficulties. Initially, it said it would have a unit that would run independent of the power grid by the first half of 2002. However, the company has pushed that date back 12 months, and will instead produce a unit that will work in conjunction with the power grid, said Greg Silvestri, the company's chief operating officer.
Silvestri said the initial cost of the unit will be more than $10,000, coming down to $5,000 in time. He anticipated it would produce electricity at 10 cents per kilowatt hour. The first unit is likely to be the size of a large refrigerator. A product independent of the grid is still at least three years away, he said.
The Long Island Power Authority is working with Plug Power -- providing the company with $1.6 million worth of research and development this year. Ultimately, if the product proves viable, LIPA could be selling Plug Power's units to consumers, said Bert Cunningham, a spokesman for LIPA. However, the product would represent one of many fuel types LIPA might offer in the future, he added.
Ballard Power Systems, a Vancouver, Canada-based company, is recognized as a leader in fuel- cell technology -- especially in the motor vehicle area. To date, the company, which is 19 percent owned by DaimlerChrysler and 14 percent owned by Ford, has seen 10 cars and 10 buses powered by Ballard fuel-cell technology.
Honda Motor Co., a customer of Ballard, unveiled a fuel-cell generated car last week that will be among the more than 50 fuel-cell vehicles tested in the next three years under the California Fuel Cell Partnership. Toyota and Ford have similar vehicles in the works.
In the interim, according to the U.S. Department of Energy, the use of hybrid vehicles, powered by battery and internal combustion engines, should be widespread by the middle of this decade. Not long after that, the nation's energy czar says, fuel cells will take off. "Fuel cells could do for 21st Century transportation what the internal combustion engine did for the 20th Century,” U.S. Energy Secretary Bill Richardson said.
However, the ultimate goal is to create an infrastructure where a fuel-cell car would drive into a hydrogen station and fill up, experts said. But that is not going to happen any time soon. Engineers are still working out the best method of getting hydrogen into the vehicle while such an infrastructure is created.
But many companies are likely to look for the answer.
Michael Kujawa, director of energy research for Allied Business Intelligence in Oyster Bay, said he prepared a report a year ago and found between 15 to 20 companies in the fuel-cell business. "Now there are over 100 -- with one or two new ones entering the market every week,” he said. |
