From "The Montreal Gazette"
Tuesday 27 February 2001
Cheap power from your basement
JAY BRYAN
The Gazette
Jim Perry displays Global's soft-oxide fuel cell, a leader in energy output.
When Jim Perry of Global Thermoelectric has a pleasant daydream, here's the way it might go: widespread power shortages are causing brownouts in some places and higher electricity bills in others. So consumers rush to buy a gizmo from Perry's company that sits in their basement, silently converting natural gas into electricity at rates lower than the local utility can offer.
It's a daydream today, but Global Thermoelectric of Calgary is one of the few companies in the world that analysts give a reasonable chance of making it reality within a few years.
The miracle gizmo, about the size of a washing machine, will contain Global's special version of a fuel cell, a device that directly transforms hydrogen and oxygen into electricity with no combustion.
Essentially, fuel cells act like batteries, converting chemical energy into electrical energy. But unlike batteries, they can be refueled continuously by piping in hydrogen or some fuel containing hydrogen, like methanol or natural gas.
The oxygen they get from the air, just like a conventional furnace or car engine.
Fuel cells have been around for more than 150 years, but until very recently produced power so inefficiently that uses were limited to those where cleanliness was everything and cost nearly nothing, like the manned rockets sent up by the U.S. space program.
Most Canadians know about fuel cells because of Ballard Power Systems, a Vancouver company that has raced ahead of competitors all over the world to produce reliable fuel cells and to develop techniques for manufacturing them more cheaply.
Because of this, Ballard is a leader in the race to power cars, a market that will be massive if these devices become cheap enough to replace gasoline motors with fuel-cell-powered electric ones.
But Global, using a technology different from Ballard's, has quietly become a leader in another massive market, where its type of fuel-cell technology just might give it a significant edge over Ballard and other high-visibility competitors.
Unlike Ballard's PEM fuel cell, so called because it uses a proton-exchange membrane to accomplish the production of electricity, Global makes a solid-oxide fuel cell that operates at much higher temperatures (700 to 800 degrees Celsius vs. less than 100 degrees for PEM fuel cells).
Global's fuel cell takes much longer to warm up and, therefore, isn't suitable for powering car motors, but it can offer very high efficiency when used in a home.
The excess heat can be used to produce hot water, allowing up to 85 per cent of the energy to be captured.
Theoretically, this means that a Global fuel-cell device could produce big savings for consumers in most of North America. The biggest savings would be in places, like New York and California, where electricity prices are high and gas prices (with the exception of the recent gas-price spike) relatively low.
Global estimates that consumers in these two states could save up to 70 per cent on their combined power and hot-water costs by using a device that it expects to start marketing within three years.
It would use technology that already exists but still must be proved to be cheap and reliable, notes analyst Peter Tertzakian of Raymond James Financial.
Even in Quebec, where electricity costs are low by North American standards, the Global fuel cell theoretically would have saved a consumer money last year.
Using Global's figures, one can calculate the device would have produced electricity last year in Montreal for about 3.8 cents a kilowatt-hour, based on an average price of $4.75 a gigajoule for natural gas.
That's substantially less than Hydro-Quebec's residential rate of about 5 cents.
The savings would have been greater for big homes, because Hydro's rate for additional power climbs to nearly 6 cents for big consumers.
Of course, these savings would have screeched into reverse when gas prices shot up to $8.78 this month. Even though gas rates are now dropping and expected to drop a lot farther, this illustrates a risk of generating power from natural gas, whose price can jump around much more than that of Hydro-Quebec's hydro-electric power.
Long-term trends in North America seem to favour Global, however, with power shortages and rates rising and gas prices forecast to remain more stable.
Investors seem to agree. Although the company's stock price has plunged along with other fuel-cell and high-tech stocks, investors still value Global much more for its fuel cells than for its older businesses making vehicle heaters and remote power-generation devices for utilities.
And the remote-power business, where buyers will pay a hefty premium for reliability, offers a profitable early market niche for Global's new fuel-cell business.
In the longer run, Calgary-based Enbridge Inc., which distributes natural gas in Ontario, Canada's biggest market, has bet $25 million that Global will be able to produce appliances that consumers will want to buy. It invested that amount in Global six months ago, establishing a strategic alliance with the fuel-cell firm. Now, observers are waiting to see a similar alliance with a U.S. gas utility. |
