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Technology Stocks : FCL - FuelCell Energy -- Ignore unavailable to you. Want to Upgrade?

To: WWS who wrote (114)	12/19/1997 12:27:00 AM
From: Michael Winkler	Read Replies (1) \| Respond to of 407

Bill: I work on PEM fuel cells at Schatz Energy Research Center at Humboldt State University in northern California. I have stock in both Ballard and ERC. I bleieve that particular types of fuel cells are appropriate for particular applications. In portable applications, such as vehicles, PEM fuel cells appear to have advantages. 1. They can be easily built in small sizes. 2. They use relatively nontoxic materials 3. They have fast start-up times. 4. They can start up at room temperature. They also appear to have an advantages in very small sizes such as home cogeneration(1 to 5 kw). In larger sizes, carbonate fuel cells(i.e. ERC) have advantages: 1. They are inherently higher efficiency than PEM 2. Their high temperature allows them to be used for combined-cycle operation leading to even higher efficiency 3. Becuase they do internal reforming and are not poisoned by carbon monoxide, they are simpler when running on a hydrocarbon fuel such as natural gas. PEM fuel cells need an external reformer. The Ballard-GPU-GEC venture is targeting 250kw units. In this size, they will be competing against combined-cycle gas turbines which now cost $500-$700(U.S.) per kw and dropping with with efficiencies eventually reaching about 55%. It's going to be very hard for them to compete at this price. In the long run, I believe that carbonate fuel cells will win out because of their higher efficiency. Carbonate will be competing against gas turbines. PEM fuel cells won't be cost effective as power plants.

To: WWS who wrote (114)	12/19/1997 5:36:00 AM
From: Sid Turtlman	Read Replies (1) \| Respond to of 407

bill: The only implication will be on Wall Street, where investors will mistakenly think that Ballard has some chance of succeeding in stationary power plants. I strongly believe they don't, despite this investment. A few months ago I wrote a piece on the Ballard thread as to why PEM cells are unlikely ever to be economic for that application: Message 2605074 The problems don't look solvable no matter how much money gets thrown at it. This is backed up by the fact that the only hard number that Ballard has ever released about its stationary prototype was that its efficiency was 31%, a pretty terrible number when you consider the negligible potential for cogen. ERC's Santa Clara unit ran at something close to 50% without cogen, which could easily move it up over 80% efficiency. This isn't surprising; a good chunk of the electricity that a PEM cell produces is needed to run the very complex reforming equipment needed to extract the hydrogen from natural gas. ERC cells don't need any reforming equipment. One other thing that I didn't cover in the Ballard post above is that the 250 kW size is inherently less economic than ERC's design of around ten times bigger. Some expensive commerical components in the "balance of plant", especially the inverters that convert the DC power that a fuel cell produces to AC, don't cost much less to handle 250 kW than 2.8 MW. So the cost per kW for the smaller size is at a big disadvantage. So why did GEC Alsthom get involved with Ballard? I think one reason may be that ERC has not had a real marketing effort at all, procrastinating until it had an actual commercial product for sale. Ballard takes the other approach of all marketing, no product, and that has attracted the attention of companies that want to do something in fuel cells. They may not know ERC exists. The other thing is that Ballard has come up with an excellent formula for attracting money. You will note that every deal it has announced--Daimler, Ford, now GEC Alsthom--involve those companies contributing "technology" valued at some lofty figure in addition to cash. This "technology" is actually R&D money that has already been spent and would have to be written off the company's income statement. By "contributing" it to the joint ventures, the partner companies get to remove a large expense from their income statements, making earnings go up, and turn it into an asset. Good deal, eh?