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Fuel-Cell Power Industry Takes On Important New Market

Trevor Curwin,|Special to CNBC.com
Sunday, 18 Apr 2010 | 12:06 PM ET

After long being billed as the clean-energy future for moving vehicles, fuel cells may be poised to make their biggest leap forward by finally standing still.

Bloom Boxes installed on eBay's campus in Silicon Valley.
Source: Bloom Energy
Bloom Boxes installed on eBay's campus in Silicon Valley.

California newcomer Bloom Energy made a big splash in February when it debuted the “Bloom Box,” a dumpster-sized fuel cell than can generate 100 kilowatts of power.

That gives it the production heft to take fuel cell technology out of the nation’s bus fleets and into the stationary, green-electricity market, taking on solar and wind power plants in the process.

“We went after the holy grail,” says Bloom founder K.R. Sridhar in an interview at the Bloom Box’s launch in February, pointing out his fuel cell produces green power on demand. “It’s not even a competition."

Bloom Energy’s fuel-cell unit costs over $700,000 but they hope to bring down the price significantly in coming years, even planning a $3,000 “home-scale” model to compete with rooftop solar panels as well.

Firms like eBay, Google , FedEx are currently testing the Bloom fuel cells.

Bloom says the investment pays for itself in energy savings in under ten years, generating electricity at as little as 8-10 cents per kilowatt hour, according to reports—cheaper, in some cases, than commercial coal-generated electricity.

While test clients are using the fuel cells to offset purchased power from the grid, Sridhar sees fuel cell “farms” essentially becoming stand-alone power plants, a potential challenge to large-scale renewable energy plants.

But rather than cannibalizing markets for established-but-intermittent green power sources like wind and solar, Sridhar envisions his technology as being complementary to other renewables, providing clean power when the wind isn’t blowing and sun isn’t shining.

“Most renewable assets are intermittent and it causes problems for [utilities] in terms of [power] grid stability,” he said. “We offer them 24/7, so there’s absolutely no reason for them not to want these.”

Competition From Batteries

Despite advancing technology and growing popularity as grid electricity solutions, fuel-cell makers face stiff competition from a new generation of electric batteries.

“Fuel cells fall into the broader category of game-changing technologies that can provide storage for intermittent renewables, along with batteries,” says Alex Klein, research director at Emerging Energy Research.

But given the government’s push for more electric vehicles—driven by the same kind of auto-fleet efficiency goals that spurred investments in new fuel-cell technologies in past decades—Klein says fuel cells makers’ “bigger battle” will be overcoming investment inflows into battery technology.

“Right now, the overwhelming support is around batteries,” he says, and that will likely push that electricity storage technology into stationary applications as well. “You’re seeing higher numbers of factories being built, and there’s a lot of momentum and expectations. On the fuel cell side, you don’t have that broad government and industry push."

Large-scale batteries would allow wind and solar power plants to store excess generation when they can, and release it slowly and consistently over a period of time, turning these intermittent resources into on-demand power sources, or “baseload.”

Batteries also win right now on process efficiency, or how much electricity generates is actually provided to the user. For fuel cells, it can be less than 50%, while a run-of-the-mill lead-acid battery, like you’d find in a car, is 90%.

Peak Demand Needs

But while batteries and fuel cells may compete down the road as energy storage concepts, today’s fuel cells are closer to replacing one aspect of the power grid—the need for peak demand generation.

Handled today mainly by natural gas combustion plants that can be quickly fired up as power usage spikes, this power usually commands higher prices, and that could improve the return on investment for fuel cells.

Sanjiv Malhotra, CEO of California-based fuel cell maker Oorja Protonics, says fuel cells can also fire up quickly and on a variety of fuels—methane from a landfill capture system, gas from methanol biofuel produced from agricultural waste, products from experimental coal-gasification technologies, or even natural gas--in a carbon-neutral way.

Malhotra says his fuel cells are twice as efficient as comparative combustion engines for peak use. “Fuel cells are more efficient since there is no burning of the fuel ,” he says. “They do an electrochemical conversion of the fuel into electrical energy.”

Emerging Energy’s Klein disagrees, saying such flexibility is largely theoretical and unproven. “You’d never use a fuel cell for landfill gas,” he says, adding that the quality of the methane produced in landfills isn’t consistent or clean enough.

Malhotra counters his system uses filters for solve this. Some of the Bloom Boxes use landfill gas as a fuel, as well.

While acknowledging development is happening in competing technologies like batteries, Malhotra says there’s space for both.

“That’s where we’re heading,” he says of fuel cell’s large-scale usage. “Whether that’s three years or five years, I don’t know.”

Bloom’s Sridhar agrees, and with US government estimates of more than 200 gigawatts – the equivalent output of of 2 million Bloom Boxes -- of new electricity generation needed in the coming years, there’s room for everyone.

“It’s a big table, it’s a big market,” says Bloom

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