Electric Competition Moves On
The recent months have brought a flurry of activity in a number of states:
ARIZONA: The Arizona Corporation Commission approved rules opening...
Midwest where electricity is relatively inexpensive, DG may provide niche opportunities.
"The issue of fuel cells is not just their operability and their maintenance issues and so forth, but to a very large degree, their cost," says Denise Zurn, technology planning consultant at NSP. "So fuel cells, as they hit the marketplace, are viewed as fitting into a niche where you really have a very particular customer need, and they're willing to pay a higher cost to have that need met."
Still others suggest that for the incumbent electric utilities to benefit from distributed generation, they must own it.
"To say that it's going to be a boon for electric utilities, I think, would be wrong," says Krebs of Laclede Gas. Ultimately, he explains, it's who owns the DG that's important. "Traditionally, it's a threat, the way PCs threatened mainframes. But thinking beyond that, [electric companies] think, 'well, we'll mitigate the threat if we own it.'"
Regardless of how individual energy companies choose to fit fuel cells into their business strategies or leave them out entirely, experts say DG won't dent existing generation needs anytime soon.
Says GPU's Hafer, "It's a very attractive way to meet future load growth, and to perhaps eliminate the need for certain types of peaking capacity. But I don't think it has the prospect of eliminating or offsetting any of the existing generation capacity, at least not in the next several lifetimes."
Instead, "what you'll see is a natural shift," says Breakthrough Technologies' Ross. "Since you're adding generation as you go along, that removes the need to add new, big base station generation plants. It also allows you to start retiring some of your older plants that are more expensive to run."
Adds Ross, "You're not going to see an immediate death knell; you're going to see a shift in the way the companies utilize the technology." And that shifting will take time.
Electric companies are a resourceful lot, as many fuel cell experts note, and they'll find ways of participating if and when the technology takes off.
Says Chris Forbes, manager of solid oxide fuel cell development at Siemens Westinghouse, "If fuel cells can get to be commercially viable, [the energy companies] know they're going to benefit somehow, whether in maintenance of the units, distributing them - really, anything goes."
Storage and Cogeneration: Another Twist on Who Wins
Fuel cells offer other opportunities in capture and use of waste heat and reverse operation to store electricity, much in the manner of a traditional pumped storage project.
For example, as Krebs notes, fuel cells may be run in reverse to convert electricity into hydrogen. "The implications are that gas and electricity will compete on a time-of-use basis," he says. "It really comes down to natural gas vs. coal."
Krebs explains that an electric generator could dump off-peak, coal-generated electricity into the fuel cell at night to generate hydrogen and compress it into storage for use the next day.
"That's pretty cheap energy to make hydrogen with to power your fuel cell," he says. "If you made your