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Looking for Fuel Cell Technology's Future.
Fortnightly Magazine - November 1 2001

zirconium dioxide ceramic electrolyte, allowing the highest operating temperature of all types (1800 degrees Fahrenheit). Its electrical efficiency rivals that of the molten carbonate fuel cell, but the ceramic material required for the process tends to be costly.

Other fuel cell technologies that utilize the PEM membrane under development include the Direct Methanol Fuel Cell, which eliminates the need for a reformer by deriving hydrogen straight from liquid methanol; and the Regenerative Fuel Cell, which electrolyses water into hydrogen and oxygen, reverses the reaction to create electricity and water, and recycles the water byproduct, thereby looping (or regenerating) the process.

Don't forget, says Prouty, that fuel cells sometimes are competing directly against other distributed generation products, and manufacturers have been working to improve those products as well, driving down costs and making them more efficient and cleaner. The fuel cell industry, he says, is competing against a moving target. "[Fuel cells] will have to be manufactured inexpensively [to be able to] compete against the incumbent technology. We think that that's the biggest risk and the biggest hurdle for fuel cells, is really the incumbent technology. The diesel and gas turbine guys have not been sitting on their hands either."

In order to become a mass market, Prouty concludes, fuel cell technology is going to have to replace incumbent technologies. But note: The key term is mass market. Don't forget the near-term strategy for the industry: to exploit the niche markets. FuelCell Energy CEO Leitman suggests that many of those markets currently are not being served at all by any incumbent technology. Leitman says that, for one, fuel cells can help utilities save money in transmission and distribution costs by serving load pockets and for grid support. If a utility can avoid having to put up a new wire, it will. "There's really not a market that's served today by our megawatt class fuel cells," he says, pointing out that environmental regulations in many areas prevent the installment of, say, a Caterpillar diesel generator for such purposes.

Leitman even contests the assumption that fuel cells currently cannot compete with central power stations on a level economic playing field. He cites his own company's experience as an example. "In Connecticut we have two different facilities. ... We've got about a 1-MW load and a 1.5-MW load. We're paying Connecticut Light & Power 11 cents a kilowatt-hour. At 50 MW a year production capacity, if we sell that many in a 12-month period, our capital costs will be such that at $4 gas, we're generating in the 8 to 9 cents per kilowatt-hour range."

The key assumption to remember, he says is that right now at least, fuel cells are not out to compete with wholesale power prices but with retail prices. "Now, that's not going to compete against 4- or 5-cent generation, but we're not competing with that. This initial group of products are what I would call retail products. We're competing against the retail price of electricity. The Danbury, [Conn., where FuelCell Energy is based] hospital pays 11 cents per kilowatt-hour. Whether half