Are stationary fuel cells sexy?

The fuel cell market, particularly stationary power plants, stands poised to grow faster than sexier sectors like solar, according to data shared in a web based seminar today from the Cleantech Group.

They were incubated in labs in the 1950s, and they powered manned space missions in the 60s, but this old technology is new again with the sudden resurgence of interest in clean power, attendees heard.

"The pull that we are feeling from the marketplace is a lot faster and more definitive than we've expected," said Joshua Tosteson of HydroGen (Nasdaq: HYDG).

The company recently completed a 400 kilowatt phosphoric acid fuel cell commercial demonstration plant in Ohio, and has a second demonstration plant in Pennsylvania.

In research released earlier this year, Cleantech industry analyst firm Clean Edge predicted continued growth for the usual suspects in clean energy, including wind, solar and biofuels.

But it predicted the biggest growth for fuel cells—an 11-times growth for the market in the next nine years (see the Cleantech Group's Underdog fuel cells to outperform, says Clean Edge.)

That a $15.6 billion market. Without even without taking into account fuel cell vehicles, as published by the company.

Clean Edge estimated most of the fuel cell growth to come from stationary fuel cells used in large power plant and combined heat and power applications.

The key to the renewed interest may be efficiency.

"If you look at solar and wind, they have very low capacity factors, typically 40-to-50-percent," Jeff Cox of FuelCell Energy (Nasdaq: FCEL) told webinar listeners.

"So if you put a megawat of solar in, you're going to get less than 50-percent of that actually hitting the grid. You put a megawatt of fuel cells in, you're going to get about 98-percent of that," said Cox.

FuelCell uses molten carbonate fuel cell (MCFC) technology, offering systems from 300 kW to 2.4 MW, scalable up to 50 MW.

Last month, Freedonia Group's world fuel cells study predicted an $8.5 billion market by 2016 (see Fuel cell market size soon $8.5 billion, says report.)

Although lower than Clean Edge's prediction, that's still more than 6-times the market today.

Freedonia cited economies of scale and technological advances to justify its claims, as well as high energy prices and heightened environmental concerns.

What are the markets for fuel cell plants?

The main target for vendors are large industrial companies where the fuel is free, according to the webinar.

"We believe that there are many hundreds, I mean many hundreds, in North America of megawatts of basically vented hydrogen streams," said HydroGen's Tosteson.

A number of industrial and agricultural plants generate hydrogen or other gases, like biogas, including methane, as byproducts.

Fuel cell plants can run on any or all of those gases, reforming them into hydrogen if necessary, depending on the technology.

This makes their fuel renewable, and, if they're already making the gas, free.

And Tosteson said the amount of vented hydrogen grows when you look beyond the many hundreds of wasted megawatts in North America.

"You have to perhaps add a zero, possibly two zeroes, to really capture what that looks like worldwide. And i'm not really including any specific quantitative estimates of Asia."

There have been commercialization challenges in the past, such as the historically high capital costs of fuel cell power plants.

But the complexity of the system has been standardized and there are better economies of scale today.

"We believe we'll be able to deliver our first 6 MW into the field at a cost price around $3,000 a kilowatt installed," said Tosteson.

He added that "for the next run of about 20-to-25-MW we believe that we'll have cost prices down into a range approximately to $1,500 a kilowatt."

FuelCell's Cox said the company had "roughly speaking a target price of about $3,500 per kW."

It's not all wine and roses for every fuel cell technology; each of the major approaches have their drawbacks.

Phosphoric acid, used by HydroGen, lasts longer than molten carbonate, but it gets lower overall efficiencies.

Meanwhile, molten carbonate, used by FuelCell, offers higher efficiencies, but its primary drawback is longevity.

Despite the short comings, many groups can benefit from the features of fuel cell plants, event attendees were told.

Companies can put a fuel cell power plant on-site and implement real-time monitoring, giving organizations like hospitals, hotels, universities and manufacturing facilities more reliable power.

"It's a 24-hour, 7-day-a-week renewable energy source, unlike wind and solar," said Cox.

Listen to a replay of the entire free one hour the Cleantech Group event here.

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