HydroGen prepping massive fuel cell generators

A Pennsylvania company working on multi-megawatt fuel cell power and heating systems is approaching commercialization of its technology.

HydroGen Corporation (OTCBB: HYDG) is in the process of productizing breakthroughs originally developed by Westinghouse Electric to build huge 400kW hydrogen-powered fuel cells, which, combined in groups of five, are intended to form the basis of a forthcoming two-megawatt "power island" mini power-plant product.

"We want to be a leading manufacturer of stationary fuel cells for power generation in multi-megawatt applications," said Joshua Tosteson, HydroGen president and director, in a presentation today at the company's headquarters in Versailles, PA.

For chemical and other industrial customers - like sodium chlorate plants, or producers of coke for the steel industry who already generate a supply of hydrogen as a by-product or as waste - HydroGen says its power island will offset the high rates paid for electricity.

"The bigger the spread in opportunity cost of hydrogen (as low as possible) and the power price paid by the customer (as high as possible), the higher our value," noted Tosteson.

HydroGen's products will be built around 400kW PAFC (phosphoric acid fuel cell) modules, built in a vertical tower configuration. They're to be cooled by air rather than liquid, simplifying the unit and reducing corrosion, the company says. In a further point of differentiation, operators are to be able to replenish acid while the units are production.

While the company is currently demonstrating only a working 2.5 kW cell, operating at full rated capacity, two 400kW test plants are under construction: one at its facility in Pennsylvania and one in Ohio. A commercial demonstration plant is also under construction.

The company plans to enter into full-scale manufacturing starting in 2008 in Ohio.

If HydroGen succeeds in delivering, it will be notable for its scale. The company's planned installation sizes are ambitious. "We're focused on 6-to-30 MW applications ideally," said Tosteson.

Investors are enthusiastic about HydroGen's opportunity. David Kurzman used to cover the company as a sell-side analyst with Needham & Company, and has now invested in HydroGen as a fund manager.

He told the Cleantech Group, "we used to cover a lot of fuel cell companies, but this is the one we feel has the greatest near-term potential for true earnings and cash flow generation." Kurzman's company Kurzman CleanTech participated in the last two of the company's rounds.

HydroGen is to compete with a fuel cell company already in the market for stationary power plants. FuelCell Energy is currently selling and installing 300 kW, 1.5 MW and 3 MW configurations, is developing other configurations, and its products run on a variety of different fuels, not just hydrogen. Like HydroGen, however, FuelCell Energy continues to swim in red ink.

HydroGen has raised $40M USD to date, with the last $26M structured as pipe financing with Piper Jaffray. The company claims to have cash through 2007, and plans an additional round in 2007. It's also apparently negotiating with potential partners to offer creative financing options for customers - even including simple power purchase arrangements.

In an interesting industry connection, Scott Schecter, the CFO of HydroGen, is on the board of directors of thin film solar vendor DayStar Technologies, covered closely these days by the Cleantech Group.

HydroGen said it plans to "hit the market hard" in 2007.

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